0000950137-05-005244.txt : 20120827
0000950137-05-005244.hdr.sgml : 20120827
20050502154750
ACCESSION NUMBER: 0000950137-05-005244
CONFORMED SUBMISSION TYPE: POS AMI
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20050502
DATE AS OF CHANGE: 20051220
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VAN KAMPEN EXCHANGE FUND
CENTRAL INDEX KEY: 0000005100
IRS NUMBER: 741908071
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: POS AMI
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-02611
FILM NUMBER: 05790625
BUSINESS ADDRESS:
STREET 1: 1555 PEACHTREE STREET, N.E.
STREET 2: SUITE 1800
CITY: ATLANTA
STATE: 2Q
ZIP: 30309
BUSINESS PHONE: 404-439-3217
MAIL ADDRESS:
STREET 1: 1555 PEACHTREE STREET, N.E.
STREET 2: SUITE 1800
CITY: ATLANTA
STATE: 2Q
ZIP: 30309
FORMER COMPANY:
FORMER CONFORMED NAME: VAN KAMPEN EXCHANGE FUND
DATE OF NAME CHANGE: 20030731
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN CAPITAL EXCHANGE FUND
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN GENERAL EXCHANGE FUND
DATE OF NAME CHANGE: 19831101
POS AMI
1
c91050a1posami.txt
POST-EFFECTIVE AMENDMENT TO FORM N-1A
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 2, 2005
FILE NO. 811-2611
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 27 [X]
VAN KAMPEN EXCHANGE FUND
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN THE AGREEMENT OF LIMITED PARTNERSHIP)
1221 AVENUE OF THE AMERICAS
22ND FLOOR
NEW YORK, NEW YORK 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(212) 762-5260
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
AMY R. DOBERMAN, ESQ.
MANAGING DIRECTOR
VAN KAMPEN INVESTMENTS INC.
1221 AVENUE OF THE AMERICAS
22ND FLOOR
NEW YORK, NEW YORK 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------
Copies to:
WAYNE W. WHALEN, ESQ.
CHARLES B. TAYLOR, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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VAN KAMPEN EXCHANGE FUND
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Van Kampen Exchange Fund (the "Registrant" or the "Fund") is an open-end
diversified management investment company, registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), and formed on December 4, 1975
under the Uniform Limited Partnership Act of California. The Registrant
commenced business as an investment company on December 13, 1976.
Items 1, 2, 3 and 8 of Part A are omitted pursuant to General Instruction
B.2. of Form N-1A.
This Prospectus, which incorporates by reference the entire Statement of
Additional Information, concisely sets forth certain information about the
Registrant that a prospective investor should know before investing in shares of
the Registrant. Shareholders should read this Prospectus carefully and retain it
for future reference. A copy of the Statement of Additional Information may be
obtained without charge by calling (800) 847-2424 or for Telecommunications
Device for the Deaf at (800) 421-2833. The Statement of Additional Information
has been filed with the Securities and Exchange Commission ("SEC") and is
available along with other related materials at the SEC's internet web site
(http://www.sec.gov).
This Prospectus is dated May 2, 2005.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, RELATED RISKS
AND DISCLOSURE OF PORTFOLIO HOLDINGS.
The Registrant's principal investment objective is long-term growth of
capital, while the production of current income is an important secondary
objective. Under normal market conditions, the Registrant seeks to achieve these
objectives by investing primarily in common stocks or convertible securities of
companies believed to have long-term growth potential. The Registrant does not
intend to engage to any significant degree in active or frequent trading of
portfolio securities. The Registrant's portfolio turnover is reported in its
financial statements. The Registrant may, however, for defensive purposes,
temporarily invest all or a portion of its assets in other types of securities,
including investment grade bonds, preferred stocks and money market obligations
such as government securities, certificates of deposit and commercial paper. In
taking a temporary defensive position, the Registrant would temporarily not be
pursuing and may not achieve its investment objective. The foregoing policies
may not be changed without approval of a majority of the Registrant's
outstanding voting securities, as defined in the 1940 Act. The Registrant's
temporary investments may consist of U.S. Treasury Bills and U.S. Treasury
Bonds, both issued by and supported by the full faith and credit of the United
States Government, and commercial paper rated P-1, if by Moody's Investors
Service, Inc., or A-1 if by Standard & Poor's and repurchase agreements with
domestic banks and broker-dealers.
The Registrant is subject to market risk. Market risk is the possibility
that the market values of securities owned by the Registrant will decline.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole. Investments in common stocks and convertible securities
generally are affected by changes in the stock markets, which fluctuate
substantially over time, sometimes suddenly and sharply.
A description of the Registrant's policies and procedures with respect to
the disclosure of the Registrant's portfolio securities is available in the
Registrant's Statement of Additional Information.
ITEM 5. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE.
The business and affairs of the Registrant are managed under the direction
of the Board of Managing General Partners of the Registrant. Subject to the
Managing General Partners' oversight, the Adviser (defined below) determines the
investment of the Registrant's assets, provides administrative services and
manages the Registrant's business and affairs.
Van Kampen Asset Management (the "Adviser"), serves as investment adviser
to the Registrant. The Adviser is a wholly owned subsidiary of Van Kampen
Investments Inc. ("Van Kampen Investments"). Van Kampen Investments is a
diversified asset management company that administers more than three
A-1
million retail investor accounts, has extensive capabilities for managing
institutional portfolios and has more than $98 billion under management or
supervision as of March 31, 2005. Van Kampen Investments is an indirect wholly
owned subsidiary of Morgan Stanley, a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services. Morgan Stanley is a full
service securities firm engaged in securities trading and brokerage activities,
investment banking, research and analysis, financing and financial advisory
services. The Adviser's principal office is located at 1221 Avenue of the
Americas, New York, New York 10020.
The Registrant 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 Registrant (the
"Advisory Agreement"), the Registrant pays the Adviser a fee monthly calculated
at the annual rate of 0.30% of average daily net assets of the Registrant. Prior
to November 1, 2004, the Registrant paid the Adviser a monthly fee computed
based upon an annual rate of 0.50% applied to the average net assets of the
Registrant. Under the Advisory Agreement, the Registrant also reimburses the
Adviser for the cost of the Registrant's accounting services, which include
maintaining its financial books and records and calculating its daily net asset
value. For the fiscal year ended December 31, 2004, advisory fees paid by the
Registrant equaled 0.47% of the Registrant's average daily net assets.
The Fund is managed by Janet Luby, an Executive Director of the Adviser.
Ms. Luby has worked for the Adviser since 1995 and joined the team managing the
Fund in November 2004. Prior to 2004, Ms. Luby worked in an investment capacity
for the Adviser. Ms. Luby is responsible for the day-to-day management of the
Registrant's portfolio.
The Registrant's Statement of Additional Information provides additional
information about the portfolio manager's compensation structure, other accounts
managed by the portfolio manager and the portfolio manager's ownership of
securities in the Registrant.
Other operating expenses paid by the Registrant include transfer agency
fees, custodial fees, legal and accounting fees, the costs of reports and
proxies to partners, managing general partners' fees, and all other business
expenses not specifically assumed by the Adviser. For the fiscal year ended
December 31, 2004, the Registrant's other operating expenses were 0.42% of
average net assets.
ITEM 6. SHAREHOLDER INFORMATION.
The Registrant has outstanding units of partnership interest ("shares")
with equal rights to participate in distributions made by the Registrant and
equal rights to the Registrant's assets. Each share is entitled to one vote and
there is no cumulative voting. If the Registrant were unable to pay its
liabilities, partners receiving distributions could be liable to creditors of
the Registrant to the extent of such distributions, plus interest.
The Registrant will determine its net asset value as of the close of each
business day on the New York Stock Exchange. The Registrant's net assets equal
the value of its portfolio securities, plus all cash and other assets (including
dividends and interest accrued but not collected) less all liabilities
(including accrued expenses but excluding partner capital contributions). The
Registrant's portfolio securities are valued at the last sales price on the
exchange where principally traded, or, if no sale occurred on that day, at the
mean between the closing bid and asked prices; securities not so traded are
valued in like manner, if market quotations are available, or at the mean
between the highest bid and the lowest asked prices if there is no last sales
price or closing bid and asked prices. The value of any other securities and
assets is their fair value as determined in good faith by the Adviser based on
procedures approved by the Managing General Partners.
Shareholders may redeem shares at any time, without charge by the
Registrant, at the next determined net asset value per share by submitting a
written request in proper form to the Registrant's transfer agent, Van Kampen
Investor Services, Inc. ("Investor Services"), PO Box 947, Jersey City, New
Jersey 07303-0947, by placing the redemption request through an authorized
dealer or by calling the Registrant. Redemptions are priced at the next
determined net asset value per share after acceptance by Investor Services of
the request and any other necessary documents in proper order and payment for
shares redeemed will be made within seven days thereafter. Redemptions are not
made on days during which the New York Stock
A-2
Exchange is closed. The right of redemption may be suspended and the payment
therefor may be postponed for more than seven days during any period when (a)
the New York Stock Exchange is closed for other than customary weekends or
holidays; (b) the SEC determines trading on the New York Stock Exchange is
restricted; (c) the SEC determines an emergency exists as a result of which
disposal by the Registrant of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Registrant to fairly
determine the value of its net assets; or (d) the SEC, by order, so permits.
The shares redeemed (other than redemptions under a systematic withdrawal
plan) may be paid in cash or securities, at the option of the Registrant, and
will ordinarily be paid in whole or in part in securities. The Registrant's
valuation will determine the quantity of securities tendered. The Registrant
will select securities for tender in redemptions based on tax or investment
considerations.
While there is no charge when shares are redeemed or repurchased through
the Registrant or through Van Kampen Funds Inc., an affiliate of the Adviser,
dealers may make a charge for effecting a repurchase. Payment for shares
redeemed may be postponed or the right of redemption suspended as provided by
the rules of the SEC.
The Registrant makes quarterly distributions of net investment income,
exclusive of capital gains (such distribution, "ordinary income distributions"),
to the partners. The Managing General Partners determine each year whether and
to what extent any realized capital gains are to be distributed and such
distributions, if any, will be made annually. Distributions, when made, are made
equally among the outstanding shares held by shareholders. Ordinary income
distributions and capital gains distributions are automatically applied to
purchase additional shares of the Registrant at the next determined net asset
value unless the shareholder instructs otherwise.
The Registrant is classified as a partnership for federal income tax
purposes. Each partner is required to report on his personal federal income tax
return his share of the Registrant's income, gains, losses, deductions and
expenses for the taxable year of the Registrant ending within or with his
taxable year, regardless of whether cash or other properties are distributed.
For federal income tax purposes, capital gain or loss is allocated equally among
shares outstanding on the day recognized, and all other items of the
Registrant's income, gain, loss, deduction and expense during a year are
allocated to each partner in the proportion which the total number of shares
such partner held on each day during the year bears to the total of the
outstanding shares of the Registrant on each day during the year.
The tax basis to each partner for his shares in the Registrant is
determined by reference to the basis of the securities and any money that he
contributed to the Registrant in exchange for his shares, increased by his share
of the Registrant's taxable income and decreased (but not below zero)
principally by the Registrant's distributions and his share of the Registrant's
net losses. If cash distributed exceeds basis, the excess generally will be
taxable as gain from the sale of a capital asset. The Registrant's tax basis in
the securities contributed by the partners is the same as that of the partners
contributing such securities.
Redemptions for cash generally will be taxable as capital gains to the
extent that such cash exceeds a partner's adjusted tax basis in his shares of
the Registrant. The receipt of securities on redemption is not a taxable event
to the partner or to the Registrant. The partner's basis in securities received
on redemption will be the same as the Registrant's. Net long-term capital gains
realized by the Registrant will be taxable to the partners at the current
capital gain rates.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "2003 Tax
Act") contains provisions that reduce the U.S. federal income tax rates on (1)
long-term capital gains received by individuals and (2) "qualified dividend
income" received by individuals from certain domestic and foreign corporations.
The reduced rate for capital gains generally applies to long-term capital gains
from sales or exchanges recognized on or after May 6, 2003, and ceases to apply
for taxable years beginning after December 31, 2008. The reduced rate for
dividends generally applies to "qualified dividend income" received in taxable
years beginning after December 31, 2002 and ceases to apply for taxable years
beginning after December 31, 2008. Because the Registrant's investment portfolio
consists primarily of common stocks, a portion of the ordinary income
distributions from the Registrant may be eligible for the reduced rate
applicable to "qualified dividend income" in the hands of partners who are
individuals (subject to certain holding period requirements). Capital
A-3
gains distributions from the Registrant that are attributable to long-term
capital gains will be eligible for the reduced rate applicable to long-term
capital gains in the hands of partners who are individuals.
Because shares of the Registrant are not available for additional
investments, the Registrant is not susceptible to the "market-timing" or
"short-term trading" practices that affect other continuously offered Van Kampen
Funds. Therefore, the "market timing" and "short term trading" policies
applicable to other Van Kampen Funds are not currently applied to the
Registrant. If in the future the Registrant offers additional shares, it is
expected that those policies would be applied to the Registrant and the
Registrant's prospectus would be updated to describe those policies.
ITEM 7. DISTRIBUTION ARRANGEMENTS.
Not Applicable.
A-4
VAN KAMPEN EXCHANGE FUND
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
ITEM 9. COVER PAGE AND TABLE OF CONTENTS.
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the Van
Kampen Exchange Fund (the "Fund" or "Registrant") prospectus (the "Prospectus")
dated as of the same date as this Statement of Additional Information. This
Statement of Additional Information does not include all of the information a
prospective investor should consider before purchasing shares of the Registrant.
Investors should obtain and read the Prospectus prior to purchasing shares of
the Registrant. A Prospectus the Statement of Additional Information and the
Fund's Annual and Semiannual Reports may be obtained without charge by writing
or calling Van Kampen Funds Inc. (the "Distributor"), 1 Parkview Plaza, P.O. Box
5555, Oakbrook Terrace, Illinois 60181-5555, at (800) 341-2911.
This Statement of Additional Information is dated May 2, 2005.
PAGE
----
Fund History................................................ B-1
Description of the Fund and its Investment Risks............ B-1
Management of the Registrant................................ B-7
Control Persons and Principal Holders of Securities......... B-17
Investment Advisory and Other Services...................... B-17
Portfolio Management........................................ B-19
Brokerage Allocation and Other Practices.................... B-21
Capital Stock and Other Securities.......................... B-22
Purchase, Redemption and Pricing of Shares.................. B-22
Taxation of the Fund........................................ B-22
Underwriters................................................ B-22
Calculation of Performance Data............................. B-22
Financial Statements........................................ B-22
ITEM 10. FUND HISTORY.
The Registrant was formed on December 4, 1975 under the Uniform Limited
Partnership Act of California. The Registrant commenced business as an
investment company on December 13, 1976 under the name American General Exchange
Fund.
On September 9, 1983, the name of the Registrant was changed from American
General Exchange Fund to American Capital Exchange Fund. The name of the
Registrant was changed from American Capital Exchange Fund to Van Kampen
American Capital Exchange Fund (a California Limited Partnership) on April 26,
1996. The Registrant began using its current name on December 9, 1998.
ITEM 11. DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS.
The Registrant is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act").
The Registrant's principal investment objective is long-term growth of capital,
while the production of current income is an important secondary objective.
Under normal market conditions, the Registrant seeks to achieve these objectives
by investing primarily in common stocks or convertible securities of companies
believed to have long-term growth potential. In seeking to attain its investment
objectives of long-term growth of capital, and, secondarily, production of
income, the Registrant will acquire securities for long-term appreciation and
does not intend to engage to any significant degree in short-term trading.
Capital gains taxes will be considered in determining the sale of portfolio
securities. However, sales will be effected whenever believed to be in the best
interests of the Partners, even though capital gains may be recognized thereby.
B-1
The Registrant has no present intention of investing in corporate bonds,
preferred stocks or certificates of deposit in an amount in excess of 5% of the
value of its net assets.
The Registrant has adopted certain fundamental investment restrictions
which may not be changed without approval by the vote of a majority of its
outstanding voting securities, which is defined by the 1940 Act, as the lesser
of (i) 67% or more of the voting securities present at a meeting, if the holders
of more than 50% of the outstanding voting securities 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 the securities. With respect to the
limitations on illiquid securities and borrowings, the percentage limitations
apply at the time of purchase and on an ongoing basis. The Registrant may not:
(1) Purchase securities on margin or make short sales.
(2) Purchase or write any options, puts, calls, straddles, spreads or
combinations thereof.
(3) Borrow money, except from banks for a purpose other than the purchase
of securities, such borrowing not to exceed 5% of the Registrant's
total assets at market value at the time of borrowing. Any such
borrowing may be secured provided that not more than 10% of the total
assets at market value at the time of pledging may be used as security
for such borrowings.
(4) Engage in the underwriting of securities or invest in securities
subject to restrictions on resale.
(5) Invest more than 25% of its assets at market value at the time of
purchase in securities of companies all of which conduct their
principal activities in the same industry.
(6) Invest in real estate (including interests in real estate investment
trusts) or invest in oil, gas or mineral exploration or development
programs, except in publicly traded securities of issuers which engage
in such business.
(7) Buy or sell commodities or commodity contracts.
(8) Make loans of money or securities to other persons provided that this
limitation shall not prevent the purchase of a portion of an issue of
bonds, notes, debentures or other debt securities which are publicly
distributed or of a type customarily purchased by institutional
investors.
(9) Invest more than 5% of its total assets at market value at the time of
purchase in the securities of any one issuer (other than obligations of
the United States Government or any instrumentalities thereof).
(10) Purchase securities if such purchase would result in the Registrant
owning more than 10% of the outstanding voting securities of any one
issuer at the time of purchase.
(11) Invest in securities of companies which have a record, together with
their predecessors, of less than three years of continuous operation.
(12) Purchase securities issued by any other investment company or
investment trust.
(13) Purchase or hold securities of any company if any of its General
Partners, or officers or directors of the Registrant's investment
adviser, who beneficially own more than 0.50% of the securities of
that company together own beneficially more than 5% of the securities
of such company.
(14) Invest in companies for the purpose of exercising control or
management. (The Registrant's officers may be authorized to vote
proxies issued with respect to its portfolio securities consistently
with its investment objectives).
(15) Invest in or hold warrants unless received with respect to securities
held by the Registrant.
(16) Invest in foreign securities unless listed at the time of purchase on
the New York Stock Exchange.
(17) Invest more than 5% of its total assets at market value at the time of
purchase in equity securities which are not readily marketable.
Registrant does not issue senior securities.
B-2
The Registrant has adopted the following policy, which may be changed by
the Managing General Partners. The Registrant shall not invest 25% or more of
its assets at market value at the time of purchase in securities of companies
all of which conduct their principal activities in the same industry.
DISCLOSURE OF PORTFOLIO HOLDINGS
The Registrant's Managing General Partners and the Adviser have adopted
policies and procedures regarding disclosure of portfolio holdings information
(the "Policy"). Pursuant to the Policy, information concerning the Registrant's
portfolio holdings may be disclosed only if such disclosure is consistent with
the antifraud provisions of the federal securities laws and the fiduciary duties
owed by the Registrant and the Adviser to the Registrant's shareholders. The
Registrant and the Adviser may not receive compensation or any other
consideration (which includes any agreement to maintain assets in the Registrant
or in other investment companies or accounts managed by the Adviser or any
affiliated person of the Adviser) in connection with the disclosure of portfolio
holdings information of the Registrant. The Registrant's Policy is implemented
and overseen by the Portfolio Holdings Review Committee (the "PHRC"), which is
described in more detail below.
The Registrant provides a complete schedule of portfolio holdings for the
second and fourth fiscal quarters in its semiannual and annual reports, and for
the first and third fiscal quarter in its filings with the SEC on Form N-Q.
Non-Public Portfolio Holdings Information Policy. All portfolio holdings
information that has not been disseminated in a manner making it available to
investors is considered non-public portfolio holdings information for the
purposes of the Policy. Pursuant to the Policy, disclosing non-public portfolio
holdings information to third parties may occur only when the Registrant has a
legitimate business purpose for doing so and the recipients of such information
are subject to a duty of confidentiality, which prohibits such recipients from
disclosing or trading on the basis of the non-public portfolio holdings
information. Any disclosure of non-public portfolio holdings information made to
third parties must be approved by both the Registrant's Managing General
Partners (or a designated committee thereof) and the PHRC. The Policy provides
for disclosure of non-public portfolio holdings information to certain
pre-authorized categories of entities, executing broker-dealers and
shareholders, in each case under specific restrictions and limitations described
below, and the Policy provides a process for approving any other entities.
Pre-Authorized Categories. Pursuant to the Policy, the Registrant may
disclose non-public portfolio holdings information to certain third parties who
fall within pre-authorized categories. These third parties include fund rating
agencies, information exchange subscribers, consultants and analysts, portfolio
analytics providers, and service providers, provided that the third party
expressly agrees to maintain the non-public portfolio holdings information in
confidence and not to trade portfolio securities based on the non-public
portfolio holdings information. Subject to the terms and conditions of any
agreement between the Adviser or the Registrant and the third party, if these
conditions for disclosure are satisfied, there shall be no restriction on the
frequency with which Registrant's non-public portfolio holdings information is
released, and no lag period shall apply. In addition, persons who owe a duty of
trust or confidence to the Registrant or the Adviser (including legal counsel)
may receive non-public portfolio holdings information without entering into a
non-disclosure agreement. The PHRC is responsible for monitoring and reporting
on such entities to the Registrant's Managing General Partners. Procedures to
monitor the use of such non-public portfolio holdings information may include
requiring annual certifications that the recipients have utilized such
information only pursuant to the terms of the agreement between the recipient
and the Adviser and, for those recipients receiving information electronically,
acceptance of the information will constitute reaffirmation that the third party
expressly agrees to maintain the disclosed information in confidence and not to
trade portfolio securities based on the material non-public portfolio holdings
information.
Broker-Dealer Interest Lists. Pursuant to the Policy, the Adviser may
provide "interest lists" to broker-dealers who execute securities transactions
for the Registrant. Interest lists may specify only the CUSIP numbers and/or
ticker symbols of the securities held in all registered management investment
companies advised by the Adviser or affiliates of the Adviser on an aggregate
basis. Interest lists will not disclose portfolio
B-3
holdings on a fund by fund basis and will not contain information about the
number or value of shares owned by a specified fund. The interest lists may
identify the investment strategy to which the list relates, but will not
identify particular Funds or portfolio managers/management teams. Broker-dealers
need not execute a non-disclosure agreement to receive interest lists.
Shareholders In-Kind Distributions. The Registrant's shareholders may, in
some circumstances, elect to redeem their shares of the Registrant in exchange
for their pro rata share of the securities held by the Registrant. In such
circumstances, pursuant to the Policy, such Registrant shareholders may receive
a complete listing of the portfolio holdings of the Registrant up to seven (7)
calendar days prior to making the redemption request provided that they
represent orally or in writing that they agree to maintain the confidentiality
of the portfolio holdings information.
Attribution Analyses. Pursuant to the Policy, the Registrant may discuss or
otherwise disclose performance attribution analyses (i.e., mention the effects
of having a particular security in the portfolio(s)) where such discussion is
not contemporaneously made public, provided that the particular holding has been
disclosed publicly. Any discussion of the analyses may not be more current than
the date the holding was disclosed publicly.
Transition Managers. Pursuant to the Policy, the Registrant may disclose
portfolio holdings to transition managers, provided that the Registrant has
entered into a non-disclosure or confidentiality agreement with the party
requesting that the information be provided to the transition manager and the
party to the non-disclosure agreement has, in turn, entered into a
non-disclosure or confidentiality agreement with the transition manager.
Other Entities. Pursuant to the Policy, the Fund or the Adviser may
disclose non-public portfolio holdings information to a third party who does not
fall within the pre-approved categories, and who are not executing
broker-dealers, shareholders receiving in-kind distributions, persons receiving
attribution analyses, or transition managers; however, prior to the receipt of
any non-public portfolio holdings information by such third party, the recipient
must have entered into a non-disclosure agreement and the disclosure arrangement
must have been approved by the PHRC and the Registrant's Managing General
Partners (or a designated committee thereof). The PHRC will report to the
Managing General Partners of the Registrant on a quarterly basis regarding any
other approved recipients of non-public portfolio holdings information.
PHRC and Board of Trustees Oversight. The PHRC, which consists of executive
officers of the Registrant and the Adviser, is responsible for overseeing and
implementing the Policy and determining how portfolio holdings information will
be disclosed on an ongoing basis. The PHRC will periodically review and has the
authority to amend the Policy as necessary. The PHRC will meet at least
quarterly to (among other matters):
- address any outstanding issues relating to the Policy;
- monitor the use of information and compliance with non-disclosure
agreements by current recipients of portfolio holdings information;
- review non-disclosure agreements that have been executed with prospective
third parties and determine whether the third parties will receive
portfolio holdings information;
- generally review the procedures to ensure that disclosure of portfolio
holdings information is in the best interests of Registrant shareholders;
and
- monitor potential conflicts of interest between Registrant's
shareholders, on the one hand, and those of the Adviser, the Distributor
or affiliated persons of the Registrant, the Adviser or the Distributor,
on the other hand, regarding disclosure of portfolio holdings
information.
The PHRC will regularly report to the Managing General Partners on the
Registrant's disclosure of portfolio holdings information and the proceedings of
PHRC meetings.
Ongoing Arrangements of Portfolio Holdings Information. The Adviser and
Registrant have entered into ongoing arrangements to make available public
and/or non-public information about the Registrant's portfolio
B-4
holdings. The Registrant may disclose portfolio holdings information based on
ongoing arrangements to the following pre-authorized parties:
NAME INFORMATION DISCLOSED FREQUENCY (1) LAG TIME
---- ---------------------- ------------------- -------------------
SERVICE PROVIDERS
State Street
Bank and Trust Company (*).... Full portfolio Daily basis (2)
holdings
Institutional Shareholder
Services (ISS) (proxy voting
agent) (*).................... Full portfolio Twice a month (2)
holdings
Van Kampen Investor
Services, Inc. (*)............ Full portfolio As needed (2)
holdings
David Hall (*).................. Full portfolio On a semi-annual (3)
holdings and annual fiscal
basis
Windawi (*)..................... Full portfolio On a semi-annual (3)
holdings and annual fiscal
basis
FUND RATING AGENCIES
Lipper (*)...................... Full portfolio Monthly and Approximately 1 day
holdings quarterly basis after previous
month end and
approximately 30
days after quarter
end, respectively
Morningstar (**)................ Full portfolio Quarterly basis Approximately 30
holdings days after quarter
end
Standard & Poor's (*)........... Full portfolio Monthly As of previous
holdings month end
CONSULTANTS AND ANALYSTS
Arnerich Massena & Associates,
Inc. (*)...................... Top Ten and Full Quarterly basis (6) Approximately 30
portfolio holdings days after quarter
end
Bloomberg (**).................. Full portfolio Quarterly basis Approximately 30
holdings days after quarter
end
Callan Associates (*)........... Top Ten and Full Monthly and Approximately 10-12
portfolio holdings quarterly basis, days after
respectively (6) month/quarter end
Cambridge
Associates (*)................ Top Ten and Full Quarterly basis (6) Approximately 10-12
portfolio holdings days after quarter
end
B-5
NAME INFORMATION DISCLOSED FREQUENCY (1) LAG TIME
---- ---------------------- ------------------- -------------------
CTC Consulting,
Inc. (**) .................... Top Ten and Full Quarterly basis Approximately 15
portfolio holdings days after quarter
end and
approximately 30
days after quarter
end, respectively
Fund Evaluation Group (**)...... Top Ten portfolio Quarterly basis At least 15 days
holdings (4) after quarter end
Jeffrey Slocum & Associates
(*)........................... Full portfolio Quarterly basis (6) Approximately 10-12
holdings (5) days after quarter
end
Hammond
Associates (**)............... Full portfolio Quarterly basis At least 30 days
holdings (5) after quarter end
Hartland & Co. (**)............. Full portfolio Quarterly basis At least 30 days
holdings (5) after quarter end
Hewitt Associates (*)........... Top Ten and Full Monthly and Approximately 10-12
portfolio holdings quarterly basis, days after
respectively (6) month/quarter end
Merrill Lynch (*)............... Full portfolio Monthly basis (6) Approximately 1 day
holdings after previous
month end
Mobius (**)..................... Top Ten portfolio Monthly basis At least 15 days
holdings (4) after month end
Nelsons (**).................... Top Ten holdings (4) Quarterly basis At least 15 days
after quarter end
Prime Buchholz & Associates,
Inc. (**)..................... Full portfolio Quarterly basis At least 30 days
holdings (5) after quarter end
PSN (**)........................ Top Ten holdings (4) Quarterly basis At least 15 days
after quarter end
PFM Asset
Management LLC (*)............ Top Ten and Full Quarterly basis (6) Approximately 10-12
portfolio holdings days after quarter
end
Russell Investment
Group/Russell/ Mellon
Analytical Services, Inc.
(**).......................... Top Ten and Full Monthly and At least 15 days
portfolio holdings quarterly basis after month end and
at least 30 days
after quarter end,
respectively
Stratford Advisory
Group, Inc. (*)............... Top Ten portfolio Quarterly basis (6) Approximately 10-12
holdings (7) days after quarter
end
B-6
NAME INFORMATION DISCLOSED FREQUENCY (1) LAG TIME
---- ---------------------- ------------------- -------------------
Thompson
Financial (**)................ Full portfolio Quarterly basis At least 30 days
holdings (5) after quarter end
Watershed Investment
Consultants,
Inc. (*)...................... Top Ten and Full Quarterly basis (6) Approximately 10-12
portfolio holdings days after quarter
end
Yanni Partners (**)............. Top Ten portfolio Quarterly basis At least 15 days
holdings (4) after quarter end
------------------------------------
(*) This entity has agreed to maintain Registrant non-public portfolio holdings
information in confidence and not to trade portfolio securities based on
the non-public portfolio holdings information.
(**) The Registrant does not currently have a non-disclosure agreement in place
with this entity and therefore this entity can only receive publicly
available information.
(1) Dissemination of portfolio holdings information to entities listed above
may occur less frequently than indicated (or not all).
(2) Information will typically be provided on a real time basis or as soon
thereafter as possible.
(3) As needed after the end of the semi-annual and/or annual period.
(4) Full portfolio holdings will also be provided upon request from time to
time on a quarterly basis, with at least a 30 day lag.
(5) Top Ten portfolio holdings will also be provided upon request from time to
time, with at least a 15 day lag.
(6) This information will also be provided upon request from time to time.
(7) Full portfolio holdings will also be provided upon request from time to
time.
The Registrant may also provide Registrant portfolio holdings information,
as part of its normal business activities, to the Registrant's to persons who
owe a duty of trust or confidence to the Fund or the Adviser. These persons
currently are (i) independent registered public accounting firm (as of the
Registrant's fiscal year end and on an as needed basis), (ii) counsel to the
Registrant (on as needed basis), (iii) counsel to the independent trustees (on
an as needed basis) and (iv) members of the Managing General Partners (on an as
needed basis).
ITEM 12. MANAGEMENT OF THE REGISTRANT.
The business and affairs of the Registrant are managed under the direction
of the Registrant's Managing General Partners and the Registrant's officers
appointed by the Managing General Partners. The tables below list the managing
general partners and executive officers of the Registrant and their principal
occupations during the last five years, other directorships held by the managing
general partners and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (or the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). The
term "Fund Complex" includes each of the investment companies advised by the
Adviser as of the date of this Statement of Additional Information. Managing
General Partners serve one year terms or until their successors are duly elected
and qualified. Executive officers are annually elected by the managing general
partners.
B-7
INDEPENDENT MANAGING GENERAL PARTNERS:
NUMBER OF
FUNDS IN
FUND
TERM OF COMPLEX
OFFICE AND OVERSEEN
NAME, AGE AND ADDRESS POSITION(S) LENGTH OF BY MANAGING OTHER DIRECTORSHIPS
OF INDEPENDENT MANAGING HELD WITH TIME PRINCIPAL OCCUPATION(S) GENERAL HELD BY MANAGING
GENERAL PARTNER REGISTRANT SERVED DURING PAST 5 YEARS PARTNER GENERAL PARTNER
David C. Arch (59) Managing Managing Chairman and Chief 82 Trustee/Director/Managing
Blistex Inc. General General Executive Officer of General Partner of funds
1800 Swift Drive Partner Partner Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 since 1998 health care products
manufacturer. Director of
the Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago. Director of
St. Vincent de Paul
Center, a Chicago based
day care facility serving
the children of low
income families. Board
member of the Illinois
Manufacturers'
Association.
Jerry D. Choate (66) Managing Managing Prior to January 1999, 80 Trustee/Director/Managing
33971 Selva Road General General Chairman and Chief General Partner of funds
Suite 130 Partner Partner Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 since 2003 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (64) Managing Managing President of CAC, llc., a 82 Trustee/Director/Managing
CAC, llc. General General private company offering General Partner of funds
4350 LaJolla Village Drive Partner Partner capital investment and in the Fund Complex.
Suite 980 since 1998 management advisory Director of Stericycle,
San Diego, CA 92122-6223 services. Prior to July Inc., Ventana Medical
2000, Managing Partner of Systems, Inc., GATX
Equity Group Corporate Corporation and Trustee
Investment (EGI), a of The Scripps Research
company that makes Institute. Prior to
private investments in January 2005, Director of
other companies. the University of Chicago
Hospitals and Health
Systems. Prior to April
2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Prior to May 2002,
Director of Peregrine
Systems Inc. Prior to
February 2001, Vice
Chairman and Director of
Anixter International,
Inc. and IMC Global Inc.
Prior to July 2000,
Director of Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero Mexico
(GAM).
B-8
NUMBER OF
FUNDS IN
FUND
TERM OF COMPLEX
OFFICE AND OVERSEEN
NAME, AGE AND ADDRESS POSITION(S) LENGTH OF BY MANAGING OTHER DIRECTORSHIPS
OF INDEPENDENT MANAGING HELD WITH TIME PRINCIPAL OCCUPATION(S) GENERAL HELD BY MANAGING
GENERAL PARTNER REGISTRANT SERVED DURING PAST 5 YEARS PARTNER GENERAL PARTNER
Linda Hutton Heagy (56) Managing Managing Managing Partner of 80 Trustee/Director/Managing
Heidrick & Struggles General General Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive Partner Partner executive search firm. in the Fund Complex.
Suite 7000 since 2003 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (52) Managing Managing Director and President of 80 Trustee/Director/Managing
1744 R Street, NW General General the German Marshall Fund General Partner of funds
Washington, D.C. 20009 Partner Partner of the United States, an in the Fund Complex.
since 2003 independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (69) Managing Managing Prior to 1998, President 82 Trustee/Director/Managing
736 North Western Avenue General General and Chief Executive General Partner of funds
P.O. Box 317 Partner Partner Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 since 1998 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
Jack E. Nelson (68) Managing Managing President of Nelson 80 Trustee/Director/Managing
423 Country Club Drive General General Investment Planning General Partner of funds
Winter Park, FL 32789 Partner Partner Services, Inc., a in the Fund Complex.
since 2003 financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the NASD,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
B-9
NUMBER OF
FUNDS IN
FUND
TERM OF COMPLEX
OFFICE AND OVERSEEN
NAME, AGE AND ADDRESS POSITION(S) LENGTH OF BY MANAGING OTHER DIRECTORSHIPS
OF INDEPENDENT MANAGING HELD WITH TIME PRINCIPAL OCCUPATION(S) GENERAL HELD BY MANAGING
GENERAL PARTNER REGISTRANT SERVED DURING PAST 5 YEARS PARTNER GENERAL PARTNER
Hugo F. Sonnenschein (64) Managing Managing President Emeritus and 82 Trustee/Director/Managing
1126 E. 59th Street General General Honorary Trustee of the General Partner of funds
Chicago, IL 60637 Partner Partner University of Chicago and in the Fund Complex.
since 1998 the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
Suzanne H. Woolsey, P.h.D. Managing Managing Previously Chief 80 Trustee/Director/Managing
(63) General General Communications Officer of General Partner of funds
815 Cumberstone Road Partner Partner the National Academy of in the Fund Complex.
Harwood, MD 20776 since 2003 Sciences/ National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction organization
institution, from 2001 to since January 2004 and
November 2003 and Chief Director of Neurogen
Operating Officer from Corporation, a
1993 to 2001. Director of pharmaceutical company,
the Institute for Defense since January 1998.
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, and
Trustee of Colorado
College. Prior to 1993,
Executive Director of the
Commission on Behavioral
and Social Sciences and
Education at the National
Academy of
Sciences/National
Research Council. From
1980 through 1989,
Partner of Coopers &
Lybrand.
B-10
INTERESTED MANAGING GENERAL PARTNERS:*
NUMBER OF
FUNDS IN
FUND
TERM OF COMPLEX
OFFICE AND OVERSEEN
NAME, AGE AND ADDRESS POSITION(S) LENGTH OF BY MANAGING OTHER DIRECTORSHIPS
OF INTERESTED MANAGING HELD WITH TIME PRINCIPAL OCCUPATION(S) GENERAL HELD BY MANAGING
GENERAL PARTNER REGISTRANT SERVED DURING PAST 5 YEARS PARTNER GENERAL PARTNER
Mitchell M. Merin* (51) Managing Managing President and Chief 80 Trustee/Director/Managing
1221 Avenue of the Americas General General Executive Officer of General Partner of funds
New York, NY 10020 Partner, Partner funds in the Fund in the Fund Complex.
President since Complex. Chairman,
and Chief 2003; President, Chief
Executive President Executive Officer and
Officer and Chief Director of the Adviser
Executive and Van Kampen Advisors
Officer Inc. since December 2002.
since 2002 Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
Richard F. Powers, III* (59) Managing Managing Advisory Director of 82 Trustee/Director/Managing
1221 Avenue of the Americas General General Morgan Stanley. Prior to General Partner of funds
New York, NY 10020 Partner Partner December 2002, Chairman, in the Fund Complex.
since 1999 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
B-11
NUMBER OF
FUNDS IN
FUND
TERM OF COMPLEX
OFFICE AND OVERSEEN
NAME, AGE AND ADDRESS POSITION(S) LENGTH OF BY MANAGING OTHER DIRECTORSHIPS
OF INTERESTED MANAGING HELD WITH TIME PRINCIPAL OCCUPATION(S) GENERAL HELD BY MANAGING
GENERAL PARTNER REGISTRANT SERVED DURING PAST 5 YEARS PARTNER GENERAL PARTNER
Wayne W. Whalen* (65) Managing Managing Partner in the law firm 82 Trustee/Director/Managing
333 West Wacker Drive General General of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Partner Partner Meagher & Flom LLP, legal in the Fund Complex.
since 1998 counsel to funds in the Director of Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
------------------------------------
* Such Managing General Partner is an "interested person" (within the meaning of
Section 2(a)(19) of the 1940 Act). Messrs. Merin and Powers are interested
persons of funds in the Fund Complex and the Adviser by reason of their
current or former positions with Morgan Stanley or its affiliates. Mr. Whalen
is an interested person of certain funds in the Fund Complex by reason of he
and his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
B-12
OFFICERS:
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER REGISTRANT SERVED DURING PAST 5 YEARS
Stefanie V. Chang (38) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Amy R. Doberman (42) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc.
and the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeitus Investment Management,
Inc. from January 1997 to July 2000.
James W. Garrett (36) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Treasurer since 2005 Chief Financial Officer and Treasurer of Morgan Stanley
New York, NY 10020 Institutional Funds since 2002 and of funds in the Fund
Complex since January 2005.
Joseph J. McAlinden (61) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and
Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Adviser and Van Kampen
Advisors Inc. since December 2002.
Ronald E. Robison (66) Executive Vice Officer Executive Vice President and Principal Executive Officer of
1221 Avenue of the Americas President and since 2003 funds in the Fund Complex. Chief Executive Officer and
New York, NY 10020 Principal Executive Chairman of Investor Services. Managing Director of Morgan
Officer Stanley. Managing Director and Director of Morgan Stanley
Investment Advisors Inc., Morgan Stanley Services Company
Inc. and Morgan Stanley Distributors Inc. Director of Morgan
Stanley Trust. Executive Vice President and Principal
Executive Officer of the Institutional and Retail Morgan
Stanley Funds; Director of Morgan Stanley SICAV; previously
Chief Global Operations Officer and Managing Director of
Morgan Stanley Investment Management Inc.
John L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1996 2004. Prior to August 2004, Director and Managing Director
Oakbrook Terrace, IL 60181 of Van Kampen Investments, the Adviser, Van Kampen Advisors
Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex. Head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
B-13
COMPENSATION TABLE
FUND COMPLEX
------------------------------------------------------------
AGGREGATE ESTIMATED TOTAL
AGGREGATE AGGREGATE PENSION OR MAXIMUM ANNUAL COMPENSATION
COMPENSATION RETIREMENT BENEFITS BENEFITS FROM THE BEFORE DEFERRAL
FROM THE ACCRUED AS FUND COMPLEX FROM THE
NAME(1) REGISTRANT(2) PART OF EXPENSES(3) UPON RETIREMENT(4) FUND COMPLEX(5)
------- ------------- -------------------- ------------------- ---------------
INDEPENDENT MANAGING GENERAL PARTNERS
David C. Arch........................ $1,399 $35,277 $147,500 $192,530
Jerry D. Choate...................... 1,787 82,527 120,000 200,002
Rod Dammeyer......................... 1,605 63,782 147,500 208,000
Linda Hutton Heagy................... 1,586 24,465 142,500 184,784
R. Craig Kennedy..................... 1,787 16,911 142,500 200,002
Howard J Kerr........................ 1,605 140,743 146,250 208,000
Jack E. Nelson....................... 1,787 97,294 109,500 200,002
Hugo F. Sonnenschein................. 1,605 64,476 147,500 208,000
Suzanne H. Woolsey................... 1,605 58,450 142,500 200,002
INTERESTED MANAGING GENERAL PARTNER
Wayne W. Whalen...................... 1,787 72,001 147,500 208,000
---------------
(1) Managing General Partners not eligible for compensation are not included in
the Compensation Table. J. Miles Branagan retired as a Managing General
Partner of the Registrant and certain other funds in the Fund Complex on
December 31, 2004.
(2) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Registrant's fiscal year ended December 31,
2004.
(3) Funds in the Fund Complex other than the Registrant have adopted retirement
plans for trustees who are not affiliated persons of the Adviser or Van
Kampen Investments. The amounts shown in this column represent the sum of
the retirement benefits accrued by the operating funds in the Fund Complex
for each of the Managing General Partners for the funds' respective fiscal
years ended in 2004.
(4) Funds in the Fund Complex other than the Registrant's have adopted
retirement plans for trustees who are not affiliated persons of the Adviser
or Van Kampen Investments. The amounts shown in this column represent the
sum of the estimated maximum annual benefits payable by the funds in the
Fund Complex for each year of the 10-year period commencing in the year of
such person's anticipated 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, 2004 before
deferral by the trustees under the deferred compensation plan. Because the
funds in the Fund Complex have different fiscal year ends, the amounts shown
in this column are presented on a calendar year basis.
BOARD COMMITTEES
The Board of Managing General Partners has three standing committees (an
audit committee, a brokerage and services committee and a governance committee).
Each committee is comprised solely of "Independent Managing General Partners",
which is defined for purposes herein as Managing General Partners who: (1) are
not "interested persons" of the Registrant as defined by the 1940 Act and (2)
are "independent" of the Registrant as defined by the New York Stock Exchange,
American Stock Exchange and Chicago Stock Exchange listing standards.
The Board's audit committee consists of Jerry D. Choate, Rod Dammeyer and
R. Craig Kennedy. In addition to being Managing General Partners as defined
above, each of these Managing General Partners also meets the additional
independence requirements for audit committee members as defined by the New York
Stock Exchange, American Stock Exchange and Chicago Stock Exchange listing
standards. The audit committee makes recommendations to the Board of Managing
General Partners concerning the selection of
B-14
the Registrant's independent registered public accounting firm, reviews with
such independent registered public accounting firm the scope and results of the
Registrant's annual audit and considers any comments which the independent
registered public accounting firm may have regarding the Registrant's financial
statements, books of account or internal controls. The Board of Managing General
Partners has adopted a formal written charter for the audit committee which sets
forth the audit committee's responsibilities. The audit committee has reviewed
and discussed the financial statements of the Registrant with management as well
as with the independent registered public accounting firm of the Registrant, and
discussed with the independent registered public accounting firm the matters
required to be discussed under the Statement of Auditing Standards No. 61. The
audit committee has received the written disclosures and the letter from the
independent registered public accounting firm required under Independence
Standards Board Standard No. 1 and has discussed with the independent registered
public accounting firm its independence. Based on this review, the audit
committee recommended to the Board of the fund that the fund's audited financial
statements be included in the fund's annual report to shareholders for the most
recent fiscal year for filing with the SEC.
The Board's brokerage and services committee consists of Linda Hutton
Heagy, Hugo F. Sonnenschein and Suzanne H. Woolsey. The brokerage and services
committee reviews the Fund's allocation of brokerage transactions and
soft-dollar practices and reviews the transfer agency and shareholder servicing
arrangements with Investor Services.
The Board's governance committee consists of David C. Arch, Howard J Kerr
and Jack E. Nelson. In addition to being Independent Managing General Partners
as defined above, each of these managing general partners also meets the
additional independence requirements for nominating committee members as defined
by the New York Stock Exchange, American Stock Exchange and Chicago Stock
Exchange listing standards. The governance committee identifies individuals
qualified to serve as Independent Managing General Partners on the Board and on
committees of the Board, advises the Board with respect to Board composition,
procedures and committees, develops and recommends to the Board a set of
corporate governance principles applicable to the Registrant, monitors corporate
governance matters and makes recommendations to the Board, and acts as the
administrative committee with respect to Board policies and procedures,
committee policies and procedures and codes of ethics. The Independent Managing
General Partners of the Registrant select and nominate any other nominee
Independent Managing General Partners for the Registrant. While the Independent
Managing General Partners of the Registrant expect to be able to continue to
identify from their own resources an ample number of qualified candidates for
the Board of Managing General Partners as they deem appropriate, they will
consider nominations from shareholders to the Board. Nominations from
shareholders should be in writing and sent to the Independent Managing General
Partners as described below.
During the Registrant's last fiscal year, the Board of Managing General
Partners held 14 meetings. During the Registrant's last fiscal year, the audit
committee of the Board held 6 meetings, the brokerage and services committee of
the Board held 3 meetings and the governance committee held 3 meetings of the
Board.
SHAREHOLDER COMMUNICATIONS
Shareholders may send communications to the Board of Managing General
Partners. Shareholders should send communications intended for the Board by
addressing the communication directly to the Board (or individual Board members)
and/or otherwise clearly indicating in the salutation that the communication is
for the Board (or individual Board members) and by sending the communication to
either the Registrant's office or directly to such Board member(s) at the
address specified for such trustee above. Other shareholder communications
received by the Registrant not directly addressed and sent to the Board will be
reviewed and generally responded to by management, and will be forwarded to the
Board only at management's discretion based on the matters contained therein.
B-15
2004 BENEFICIAL OWNERSHIP OF SECURITIES
INDEPENDENT MANAGING GENERAL PARTNERS
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- ------- -------- -------- -------- ------- ------- ------------ --------
Dollar range of equity securities in
the Registrant....................... $1- $1- $1- $1- $1- $1- $1- $1- $1-
$10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Aggregate dollar range of equity
securities in all registered
investment companies overseen by
Managing General Partner in the Fund
Complex.............................. $50,001- $1- over $50,001- over $1- $1- $10,001- $10,001-
$100,000 $10,000 $100,000 $100,000 $100,000 $10,000 $10,000 $50,000 $50,000
INTERESTED MANAGING GENERAL PARTNERS
MERIN POWERS WHALEN
-------- -------- --------
Dollar range of equity securities in the Registrant......... $1- $1- $1-
$10,000 $10,000 $10,000
Aggregate dollar range of equity securities in all
registered investment companies overseen by Managing
General Partner in the Fund Complex........................ over over over
$100,000 $100,000 $100,000
The Registrant, the Adviser and the Distributor have adopted a Code of
Ethics (the "Code of Ethics") that sets forth general and specific standards
relating to the securities trading activities of their employees. The Code of
Ethics does not prohibit employees from acquiring securities that may be
purchased or held by the Fund, but is intended to ensure that all employees
conduct their personal transactions in a manner that does not interfere with the
portfolio transactions of the Registrant or other Van Kampen funds, or that such
employees take unfair advantage of their relationship with the Registrant. Among
other things, the Code of Ethics prohibits certain types of transactions absent
prior approval, imposes various trading restrictions (such as time periods
during which personal transactions may or may not be made) and requires
quarterly reporting of securities transactions and other matters. All reportable
securities transactions and other required reports are to be reviewed by
appropriate personnel for compliance with the Code of Ethics. Additional
restrictions apply to portfolio managers, traders, research analysts and others
who may have access to nonpublic information about the trading activities of the
Registrant or other Van Kampen funds or who otherwise are involved in the
investment advisory process. Exceptions to these and other provisions of the
Code of Ethics may be granted in particular circumstances after review by
appropriate personnel.
For a discussion of the Board's approval of the Registrant's advisory
agreement see Item 14.
B-16
ITEM 13. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of April 1, 2005, no person was known by the Registrant to own
beneficially or to hold of record 5% or more of the outstanding shares of the
Registrant, except as follows:
APPROXIMATE
PERCENTAGE OF
OWNERSHIP ON
NAME AND ADDRESS OF HOLDER APRIL 1, 2005
-------------------------- -------------
Comerica Bank Detroit & Edward Mardigian, TR 24.7%
DTD 8/2/77 with Helen Mardigian
P.O. Box 75000
Detroit, MI 48275-0001
A. Fletcher Sisk Jr 5.6%
3009 Larkspur Run
Williamsburg, VA 23185-3766
Gordon E. Moore & Betty I. Moore 6.1%
TR FBO Gordon E. Moore & Betty I. Moore Trust
UADTD 10-9-73
100 Canada Rd.
Woodside, CA 94062-4104
Milards & Co. 6.2%
c/o SEI Trust Company
Attn: Mutual Fund Admin
One Freedom Valley Dr.
Oaks, PA 19456
On April 1, 2005, all Managing General Partners and officers as a group
owned less than 1% of the Registrant's outstanding voting securities.
ITEM 14. INVESTMENT ADVISORY AND OTHER SERVICES.
The Adviser and Van Kampen Investor Services Inc., the Registrant's
shareholder service agent, are wholly owned subsidiaries of Van Kampen
Investments, which is an indirect wholly owned subsidiary of Morgan Stanley. The
Adviser's principal office is located at 1221 Avenue of the Americas, New York,
New York 10020. Investor Services' principal office is located at 2800 Post Oak
Boulevard, Houston, Texas 77056.
The Registrant and the Adviser are parties to an investment advisory
agreement (the "Agreement"). Under the Agreement, the Registrant 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 Registrant at an annual rate of 0.30%. Prior to November 1, 2004, the
Registrant paid the Adviser a monthly fee computed based upon an annual rate of
0.50%. The Adviser received approximately $288,100, $294,100 and $347,200, in
advisory fees from the Registrant during the fiscal years ended December 31,
2004, 2003 and 2002, respectively.
The average net asset value is determined by taking the average of all of
the determinations of net asset value for each business day during a given
calendar month. Such fee is payable for each calendar month as soon as
practicable after the end of that month. The fee payable to the Adviser is
reduced by any commissions, tender solicitation and other fees, brokerage or
similar payments received by the Adviser or any other direct or indirect
majority owned subsidiary of Van Kampen Investments, in connection with the
purchase and sale of portfolio investments of the Registrant, less any direct
expenses incurred by such subsidiary of Van Kampen Investments in connection
with obtaining such payments. The Adviser agrees to use its best efforts to
recapture tender solicitation fees and exchange offer fees for the Registrant's
benefit, and to advise the Managing General Partners of the Registrant of any
other commissions, fees, brokerage or similar payments which may be possible
under applicable laws for the Adviser or any other direct or indirect majority
owned subsidiary of Van Kampen Investments to receive in connection with the
Registrant's portfolio transactions or other arrangements which may benefit the
Registrant.
B-17
The Agreement also provides that, in the event the ordinary business
expenses of the Registrant for any fiscal year exceed 1 1/2% of the first $30
million of the Registrant's average net assets, plus one percent of any excess
over $30 million, the compensation due the Adviser will be reduced by the amount
of such excess and that, if a reduction in and refund of the advisory fee is
insufficient, the Adviser will pay the Registrant monthly an amount sufficient
to make up the deficiency, subject to readjustment during the year. Ordinary
business expenses do not include (1) interest and taxes, (2) brokerage
commissions and (3) certain litigation and indemnification expenses as described
in the Agreement.
The Agreement may be continued from year to year if specifically approved
at least annually (a)(i) by the Registrant's Managing General Partners or (ii)
by vote of a majority of the Registrant's outstanding voting securities and (b)
by the affirmative vote of a majority of the Managing General Partners 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 Agreement provides that
it shall terminate automatically if assigned and that it may be terminated
without penalty by either party on 30 days written notice.
Under the Agreement, the Registrant retains the Adviser to manage the
investment of its assets and to place orders for the purchase and sale of its
portfolio securities. The Adviser is responsible for obtaining and evaluating
economic, statistical, and financial data and for formulating and implementing
investment programs in furtherance of the Registrant's investment objectives.
The Adviser also furnishes at no cost to the Registrant (except as noted herein)
the services of sufficient executive and clerical personnel for the Registrant
as are necessary to prepare registration statements, partner reports, and
notices and proxy solicitation materials. In addition, the Adviser furnishes at
no cost to the Registrant the services of a Chief Executive Officer and other
executive and clerical personnel, as needed.
Under the Agreement, the Registrant bears the cost of its accounting
services, which includes maintaining its financial books and records and
calculating its daily net asset value. The costs of such accounting services
include the salaries and overhead expenses of the Registrant's Principal
Financial and Accounting Officer and the personnel operating under his
direction. For the fiscal years ended December 31, 2004, 2003 and 2002, the
Registrant paid approximately $9,000, $9,500 and $11,300, respectively, for such
services. A portion of these amounts were paid to the Adviser in reimbursement
of personnel, facilities and equipment costs attributable to the provision of
accounting services to the Registrant. The services provided by the Adviser are
at cost which is allocated among the investment companies advised or sub-advised
by the Adviser. The Registrant also pays transfer agency fees, custodian fees,
legal and auditing fees, the costs of reports to partners and all other ordinary
expenses not specifically assumed by the Adviser.
In approving the Agreement, the Board of Managing General Partners,
including the non-interested Managing General Partners, considered the nature,
quality and scope of the services provided by the Adviser, the performance, fees
and expenses of the Registrant compared to other similar investment companies,
the Adviser's expenses in providing the services and the profitability of the
Adviser and its affiliated companies. The Board of Managing General Partners
reviewed the Registrant's portfolio of investments and the limited trading of
the Registrant's portfolio. The Board of Managing General Partners also reviewed
the benefit to the Adviser of receiving third party research paid for by the
Registrant assets and the propriety of such an arrangement and evaluated other
benefits the Adviser derives from its relationship with the Registrant. The
Board of Managing General Partners considered the extent to which any economies
of scale experienced by the Adviser are shared with the Registrant's
shareholders. The Board of Managing General Partners considered comparative
advisory fees of the Registrant and other investment companies at different
asset levels, and considered the trends in the industry versus historical and
projected redemptions of the Registrant. The Board of Managing General Partners
reviewed reports from third parties about the foregoing factors and considered
changes, if any, in such items since its previous approval. The Board of
Managing General Partners discussed the financial strength of the Adviser and
its affiliated companies and the capability of the personnel of the Adviser. The
Board of Managing General Partners reviewed the statutory and regulatory
requirements for approval of advisory agreements. The Board of Managing General
Partners, including the non-interested Managing General Partners, evaluated all
of the foregoing and determined, in the exercise of its business judgment, that
approval of the Agreement was in the best interests of the Registrant and its
shareholders.
B-18
The Adviser, certain affiliates of the Adviser, certain investment
companies advised by the Adviser or its affiliates, including the Fund, and
certain trustees are named as defendants in a number of recently filed, similar
class action complaints. These complaints generally allege that defendants,
including the Fund, violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaints seek, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. The defendants
intend to move to dismiss these actions and otherwise vigorously to defend them.
While the defendants believe that they have meritorious defenses, the ultimate
outcome of these matters is not presently determinable at this early stage of
the litigation.
The custodian of all the assets of the Registrant is State Street Bank and
Trust Company located at 225 West Franklin Street, Boston, Massachusetts 02110.
Independent auditors for the Registrant perform an annual audit of the
Registrant's financial statements. Deloitte & Touche LLP, located at Two
Prudential Plaza, 180 North Stetson Avenue, Chicago Illinois, 60601 serves as
independent auditors for the Fund.
Investor Services, PO Box 947, Jersey City, New Jersey 07303-0947, a wholly
owned subsidiary of Van Kampen Investments, serves as the shareholder service
agent for the Registrant. The transfer agency fees are determined through
negotiations with the Registrant's Board of Managing General Partners and are
based on competitive market benchmarks.
Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to the
Registrant.
ITEM 15. PORTFOLIO MANAGEMENT.
FUND MANAGEMENT
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of December 31, 2004, Ms. Luby managed 11 mutual funds with a total of
$10 billion in assets; 0 pooled investment vehicles other than mutual funds; and
0 other accounts.
Because the portfolio managers manage assets for other investment
companies, pooled investment vehicles, and/or other accounts (including
institutional clients, pension plans and certain high net worth individuals),
there may be an incentive to favor one client over another resulting in
conflicts of interest. For instance, the Adviser may receive fees from certain
accounts that are higher than the fee it receives from the Fund, or it may
receive a performance-based fee on certain accounts. In those instances, the
portfolio managers may have an incentive to favor the higher and/or
performance-based fee accounts over the Fund. The portfolio managers of the Fund
do not currently manage assets for other investment companies, pooled investment
vehicles or other accounts that charge a performance fee. The Adviser has
adopted trade allocation and other policies and procedures that it believes are
reasonably designed to address these and other conflicts of interest.
PORTFOLIO MANAGER COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and
discretionary compensation, comprised of a cash bonus and several deferred
compensation programs described below. The methodology used to determine
portfolio manager compensation is applied across all accounts managed by the
portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base
salary compensation based on the level of their position with the Adviser.
B-19
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio
managers may receive discretionary compensation.
Discretionary compensation can include:
- Cash Bonus;
- Morgan Stanley's Equity Incentive Compensation Program (EICP) awards--a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards based on Morgan
Stanley common stock that are subject to vesting and other conditions;
- Investment Management Deferred Compensation Plan (IMDCP) awards--a
mandatory program that defers a portion of discretionary year-end
compensation and notionally invests it in designated funds advised by the
Adviser or its affiliates. The award is subject to vesting and other
conditions. Portfolio Managers must notionally invest a minimum of 25% to
a maximum of 50% of the IMDCP deferral into a combination of the
designated funds they manage that are included in the IMDCP fund menu,
which may or may not include the Fund;
- Select Employees' Capital Accumulation Program (SECAP) awards--a
voluntary program that permits employees to elect to defer a portion of
their discretionary compensation and notionally invest the deferred
amount across a range of designated investment funds, including funds
advised by the Adviser or its affiliates; and
- Voluntary Equity Incentive Compensation Program (VEICP) awards--a
voluntary program that permits employees to elect to defer a portion of
their discretionary compensation to invest in Morgan Stanley stock units.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
- Investment performance. A portfolio manager's compensation is linked to
the pre-tax investment performance of the accounts managed by the
portfolio manager. Investment performance is calculated for one-, three-
and five-year periods measured against a fund's primary benchmark (as set
forth in the fund's prospectus), indices and/or peer groups. Generally,
the greatest weight is placed on the three-and five-year periods.
- Revenues generated by the investment companies, pooled investment
vehicles and other accounts managed by the portfolio manager.
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- Market compensation survey research by independent third parties.
- Other qualitative factors, such as contributions to client objectives.
- Performance of Morgan Stanley and Morgan Stanley Investment Management,
and the overall performance of the Global Investor Group, a department
within Morgan Stanley Investment Management that includes all investment
professionals.
Occasionally, to attract new hires or to retain key employees, the total
amount of compensation will be guaranteed in advance of the fiscal year end
based on current market levels. In limited circumstances, the guarantee may
continue for more than one year. The guaranteed compensation is based on the
same factors as those comprising overall compensation described above.
B-20
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of December 31, 2004, the dollar range of securities beneficially owned
(either directly or notionally, through certain defined contribution and/or
deferred compensation program) by Ms. Luby is shown below:
Ms. Luby -- None.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Adviser is responsible for decisions to buy and sell securities for the
Registrant, the selection of brokers and dealers to affect transactions and the
negotiation of prices and any commissions on such transactions. While the
Adviser will be primarily responsible for the placement of the Registrant's
portfolio business, the policies and practices in this regard are subject to
review by the Managing General Partners of the Registrant. The Adviser is
responsible for placing portfolio transactions and does so in a manner deemed
fair and reasonable to the Registrant and not according to any formula. The
primary consideration in all portfolio transactions is prompt execution of
orders in an effective manner at the most favorable price. In selecting
broker-dealers and in negotiating prices and any brokerage commissions on such
transactions, the Adviser considers the firm's reliability, integrity and
financial condition and the firm's execution capability, the size and breadth of
the market for the security, the size of and difficulty in executing the order,
and the best net price. There are many instances when, in the judgment of the
Adviser, more than one firm can offer comparable execution services. In
selecting among such firms, consideration may be given to those firms which
supply research and other services in addition to execution services. The
Adviser is authorized to pay higher commissions to brokerage firms that provide
it with investment and research information than to firms which do not provide
such services if the Adviser determines that such commissions are reasonable in
relation to the overall services provided. No specific value can be assigned to
such research services which are furnished without cost to the Adviser. Since
statistical and other research information is only supplementary to the research
efforts of the Adviser to the Registrant and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to reduce its
expenses materially. The investment advisory fee is not reduced as a result of
the Adviser's receipt of such research services. Services provided may include
(a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; (b) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody). Research services furnished by firms through
which the Registrant effects its securities transactions may be used by the
Adviser in servicing all of its advisory accounts; not all of such services may
be used by the Adviser in connection with the Fund.
The Adviser also may place portfolio transactions, to the extent permitted
by law, with brokerage firms affiliated with the Registrant or the Adviser if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. Similarly, to the
extent permitted by law and subject to the same considerations on quality of
execution and comparable commission rates, the Adviser may direct an executing
broker to pay a portion or all of any commissions, concessions or discounts to a
firm supplying research or other services.
The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for the Registrant 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 Registrant. In making such
allocations among the Registrant and other advisory accounts, the main factors
considered by the Adviser are the respective sizes of the Registrant and other
advisory accounts, 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
Registrant paid no brokerage commissions during the fiscal years ended December
31, 2004, 2003 and 2002, respectively.
B-21
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
See Items 5 and 6.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SHARES.
No shares are being offered to the public. The redemption price per share
is equivalent to the net asset value per share as more fully described in Item
6.
ITEM 19. TAXATION OF THE FUND.
See Item 6.
ITEM 20. UNDERWRITERS.
Not Applicable.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not Applicable.
ITEM 22. FINANCIAL STATEMENTS.
FINANCIAL STATEMENTS
The audited financial statements of the Registrant are incorporated herein
by reference to the Annual Report to shareholders for the Registrant dated
December 31, 2004. The Annual Report may be obtained by following the
instructions on the cover of this Statement of Additional Information. The
Annual Report is included as part of the Registrant's filing on Form N-CSR as
filed with the SEC on February 28, 2005. The Annual Report and may be reviewed
and copied at the SEC's Public Reference Room in Washington, DC or on the EDGAR
database on the SEC's internet site (http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room may be obtained by calling the SEC
at (202) 942-8090. You can also request copies of these materials, upon payment
of a duplicating fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the SEC,
Washington, DC 20549-0102.
B-22
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Restated and Amended Certificate and Agreement of Limited
Partnership(20)
(1) Amendment to Certificate of Limited Partnership, on Form
LP-1(16)
(2) Amendment to Certificate of Limited Partnership, on Form
LP-2(17)
(3) Amendment to Certificate of Limited Partnership, on Form
LP-2(19)
(4) Amendment to Certificate of Limited Partnership, on Form
LP-2(20)
(b) Bylaws(20)
(c) Copy of Specimen Certificate(20)
(d)(1) Investment Advisory Agreement(19)
(d)(2) Amendment Number One to the Investment Advisory Agreement+
(e) Not Applicable
(f) Not Applicable
(g)(1)(a) Custodian Contract(*)
(b) Amendment to Custodian Contract(23)
(2) Transfer Agency and Service Agreement(19)
(h) Not Applicable
(i) Not Applicable
(j) Consent of Deloitte & Touche+
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p)(1) Code of Ethics of the Investment Adviser and Distributor(24)
(2) Code of Ethics of the Fund(22)
---------------
(16) Incorporated herein by reference to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 26, 1995.
(17) Incorporated herein by reference to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 29, 1996.
(*) Incorporated herein by reference to Post-Effective Amendment No. 75 to Van
Kampen American Capital Growth and Income Fund's Registration Statement on
Form N-1A, File Number 2-21657, filed March 27, 1998.
(19) Incorporated herein by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 27, 1998.
(20) Incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 23, 1999.
(22) Incorporated herein by reference to Post-Effective Amendment No. 22 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 27, 2001.
(23) Incorporated herein by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 25, 2002.
(24) Incorporated herein by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 23, 2004.
+ Filed herewith.
C-1
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
Article XIII, Section 13.4 of the Registrant's Restated and Amended
Certificate and Agreement of Limited Partnership provides as follows:
"The Partnership shall indemnify each General Partner (including officers
and or directors of a corporate General Partner and including former General
Partners who have not ceased to be liable as General Partners under the
Partnership Act) against judgments, fines, amounts paid in settlement, and
expenses (including attorneys' fees) reasonably incurred by him in any civil,
criminal or investigative proceeding in which he is involved or threatened to be
involved by reason of his being a General Partner of the Partnership, provided
that he acted in good faith, within what he reasonably believed to be the scope
of his authority, and for a purpose which he reasonably believed to be within
the scope of his authority, and for a purpose which he reasonably believed to be
in the best interests of the Partnership or the Limited Partners. To the extent
that a General Partner has been successful on the merits or otherwise in defense
of any such proceeding or in defense of any claim or matter therein, he shall be
deemed to have acted in good faith and in a manner he believed to be in the best
interests of the Partnership or the Limited Partners. The determination under
any other circumstances as to whether a General Partner acted in good faith,
within what he reasonably believed to be the scope of his authority, and for a
purpose which he reasonably believed to be in the best interests of the
Partnership or the Limited Partners, shall be made by action of the General
Partners who were not parties to such proceedings, or by independent legal
counsel selected by the General Partners (who may be the regular counsel for the
Partnership) in a written opinion. No General Partner shall be indemnified under
this provision against any liability to the Partnership or its Partners to which
he 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
office. The indemnification provided hereunder shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any applicable
statute, agreement, vote of the General Partners or Limited Partners, or
otherwise."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management, Organization and Capital Structure" in Part A and
"Management of the Fund" 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 27. PRINCIPAL UNDERWRITERS
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents of the Registrant required by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder to be maintained (i) by the Registrant will be maintained at its
offices, located at Van Kampen Investments Inc., 1 Parkview Plaza, Oakbrook
Terrace, Illinois 60181-5555, Van Kampen Investor Services Inc., Harborside
Financial Center, Plaza 2, Jersey City, New Jersey 07303-0947, or at the State
Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts
02171; and (ii) by the Adviser, will be maintained at its offices, located at 1
Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
C-2
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Van Kampen Exchange 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 New York, and the State of New York, on the 2nd
day of May, 2005.
VAN KAMPEN EXCHANGE FUND
By /s/ STEFANIE CHANG YU
------------------------------------------
Stefanie Chang Yu
Secretary and Vice President
C-3
VAN KAMPEN EXCHANGE FUND
INDEX TO EXHIBITS TO AMENDMENT NO. 27, FORM N-1A
EXHIBIT DESCRIPTION OF
NO. EXHIBIT
------- --------------
(d)(2) Amendment Number One to the Investment Advisory Agreement
(j) Consent of Deloitte & Touche LLP
EX-99.(D)(2)
2
c91050a1exv99wxdyx2y.txt
AMENDMENT NUMBER ONE TO INVESTMENT ADVISORY AGREEMENT
EXHIBIT (d)(2)
AMENDMENT NUMBER ONE
TO THE
INVESTMENT ADVISORY AGREEMENT
This Amendment Number One, dated November 1, 2004, to the Investment Advisory
Agreement dated October 31, 1996 (the "Agreement") by and between Van Kampen
Exchange Fund, (the "Fund"), a California Limited Partnership, and Van Kampen
Asset Management (the "Adviser," successor in interest of Van Kampen Asset
Management, Inc.), a Delaware statutory trust, hereby amends the terms and
conditions of the Agreement in the manner specified herein.
W I T N E S S E T H
WHEREAS, the Board of Managing General Partners of the Fund at a meeting held on
September 23, 2004 has approved a reduction in the investment advisory fee
payable by the Fund to the Adviser; and
WHEREAS, the parties desire to amend and restate Section 3 of the Agreement
relating to the investment advisory fee.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements hereinafter contained, the parties hereby agree to amend the
Agreement, as follows:
Section 3 of the Agreement is hereby deleted in its entirety and replaced with
the following:
3. Compensation Payable to the Adviser.
The Fund shall pay to the Adviser, as compensation for the services
rendered, facilities furnished and expenses paid by the Adviser, a monthly fee
computed at the annual rate of 0.30% of the Fund's average net assets. The
Adviser hereby agrees that it shall look for payment of such compensation solely
to the Fund's assets and not to any personal assets of any partner of the Fund.
Such average net assets shall be determined by taking the average of all of
the determinations of net asset value, made in the manner provided in the Fund's
Certificate and Agreement of Limited Partnership, for each business day during a
given calendar month. Such fee shall be payable for each calendar month as soon
as practicable after the end of that month.
The fees payable to the Adviser by the Fund pursuant to this Section 3
shall be reduced by any commissions, tender solicitation and other fees,
brokerage or similar payments received by the Adviser, or any other direct or
indirect majority owned subsidiary of Van Kampen Investments Inc. or its
successor, in connection with the purchase and sale of portfolio investments of
the Fund, less any direct expenses incurred by such person, in
connection with obtaining such commissions, fees, brokerage or similar payments.
The Adviser shall use its best efforts to recapture all available tender offer
solicitation fees and exchange offer fees in connection with the Fund's
portfolio transactions and shall advise the Managing General Partners 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 Van
Kampen Investments Inc. or its successor, to receive in connection with Fund's
portfolio transactions or other arrangements which may benefit the Fund.
In the event that the ordinary business expenses of the Fund for any fiscal
year should exceed 1 1/2% of the first $30 million of the Fund's average daily
net assets determined in the manner described in Section 3, plus 1% of any
excess over $30 million of such average daily net assets so taken, the
compensation due the Adviser for such fiscal year shall be reduced by the amount
of such excess. The Adviser's compensation shall be so reduced by a reduction or
a refund thereof, at the time such compensation is payable after the end of each
calendar month during such fiscal year of the Fund, and if such amount should
exceed such monthly compensation, the Adviser shall pay the Fund an amount
sufficient to make up the deficiency, subject to readjustment during the Fund's
fiscal year. For purposes of this paragraph, all ordinary business expenses of
the Fund shall exclude expenses incurred by the Fund (i) for interest and taxes;
(ii) brokerage commissions; (iii) as a result of litigation in connection with a
suit involving a claim for recovery by the Fund; (iv) as a result of litigation
involving a defense against a liability asserted against the Fund, provided
that, if the Adviser made the decision or took the actions which resulted in
such claim, it acted in good faith without negligence or misconduct; (v) any
indemnification paid by the Fund to its officers and Managing General Partners
and the Adviser in accordance with applicable state and federal laws as a result
of such litigation.
If the Adviser shall serve for less than the whole of any month, the
foregoing compensation shall be prorated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first above written.
VAN KAMPEN EXCHANGE FUND VAN KAMPEN ASSET MANAGEMENT
By: /s/ Ronald E. Robinson By: /s/ Edward C. Wood, III
---------------------- -----------------------
Ronald E. Robinson Edward C. Wood, III
Executive Vice President Managing Director
and Principal Executive Officer
EX-99.(J)
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CONSENT OF DELOITTE & TOUCHE LLP
EXHIBIT (j)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Amendment No. 26 to
Registration Statement No. 811-2611 filed under the Investment Company Act of
1940 for the Van Kampen Exchange Fund, a California limited partnership, on Form
N-1A of our report dated February 11, 2005 and to the reference to us under the
heading "Investment Advisory and Other Services", both in the Statement of
Additional Information, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Chicago, Illinois
April 27, 2005
COVER
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May 2, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Van Kampen Exchange Fund
Amendment No. 27
to the Registration Statement on Form
N-1A (File No. 811-2611)
Ladies and Gentlemen:
Van Kampen Exchange Fund (the "Registrant") hereby files via EDGAR one
electronically signed copy of Amendment No. 27 to the Registration Statement on
Form N-1A (the "Registration Statement"), complete with exhibits filed therewith
(the "Exhibits"). The Registration Statement and Exhibits thereto are filed
pursuant to Rule 8b-16 of the General Rules and Regulations (the "1940 Act
Rules") of the Securities and Exchange Commission (the "Commission") promulgated
under the Investment Company Act of 1940, as amended.
Should the staff have any questions regarding the foregoing, please call
me at (312) 407-0863 or Elisa Mitchell at (630) 684-6724.
Very truly yours,
/s/ Charles B. Taylor
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Charles B. Taylor