SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Revised Materials
[ ] Soliciting Material Pursuant to Section 140.14a-12
VAN KAMPEN BOND FUND
(Names of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
-- MAY 2007 --
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IMPORTANT NOTICE
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TO VAN KAMPEN
BOND FUND SHAREHOLDERS
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QUESTIONS & ANSWERS
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Although we recommend that you read the complete Proxy Statement, we have
provided for your convenience a brief overview of the issues to be voted on.
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Q WHY IS A SHAREHOLDER
MEETING BEING HELD?
A The purposes of the
meeting of shareholders of Van Kampen Bond Fund (the "Fund") are to elect
nominees to the Board of Trustees and to seek the approval of shareholders to
replace a fundamental policy of the Fund with a non-fundamental policy.
Q WHAT PROPOSAL WILL BE
VOTED ON?
A You are being asked to
(i) elect nominees for the Board of Trustees of the Fund and (ii) vote on a
proposal to replace the Fund's fundamental policy regarding the Fund's ability
to invest in securities or obligations of foreign issuers with a non-
fundamental policy.
Q WILL MY VOTE MAKE
A DIFFERENCE?
A Yes, your vote is important
and will make a difference no matter how many shares you own. We encourage all
shareholders to participate in the governance of their Fund.
Q HOW DOES THE BOARD OF
TRUSTEES RECOMMEND THAT I VOTE?
A After careful consideration,
the Board of Trustees recommends that you vote "FOR ALL" of the nominees and
"FOR" the proposal replacing one of the Fund's fundamental policies with a
non-fundamental policy on the enclosed proxy card.
Q HOW DO I VOTE MY PROXY?
A You may cast your vote by
mail, phone or internet. To vote by mail, please mark your vote on the enclosed
proxy card and sign, date and return the card in the postage-paid envelope
provided. If you choose to vote via phone or internet, please refer to the
instructions found on the proxy card accompanying this Proxy Statement. To vote
by phone or internet, you will need the "control number" that appears on the
proxy card.
Q WHERE DO I CALL FOR
MORE INFORMATION?
A Please call Van Kampen's
Client Relations Department at 1-800-341-2929 or visit our website at
www.vankampen.com, where you can send us an e-mail message by selecting "Contact
Us."
ABOUT THE PROXY CARD
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Please vote on each issue using blue or black ink to mark an X in one of the
boxes provided on the proxy card.
ELECTION OF TRUSTEES - mark "FOR ALL," "WITHHOLD" or "FOR ALL EXCEPT."
To withhold authority to vote for any one or more individual nominee(s), check
"FOR ALL EXCEPT" and write the nominee's name in the line below.
APPROVAL OF REPLACING THE FUND'S FUNDAMENTAL POLICY REGARDING INVESTMENT IN
SECURITIES OR OBLIGATIONS OF FOREIGN ISSUERS WITH A NON-FUNDAMENTAL POLICY
-- mark "For," "Against" or "Abstain."
Sign, date and return the proxy card in the enclosed postage-paid envelope. All
registered owners of an account, as shown in the address, must sign the card.
When signing as attorney, trustee, executor, administrator, custodian, guardian
or corporate officer, please indicate your full title.
[ ] PLEASE MARK
X VOTES AS IN
THIS EXAMPLE
VAN KAMPEN BOND FUND
ANNUAL MEETING OF SHAREHOLDERS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
FOR ALL
FOR ALL WITHHOLD EXCEPT
1. Authority to vote [ ] [ ] [ ] 3. To transact such other business as may
for the election as properly come before the Meeting.
Class X Trustees
the nominees named
below:
XXXXXXXXX, XXXXXXXXX, XXXXXXXXX
To withhold authority to vote for any one or more
individual nominee check "For All Except" and write
the
nominee's name on the line below.
----------------------------------
2. Authority to replace the Fund's fundamental policy FOR AGAINST ABSTAIN
regarding the Fund's ability to invest in securities [ ] [ ] [ ]
or obligations of foreign issuers with a
non-fundamental policy.
Please be sure to sign and date this Proxy, Date
Shareholder sign here Co-owner sign here
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
SAMPLE
VAN KAMPEN BOND FUND
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 22, 2007
Notice is hereby given to the holders of common shares of beneficial interest
("Common Shares") of the Van Kampen Bond Fund (the "Fund") that an Annual
Meeting of Shareholders of the Fund (the "Meeting") will be held at the offices
of Van Kampen Investments Inc., 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555, on Friday, June 22, 2007 at 10:00 a.m., for the following purposes:
1. To elect three Class III trustees by the holders of Common
Shares of the Fund. The elected Class III trustees will each
serve for a three year term or until a successor shall have
been duly elected and qualified.
2. To approve replacing the Fund's fundamental policy regarding
investment in securities or obligations of foreign issuers
with a non-fundamental policy.
3. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Holders of record of the Common Shares of the Fund at the close of business on
April 27, 2007 are entitled to notice of and to vote at the Meeting and any
adjournment thereof.
By order of the Board of Trustees
STEFANIE V. CHANG,
Vice President
May 8, 2007
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
AND SEMI-ANNUAL REPORT TO ANY SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD
BE DIRECTED TO THE FUND BY CALLING 1-800-341-2929 OR BY WRITING TO THE FUND AT 1
PARKVIEW PLAZA, PO BOX 5555, OAKBROOK TERRACE, ILLINOIS 60181-5555.
SHAREHOLDERS OF THE FUND ARE INVITED TO ATTEND THE MEETING IN PERSON. IF YOU
DO NOT EXPECT TO ATTEND THE MEETING, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY CARD, DATE AND SIGN SUCH PROXY CARD, AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE
IF MAILED
IN THE UNITED STATES. YOU MAY ALSO RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE
OR VIA THE INTERNET.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY PROMPTLY OR RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR
VIA THE INTERNET.
The Board of Trustees of the Fund recommends that you cast your vote:
- FOR ALL of the nominees for the Board of Trustees listed in the Proxy
Statement.
- FOR approval of replacing the Fund's fundamental policy regarding investment
in securities or obligations of foreign issuers with a non-fundamental
policy.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
PROXY STATEMENT
VAN KAMPEN BOND FUND
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
ANNUAL MEETING OF SHAREHOLDERS
JUNE 22, 2007
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INTRODUCTION
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This Proxy Statement is furnished in connection with the solicitation by the
Board of Trustees (the "Trustees" or the "Board") of the Van Kampen Bond Fund
(the "Fund") of proxies to be voted at the Annual Meeting of Shareholders of the
Fund, and all adjournments thereof (the "Meeting"), to be held at the offices of
Van Kampen Investments Inc., 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555, on Friday, June 22, 2007, at 10:00 a.m. The approximate mailing date
of this Proxy Statement and accompanying form of proxy is May 8, 2007.
The purposes of the Meeting are:
1. To elect three Class III trustees by the holders of common shares of
beneficial interest (the "Common Shares") of the Fund. The elected Class III
trustees will each serve for a three year term or until a successor shall have
been duly elected and qualified.
2. To approve replacing the Fund's fundamental policy regarding investment in
securities or obligations of foreign issuers with a non-fundamental policy.
3. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
Participating in the Meeting are holders of Common Shares of the Fund. The
Board has fixed the close of business on April 27, 2007 as the record date (the
"Record Date") for the determination of holders of Common Shares of the Fund
entitled to vote at the Meeting. At the close of business on April 27, 2007,
there were issued and outstanding [ ] Common Shares of the Fund.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
AND SEMI-ANNUAL REPORT TO ANY SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD
BE DIRECTED TO THE FUND BY CALLING 1-800-341-2929 OR BY WRITING TO THE FUND AT 1
PARKVIEW PLAZA, PO BOX 5555, OAKBROOK TERRACE, ILLINOIS 60181-5555.
VOTING
Holders of Common Shares of the Fund ("Common Shareholders") on the Record
Date are entitled to one vote per Common Share with respect to any proposal
submitted to the Common Shareholders of the Fund, with no Common Share having
cumulative voting rights. The voting requirement for passage of a particular
proposal depends on the nature of the proposal.
With respect to Proposal 1, the affirmative vote of a plurality of the Common
Shares of the Fund present at the Meeting in person or by proxy is required to
elect each nominee for Trustee of the Fund. Election by plurality means those
persons who receive the highest number of votes cast "FOR" up to the total
number of persons to be elected as Trustees at the Meeting shall be elected.
With respect to Proposal 2, the affirmative vote of a majority of the Fund's
Common Shares (defined as the lesser of (i) 67% or more of the voting securities
present at the Meeting of shareholders, if holders of more than 50% of the
outstanding voting securities are present at the Meeting, or (ii) more than 50%
of the outstanding voting securities).
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT YOU CAST YOUR VOTE FOR ALL
OF THE NOMINEES FOR THE BOARD OF TRUSTEES LISTED IN THE PROXY STATEMENT.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon. Proxies received
prior to the Meeting on which no vote is indicated will be voted "FOR" each
proposal as to which they are entitled to be voted. Abstentions and broker
non-votes (i.e., where a nominee such as a broker, holding shares for beneficial
owners, indicates that instructions have not been received from the beneficial
owners, and the nominee does not exercise discretionary authority) are not
treated as votes "FOR" a proposal. With respect to Proposal 1 (the election of
Trustees), abstentions and broker non-votes are disregarded since only votes
"For" are considered in a plurality voting requirement. With respect to Proposal
2 (replacement of a fundamental policy of the Fund with a non-fundamental
policy), shareholder approval requires approval by a majority of the Fund's
Common Shares (defined as the lesser of (i) 67% or more of the voting securities
present at the Meeting of shareholders, if holders of more than 50% of the
outstanding voting securities are present at such Meeting, or (ii) more than 50%
of the outstanding voting securities); thus abstentions and broker non-votes
will not be treated as votes "For" the proposal and will have the same effect as
votes "Against" the proposal. A majority of the outstanding Common Shares of the
Fund entitled to vote must be present in person or by proxy to have a quorum for
the Fund to conduct business at the Meeting. Abstentions and broker non-votes
will be deemed present for quorum purposes.
2
Common Shareholders who execute proxies may revoke them at any time before
they are voted by filing with the Fund a written notice of revocation, by
delivering a duly executed proxy bearing a later date, by recording later-dated
voting instructions via the internet or automated telephone or by attending the
Meeting and voting in person.
The Fund knows of no business other than the election of Trustees and the
replacement of a fundamental policy of the Fund with a non-fundamental policy
that will be presented for consideration at the Meeting. If any other matters
are properly presented, it is the intention of the persons named on the enclosed
proxy to vote proxies in accordance with their best judgment. In the event a
quorum is present at the Meeting but sufficient votes to approve any of the
proposals are not received, proxies (including abstentions and broker non-votes)
would be voted in favor of one or more adjournments of the Meeting to permit
further solicitation of proxies, provided they determine that such an
adjournment and additional solicitation is reasonable and in the interest of
shareholders based on a consideration of all relevant factors, including the
nature of the relevant proposal, the percentage of votes then cast, the
percentage of negative votes then cast, the nature of the proposed solicitation
activities and the nature of the reasons for such further solicitation.
INVESTMENT ADVISER
The investment adviser for the Fund is Van Kampen Asset Management (the
"Adviser"). 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 million retail investor
accounts, has extensive capabilities for managing institutional portfolios and
has more than $117 billion under management or supervision as of February 28,
2007. 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 principal
business address of the Adviser and Van Kampen Investments is 1221 Avenue of the
Americas, New York, New York 10020.
OTHER SERVICE PROVIDERS
The Fund has entered into an accounting services agreement with the Adviser.
The Fund has entered into an employment agreement with John Sullivan and Morgan
Stanley pursuant to which Mr. Sullivan, an employee of Morgan Stanley, serves as
Chief Compliance Officer of the Fund and other Van Kampen funds. The principal
business address of Mr. Sullivan is 1 Parkview Plaza, Oakbrook Terrace, IL
60181. The principal business address of Morgan Stanley is 1221 Avenue of the
Americas, New York, New York 10020.
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3
PROPOSAL 1: ELECTION OF TRUSTEES
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Trustees are to be elected by the shareholders at the Meeting in the following
manner. Three Class III Trustees are to be elected at the Meeting, to serve
until the later of the Fund's Annual Meeting of Shareholders in 2010 or until
their successors have been duly elected and qualified. Holders of Common Shares
will vote with respect to three Class III Trustees (R. Craig Kennedy, Jack E.
Nelson and Hugo F. Sonnenschein) designated to be elected by such class of
shares. An affirmative vote of a plurality of the Common Shares of the Fund is
required to elect the respective nominees. It is the intention of the persons
named in the enclosed proxy to vote the Common Shares represented by them for
the election of the nominees listed unless the proxy is marked otherwise.
As in the past, only one class of Trustees is being submitted to shareholders
of the Fund for election at the Meeting. The Declaration of Trust of the Fund
provides that the Board of Trustees shall consist of Trustees divided into three
classes, the classes to be as nearly equal in number as possible. The Trustees
of only one class are elected at each annual meeting so that the regular term of
only one class of Trustees will expire annually and any particular Trustee
stands for election only once in each three-year period. This type of
classification may prevent replacement of a majority of Trustees of the Fund for
up to a two-year period. The foregoing is subject to the provisions of the
Investment Company Act of 1940, as amended (the "1940 Act"), applicable state
law based on the state of organization of the Fund, the Fund's Declaration of
Trust and the Fund's Bylaws.
4
INFORMATION REGARDING TRUSTEES AND NOMINEES FOR ELECTION AS TRUSTEE
The business and affairs of the Fund are managed under the direction of the
Board of Trustees. The tables below list the incumbent Trustees and nominees for
Trustee, their principal occupations during the last five years, other
directorships held by them and their affiliations, if any, with the Adviser or
its affiliates. The term "Fund Complex" includes each of the investment
companies advised by the Adviser as of the Record Date. Trustees of the Fund
generally serve three year terms or until their successors are duly elected and
qualified. All nominees have consented to being named in this Proxy Statement
and have agreed to serve if elected.
INDEPENDENT TRUSTEES:
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
David C. Arch(1) (61) Trustee Trustee of Chairman and Chief Executive Officer 73
Blistex Inc. the Fund of Blistex Inc., a consumer health
1800 Swift Drive since 1997 care products manufacturer. Director
Oak Brook, IL 60523 of the Heartland Alliance, a
nonprofit organization serving human
needs based in Chicago. Former
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(1) (68) Trustee Trustee of Prior to January 1999, Chairman and 73
33971 Selva Road the Fund Chief Executive Officer of the
Suite 130 since 2003 Allstate Corporation ("Allstate") and
Dana Point, CA 92629 Allstate Insurance Company. Prior to
January 1995, President and Chief
Executive Officer of Allstate. Prior
to August 1994, various management
positions at Allstate.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
David C. Arch(1) (61) Trustee/Director/Managing
Blistex Inc. General Partner of funds in
1800 Swift Drive the Fund Complex.
Oak Brook, IL 60523
Jerry D. Choate(1) (68) Trustee/Director/Managing
33971 Selva Road General Partner of funds in
Suite 130 the Fund Complex. Director
Dana Point, CA 92629 of H&R Block, Director of
Amgen Inc., a
biotechnological company,
and Director of Valero
Energy Corporation, an
independent refining
company.
5
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
Rod Dammeyer(2) (66) Trustee Trustee of President of CAC, L.L.C., a private 73
CAC, L.L.C. the Fund company offering capital investment
4350 LaJolla Village Drive since 1997 and management advisory services.
Suite 980 Prior to February 2001, Vice Chairman
San Diego, CA 92122-6223 and Director of Anixter
International, Inc., a global
distributor of wire, cable and
communications connectivity products.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
Rod Dammeyer(2) (66) Trustee/Director/Managing
CAC, L.L.C. General Partner of funds in
4350 LaJolla Village Drive the Fund Complex. Director
Suite 980 of Quidel Corporation,
San Diego, CA 92122-6223 Stericycle, Inc., Ventana
Medical Systems, Inc., and
GATX Corporation, and
Trustee of The Scripps
Research Institute. Prior to
January 2005, Trustee of 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, Director
of IMC Global Inc.
6
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
Linda Hutton Heagy(2) (58) Trustee Trustee of Managing Partner of Heidrick & 73
Heidrick & Struggles the Fund Struggles, an executive search firm.
233 South Wacker Drive since 2003 Trustee on the University of Chicago
Suite 7000 Hospitals Board, Vice Chair of the
Chicago, IL 60606 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 1990, Executive Vice President of
The Exchange National Bank.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy(2) (58) Trustee/Director/Managing
Heidrick & Struggles General Partner of funds in
233 South Wacker Drive the Fund Complex.
Suite 7000
Chicago, IL 60606
7
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
R. Craig Kennedy(3) (55) Trustee Trustee of Director and President of the German 73
1744 R Street, N.W. the Fund Marshall Fund of the United States,
Washington, D.C. 20009 since 2003 an 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(1) (71) Trustee Trustee of Prior to 1998, President and Chief 73
14 Huron Trace the Fund Executive Officer of Pocklington
Galena, IL 61036 since 1997 Corporation, Inc., an investment
holding company. Director of the
Marrow Foundation.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy(3) (55) Trustee/Director/Managing
1744 R Street, N.W. General Partner of funds in
Washington, D.C. 20009 the Fund Complex.
Howard J Kerr(1) (71) Trustee/Director/Managing
14 Huron Trace General Partner of funds in
Galena, IL 61036 the Fund Complex. Director
of the Lake Forest Bank &
Trust.
8
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
Jack E. Nelson(3) (71) Trustee Trustee of President of Nelson Investment 73
423 Country Club Drive the Fund Planning Services, Inc., a financial
Winter Park, FL 32789 since 2003 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.
Hugo F. Sonnenschein(3) (66) Trustee Trustee of President Emeritus and Honorary 73
1126 E. 59th Street the Fund Trustee of the University of Chicago
Chicago, IL 60637 since 1997 and the Adam Smith Distinguished
Service 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. Prior to 2006,
Director of Winston Laboratories,
Inc.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
Jack E. Nelson(3) (71) Trustee/Director/Managing
423 Country Club Drive General Partner of funds in
Winter Park, FL 32789 the Fund Complex.
Hugo F. Sonnenschein(3) (66) Trustee/Director/Managing
1126 E. 59th Street General Partner of funds in
Chicago, IL 60637 the Fund Complex.
9
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
Suzanne H. Woolsey, Ph.D.(1) Trustee Trustee of Chief Communications Officer of the 73
(65) the Fund National Academy of Sciences/National
815 Cumberstone Road since 2003 Research Council, an independent,
Harwood, MD 20776 federally chartered policy
institution, from 2001 to November
2003 and Chief Operating Officer from
1993 to 2001. Director of the
Institute for Defense Analyses, a
federally funded research and
development center, Director of the
German Marshall Fund of the United
States, Director of the Rocky
Mountain Institute and Trustee of
California Institute of Technology
and 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. Director of
Neurogen Corporation, a
pharmaceutical company, from January
1998 until June 2006.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D.(1) Trustee/Director/Managing
(65) General Partner of funds in
815 Cumberstone Road the Fund Complex. Director
Harwood, MD 20776 of Fluor Corp., an
engineering, procurement and
construction organization,
since January 2004. Director
of Intelligent Medical
Devices, a company that
develops symptom-based
diagnostic tools for
physicians and clinical
labs.
10
INTERESTED TRUSTEE:
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN
OF TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE
Wayne W. Whalen*(2) (67) Trustee Trustee of Partner in the law firm of Skadden, Arps, Slate, Meagher & 73
333 West Wacker Drive the Fund Flom LLP, legal counsel to certain funds in the Fund
Chicago, IL 60606 since 1997 Complex.
NAME, AGE AND ADDRESS OTHER DIRECTORSHIPS
OF TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen*(2) (67) Trustee/Director/
333 West Wacker Drive Managing General
Chicago, IL 60606 Partner of funds in
the Fund Complex.
Director of the
Abraham Lincoln
Presidential Library
Foundation.
---------------
(1) Designated as a Class I trustee.
(2) Designated as a Class II trustee.
(3) Designated as a Class III trustee.
* Mr. Whalen is an interested person of 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.
11
REMUNERATION OF TRUSTEES
The compensation of Trustees and executive officers that are affiliated
persons (as defined in 1940 Act) of the Adviser or Van Kampen Investments is
paid by the respective affiliated entity. The funds in the Fund Complex,
including the Fund, pay the non-affiliated Trustees an annual retainer and
meeting fees for services to funds in the Fund Complex.
Each fund in the Fund Complex (except the Van Kampen Exchange Fund) provides a
deferred compensation plan to its non-affiliated Trustees that allows such
Trustees to defer receipt of compensation and earn a return on such deferred
amounts based upon the return of the common shares of the funds in the Fund
Complex as selected by the respective non-affiliated Trustees. Each fund in the
Fund Complex (except the Van Kampen Exchange Fund) also provides a retirement
plan to its non-affiliated Trustees that provides non-affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.
Each non-affiliated Trustee generally can elect to defer receipt of all or a
portion of the compensation earned by such non-affiliated Trustee until
retirement. Amounts deferred are retained by the respective fund and earn a rate
of return determined by reference to the return on the common shares of such
fund or other funds in the Fund Complex as selected by the respective
non-affiliated Trustee, with the same economic effect as if such non-affiliated
Trustee had invested in one or more funds in the Fund Complex, including the
Fund. To the extent permitted by the 1940 Act, the Fund may invest in securities
of those funds selected by the non-affiliated Trustees in order to match the
deferred compensation obligation. The deferred compensation plan is not funded
and obligations thereunder represent general unsecured claims against the
general assets of the Fund.
The Fund has adopted a retirement plan. Under the retirement plan, a
non-affiliated Trustee who is receiving Trustee's compensation from the Fund
prior to such non-affiliated Trustee's retirement, has at least 10 years of
service (including years of service prior to adoption of the retirement plan)
for the Fund and retires at or after attaining the age of 60, is eligible to
receive a retirement benefit each year for ten years following such Trustee's
retirement from the Fund. Non-affiliated Trustees retiring prior to the age of
60 or with fewer than 10 years but more than 5 years of service may receive
reduced retirement benefits from the Fund. Each Trustee has served as a member
of the Fund's Board of Trustees since the year of such Trustee's appointment or
election as set forth in the "Information Regarding Trustees and Nominees for
Election as Trustee" section of this Proxy Statement.
12
Additional information regarding compensation and benefits for Trustees is set
forth below. As indicated in the notes accompanying the table, the amounts
relate to either the Fund's most recently completed fiscal year ended June 30,
2006 or the Fund Complex's most recently completed calendar year ended December
31, 2006.
Additional information regarding compensation and benefits for trustees of the
Fund is set forth below for the periods described in the notes accompanying the
table.
COMPENSATION TABLE
Fund Complex
-----------------------------------------------------
Aggregate Aggregate
Pension or Estimated Total
Retirement Maximum Annual Compensation
Aggregate Benefits Benefits from the before Deferral
Compensation Accrued as Part Fund Complex from Fund
from the of Expenses Upon Retirement Complex
Name Fund(1) (2) (3) (4)
---- ------------ --------------- ----------------- ---------------
INDEPENDENT TRUSTEES
David C. Arch $3,174 $ 35,373 $105,000 $259,418
Jerry D. Choate 3,764 80,600 105,000 254,394
Rod Dammeyer 3,174 64,051 105,000 259,418
Linda Hutton Heagy 3,764 25,769 105,000 254,394
R. Craig Kennedy 3,764 18,372 105,000 254,394
Howard J Kerr 3,174 140,735 143,750 259,418
Jack E. Nelson 3,477 92,953 105,000 238,523
Hugo F. Sonnenschein 3,174 64,671 105,000 259,418
Suzanne H. Woolsey 3,764 57,060 105,000 254,394
INTERESTED TRUSTEE
Wayne W. Whalen 3,174 67,997 105,000 259,418
(1) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Fund's fiscal year ended June 30, 2006. The
following trustees deferred compensation from the Fund during the fiscal
year ended June 30, 2006: Mr. Choate, $3,764; Mr. Dammeyer, $3,174; Ms.
Heagy, $3,764; Mr. Nelson, $3,477; Mr. Sonnenschein, $3,174; and Mr. Whalen,
$3,174. The cumulative deferred compensation (including interest) accrued
with respect to each trustee, including former trustees, from the Fund as of
Fund's fiscal year ended June 30, 2006 is as follows: Mr. Choate, $11,717;
Mr. Dammeyer, $26,892; Ms. Heagy, $11,731; Mr. Kennedy, $1,455; Mr. Kerr,
$3,036; Mr. Nelson, $11,815; Mr. Sonnenschein, $30,411; and Mr. Whalen,
$32,701. The deferred compensation plan is described above the Compensation
Table.
13
(2) 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
trustees for the funds' respective fiscal years ended in 2006. The
retirement plan is described above the Compensation Table.
(3) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex as of the date of this Statement of
Additional Information for each year of the 10-year period commencing in the
year of such trustee's anticipated retirement. The retirement plan is
described above the Compensation Table.
(4) The amounts shown in this column represent the aggregate compensation paid
by all of the funds in the Fund Complex as of December 31, 2006 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 AND MEETINGS
The Fund's Board of Trustees has three standing committees (an audit
committee, a brokerage and services committee and a governance committee). Each
committee is comprised solely of "Independent Trustees", which is defined for
purposes herein as trustees who: (1) are not "interested persons" of the Fund as
defined by the 1940 Act and (2) are "independent" of the Fund as defined by the
New York Stock Exchange, American Stock Exchange and Chicago Stock Exchange
listing standards.
The Board's audit committee consists of Messrs. Choate, Dammeyer and Kennedy.
In addition to being Independent Trustees as defined above, each of these
Trustees 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 Trustees concerning the selection of the Fund's
independent registered public accounting firm, reviews with such independent
registered public accounting firm the scope and results of the Fund's annual
audit and considers any comments which the independent registered public
accounting firm may have regarding the Fund's financial statements, accounting
records or internal controls. The Board of Trustees 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 Fund with management as well as with the independent
registered public accounting firm of the Fund, 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 Standard Board
Standard No. 1 and has discussed with the independent
14
auditors their independence. Based on this review, the audit committee
recommended to the Board of Trustees 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 Securities and Exchange
Commission ("SEC"). Each member of the Fund's audit committee is deemed an audit
committee financial expert.
In accordance with proxy rules promulgated by the SEC, a fund's audit
committee charter is required to be filed at least once every three years as an
exhibit to a fund's proxy statement. The audit committee charter for the Fund is
attached as Annex A hereto.
The Board's brokerage and services committee consists of Mesdames Heagy and
Woolsey and Mr. Sonnenschein. 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.
The Board's governance committee consists of Messrs. Arch, Kerr and Nelson. In
addition to being Independent Trustees as defined above, each of these Trustees
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 Trustees 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 Fund, 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 Trustees
of the Fund select and nominate any other nominee Independent Trustees for the
Fund. While the Independent Trustees of the Fund expect to be able to continue
to identify from their own resources an ample number of qualified candidates for
the Board of Trustees 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 Trustees as described below.
In accordance with proxy rules promulgated by the SEC, a fund's nominating
committee charter is required to be filed at least once every three years as an
exhibit to a fund's proxy statement. The governance committee charter for the
Fund which includes the Fund's nominating policies, is attached as Annex B
hereto.
During the fiscal year ended June 30, 2006, the Board of Trustees of the Fund
held ten meetings. During the Fund's last fiscal year, the audit committee of
the Fund held four meetings, the brokerage and services committee of the Board
of the Fund held four meetings and the governance committee of the Board held
15
two meetings. During the last fiscal year, each of the Trustees of the Fund
during the period such Trustee served as a Trustee attended at least 75% of the
meetings of the Fund's Board of Trustees and all committee meetings thereof of
which such Trustee was a member.
SHAREHOLDER COMMUNICATIONS
Shareholders may send communications to the Fund's Board of Trustees.
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 Fund's office or directly to such Board member(s) at the address specified
for such Trustee above. Other shareholder communications received by the Fund
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.
SHAREHOLDER APPROVAL
With respect to Proposal 1, the affirmative vote of a plurality of the Common
Shares of the Fund present at the Meeting in person or by proxy is required to
elect each nominee for Trustee of the Fund. Election by plurality means those
persons who receive the highest number of votes cast "FOR" up to the total
number of persons to be elected as Trustees at the Meeting shall be elected.
There is no cumulative voting with respect to the election of Trustees.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR ALL" OF THE NOMINEES.
------------------------------------------------------------------------------
PROPOSAL 2: REPLACE A FUNDAMENTAL POLICY OF THE FUND WITH A NON-FUNDAMENTAL
POLICY
------------------------------------------------------------------------------
The Fund's investment objective is to seek interest income while conserving
capital. The Fund seeks to achieve this objective through investing in a
diversified portfolio consisting primarily of high-quality debt securities
rated, at the time of purchase by the Fund, in one of the four highest rating
categories by certain nationally recognized rating agencies. It is the Fund's
policy, which may not be changed without shareholder approval, to have at least
80% of its total assets invested in (i) debt securities rated, at the time of
purchase by the Fund, in one of the four highest categories by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") or Fitch
Investors Service, Inc. ("Fitch"); (ii) securities of, or guaranteed by, the
U.S. Government or any agency of the U.S. Government; (iii) commercial paper
rated "prime"; or (iv) cash and
16
cash equivalents. The Fund is not proposing any changes to the investment
objective or primary investment strategy as set forth in the preceding
sentences.
The Fund also operates under other policies, some of which are operating
policies that may be changed by the Fund's Board of Trustees without shareholder
approval and some of which are "fundamental" policies that may only be changed
with shareholder approval. The Fund seeks to eliminate a fundamental policy and
replace it with a non-fundamental policy to allow the Fund to invest up to 20%
of the Fund's total assets in both U.S. dollar denominated and non-U.S. dollar
denominated securities or obligations of foreign issuers. Changes in fundamental
policies require the approval of the holders of a majority of the Fund's
outstanding Common Shares (defined as the lesser of (i) 67% or more of the
voting securities present at a meeting of shareholders, if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy at such meeting, or (ii) more than 50% of the outstanding voting
securities).
OVERVIEW
The Fund seeks to invest up to 20% of the Fund's total assets in both U.S.
dollar denominated and non-U.S. dollar denominated securities or obligations of
foreign issuers to benefit the Fund's Common Shareholders. The Adviser believes
that the ability to invest in foreign securities (denominated in both U.S.
dollars and non-U.S. dollars), which may include emerging market securities,
will allow the Fund to better achieve its investment objective. Under the Fund's
current policy, the Fund is currently authorized to invest in an amount not to
exceed 10% of the total assets of the Fund at the time of purchase, in
securities or obligations of foreign issuers so long as the principal and
interest on such securities are payable in U.S. currency and such securities are
rated by a U.S. rating agency as A or better. The Fund seeks to replace this
policy with a non-fundamental policy that allows the Fund to invest up to 20% of
the Fund's net assets in both U.S. dollar denominated and non-U.S. dollar
denominated securities or obligations of foreign issuers. In addition, it is
proposed that the more restrictive quality limitation for foreign investments be
eliminated. As mentioned above, the Fund is not changing its primary investment
strategy (of investing primarily in high-quality debt securities); thus,
applying the proposed change, the Fund will continue to invest at least 80% of
its total assets (domestic or foreign) in the categories described above. If
approved, the Adviser may also engage in foreign currency hedges and cross
hedges as described below.
The remainder of this section provides: (1) the details on the Fund's current
fundamental policy regarding investment in securities or obligations of foreign
issuers and the new proposed non-fundamental policy; (2) a summary of the
recommendation for this proposal and the Board's conclusion that the proposal is
in the best interests of the Fund's Common Shareholders; and (3) a discussion of
the risks of investing in securities or obligations of foreign issuers.
17
THE FUND'S POLICY REGARDING INVESTING IN SECURITIES FOREIGN ISSUERS -- CURRENT
AND PROPOSED
The Fund currently has a fundamental policy that provides that the Fund:
may invest in an amount not to exceed 10% of the total assets of the
Fund at the time of purchase, in securities or obligations of foreign
issuers so long as the principal and interest on such securities are
payable in U.S. currency and such securities are rated by a U.S. rating
agency as A or better.
The Board of Trustees proposes replacing the above described fundamental
policy with a non-fundamental policy that allows the Fund to invest up to 20% of
the Fund's total assets in both U.S. dollar denominated and non-U.S. dollar
denominated securities or obligations of foreign issuers. Since the Adviser
proposes to invest in securities of foreign issuers that are denominated in
non-U.S. dollars, if approved, the Fund may use forward contracts to hedge the
currency risk associated with such investments back to the U.S. dollar. In
addition to such direct hedging using forward contracts, the Fund may also enter
into "cross hedges."
The Adviser believes that the ability to invest in securities of foreign
issuers (denominated in both U.S. dollars and non-U.S. dollars), which may
include securities of emerging market issuers, will allow the Fund to better
achieve its investment objective.
ACTION AND RECOMMENDATION OF THE BOARD OF TRUSTEES
Representatives of the Adviser made presentations to the Fund's Board of
Trustees proposing the replacement of the Fund's fundamental policy regarding
the ability to invest in securities of foreign issuers with a non-fundamental
policy. The Adviser believes the increased ability of the Fund to invest in
securities and obligations issued by foreign issuers will allow the Fund to
better achieve its investment objective with limited additional risks. The
Adviser noted that the Fund's competitors in its peer group invest, or are
permitted to invest, in securities of foreign issuers to a greater extent than
the Fund's current fundamental investment restriction allows. The Board of
Trustees considered information prepared by the Adviser regarding potential
benefits, costs and risks of replacing the fundamental policy with the
non-fundamental policy. Among the potential benefits discussed were (i) allowing
the Fund to better achieve its investment objective, (ii) the ability for the
Fund to expand its portfolio while maintaining its principal investment strategy
and (iii) the ability to invest to a greater extent in a type of issuer in which
the Fund's competitors in its peer groups invest. The Adviser and the Board of
Trustees discussed the Fund's current fundamental investment restriction on
investing in securities of foreign issuers.
18
After careful consideration, the Board of Trustees determined that the
approval of this proposal and the ability of the Fund to invest up to 20% of its
total assets in securities of foreign issuers (both U.S. dollar denominated and
non-U.S. dollar denominated) are in the best interests of the Fund's Common
Shareholders.
RISKS OF INVESTING IN SECURITIES OF FOREIGN ISSUERS
This section describes the risks of investing in securities of foreign
issuers. Note that the Fund already is subject to many of these risks as the
Fund may already invest up to 10% of its assets in U.S. dollar-denominated
securities of foreign issuers. The proposal sought is to, among other things,
increase the percentage allowed to 20% and to allow both U.S. dollar-denominated
and non-U.S. dollar-denominated securities.
Securities of foreign issuers may be denominated in U.S. dollars or in
currencies other than U.S. dollars. Investments in securities of foreign issuers
present certain risks not ordinarily associated with investments in securities
of U.S. issuers. These risks include fluctuations in foreign currency exchange
rates, political, economic or legal developments (including war or other
instability, expropriation of assets, nationalization and confiscatory
taxation), the imposition of foreign exchange limitations (including currency
blockage), withholding taxes on income or capital transactions or other
restrictions, higher transaction costs (including higher brokerage, custodial
and settlement costs and currency conversion costs) and possible difficulty in
enforcing contractual obligations or taking judicial action. Securities of
foreign issuers may not be as liquid and may be more volatile than comparable
securities of domestic issuers.
In addition, there often is less publicly available information about many
foreign issuers, and issuers of foreign securities are subject to different,
often less comprehensive, auditing, accounting and financial reporting
disclosure requirements than domestic issuers. There is generally less
government regulation of exchanges, brokers and listed companies abroad than in
the United States and, with respect to certain foreign countries, there is a
possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of foreign exchanges,
brokers and dealers than there is in the United States, the Fund may experience
settlement difficulties or delays not usually encountered in the United States.
Delays in making trades in securities of foreign issuers relating to volume
constraints, limitations or restrictions, clearance or settlement procedures, or
otherwise could impact yields and result in temporary periods when assets of the
Fund are not fully invested or attractive investment opportunities are foregone.
19
The Fund may invest in securities of issuers determined by the investment
adviser to be in developing or emerging market countries. Investments in
securities of issuers in developing or emerging market countries are subject to
greater risks than investments in securities of developed countries since
emerging market countries tend to have economic structures that are less diverse
and mature and political systems that are less stable than developed countries.
In addition to the increased risks of investing in securities of foreign
issuers, there are often increased transaction costs associated with investing
in securities of foreign issuers, including the costs incurred in connection
with converting currencies, higher foreign brokerage or dealer costs and higher
settlement costs or custodial costs.
The Fund may invest in securities of foreign issuers in the form of depositary
receipts. Depositary receipts involve substantially identical risks to those
associated with direct investment in securities of foreign issuers. In addition,
the underlying issuers of certain depositary receipts, particularly unsponsored
or unregistered depositary receipts, are under no obligation to distribute
shareholder communications to the holders of such receipts, or to pass through
to them any voting rights with respect to the deposited securities.
Since the Fund may invest in securities denominated or quoted in currencies
other than the U.S. dollar, the Fund may be affected by changes in foreign
currency exchange rates (and exchange control regulations) which affect the
value of investments in the Fund and the accrued income and appreciation or
depreciation of the investments. Changes in foreign currency exchange rates
relative to the U.S. dollar will affect the U.S. dollar value of the Fund's
assets denominated in that currency and the Fund's return on such assets as well
as any temporary uninvested reserves in bank deposits in foreign currencies. In
addition, the Fund will incur costs in connection with conversions between
various currencies.
The Fund may purchase and sell foreign currency on a spot (i.e., cash) basis
in connection with the settlement of transactions in securities traded in such
foreign currency. The Fund also may enter into contracts with banks, brokers or
dealers to purchase or sell securities or foreign currencies at a future date
("forward contracts"). A foreign currency forward contract is a negotiated
agreement between the contracting parties to exchange a specified amount of
currency at a specified future time at a specified rate. The rate can be higher
or lower than the spot rate between the currencies that are the subject of the
contract.
The Fund may attempt to protect against adverse changes in the value of the
U.S. dollar in relation to a foreign currency by entering into a forward
contract for the purchase or sale of the amount of foreign currency invested or
to be invested, or by buying or selling a foreign currency option or futures
contract for such amount. Such strategies may be employed before the Fund
purchases a foreign security traded in the currency which the Fund anticipates
acquiring or between the date the
20
foreign security is purchased or sold and the date on which payment therefor is
made or received. Seeking to protect against a change in the value of a foreign
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such transactions reduce or preclude the opportunity for
gain if the value of the currency should move in the direction opposite to the
position taken. Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such contracts.
The use of currency transactions can result in the Fund incurring losses
because of the imposition of exchange controls, suspension of settlements or the
inability of the Fund to deliver or receive a specified currency. In addition,
amounts paid as premiums and cash or other assets held in margin accounts with
respect to such transactions are not otherwise available to the Fund for
investment purposes.
When conducted outside the United States, such transactions may not be
regulated as rigorously as in the United States, may not involve a clearing
mechanism and related guarantees, and are subject to the risk of governmental
actions affecting trading in, or the prices of, foreign securities, currencies
and other instruments. The value of such positions also could be adversely
affected by: (i) other complex foreign political, legal and economic factors,
(ii) lesser availability than in the United States of data on which to make
trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States and (v) lower
trading volume and liquidity.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSAL TO
REPLACE THE FUNDAMENTAL POLICY REGARDING THE FUND'S ABILITY TO INVEST IN
SECURITIES OR OBLIGATIONS OF FOREIGN ISSUERS WITH A NON-FUNDAMENTAL POLICY.
21
--------------------------------------------------------------------------------
OTHER INFORMATION
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS OF THE FUND
The following information relates to the executive officers of the Fund. Each
officer also serves in the same capacity for all or a number of the other
investment companies advised by the Adviser or affiliates of the Adviser. The
officers of the Fund are appointed annually by the Trustees and serve for one
year or until their respective successors are chosen and qualified. The Fund's
officers receive no compensation from the Fund but may also be officers of the
Adviser or officers of affiliates of the Adviser and receive compensation in
such capacities.
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
1221 Avenue of the Americas Principal since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10020 Executive Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and 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 of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
22
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Dennis Shea (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
1221 Avenue of the Americas since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10020 and Van Kampen Advisors Inc. Chief Investment
Officer -- Global Equity of the same entities since February
2006. Vice President of Morgan Stanley Institutional and
Retail Funds since February 2006. Vice President of funds in
the Fund Complex since March 2006. Previously, Managing
Director and Director of Global Equity Research at Morgan
Stanley from April 2000 to February 2006.
J. David Germany (52) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment
London, GRB E14 4AD Officer -- Global Fixed Income of the same entities since
December 2005. Managing Director and Director of Morgan
Stanley Investment Management Ltd. Director of Morgan
Stanley Investment Management (ACD) Limited since December
2003. Vice President of Morgan Stanley Institutional and
Retail Funds since February 2006. Vice President of funds in
the Fund Complex since March 2006.
Amy R. Doberman (45) 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 since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (40) Vice President and Officer Executive Director of Morgan Stanley Investment Management
1221 Avenue of the Americas Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10020 Complex.
23
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
John L. Sullivan (51) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1989 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director 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 and 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.
James W. Garrett (38) Chief Financial Officer Managing Director of Morgan Stanley Investment Management,
Harborside Financial Center Officer and since 2006 Inc. since December 2006; Chief Financial Officer and
Jersey City, NJ 07311 Treasurer Treasurer of Morgan Stanley Institutional Funds since 2002
and of funds in the Fund Complex from January 2005 to August
2005 and since September 2006. Previously, Executive
Director of Morgan Stanley Investment Management Inc. from
2002 to December 2006.
24
SHAREHOLDER INFORMATION
As of April 13, 2007, to the knowledge of the Fund, no shareholder owned
beneficially more than 5% of the outstanding Common Shares of the Fund.
The table below indicates the number of Common Shares of the Fund owned
beneficially by each trustee and executive officer that owns shares of the Fund,
as of April 13, 2007, and the percentage of such Trustee's Common Shares to the
total Common Shares outstanding for the Fund.
COMMON SHARES OWNED
AS A PERCENTAGE OF
COMMON COMMON SHARES
INDEPENDENT TRUSTEES SHARES OWNED OUTSTANDING
-------------------- ------------ -------------------
Kennedy....................................... 50 <1%
INTERESTED TRUSTEE
Whalen........................................ 506 <1%
Excluding any deferred compensation balances as described in the Compensation
Table, as of December 31, 2006, the most recently completed calendar year prior
to the date of this Proxy Statement, each trustee of the Fund beneficially owned
equity securities of the Fund and of all of the funds in the Fund Complex
overseen by the trustee in the dollar range amounts specified below.
2006 TRUSTEE BENEFICIAL OWNERSHIP OF SECURITIES
INDEPENDENT TRUSTEES
TRUSTEE
-----------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- ------- -------- -------- -------- ------- ------- ------------ --------
Dollar range of equity
securities in the
Fund................. none none none none $1- none none none none
$10,000
Aggregate dollar range
of equity securities
in all registered
investment companies
overseen by trustee
in the Fund
Complex.............. over $10,001- over $50,001- over $1- $1- $50,001- over
$100,000 $50,000 $100,000 $100,000 $100,000 $10,000 $10,000 $100,000 $100,000
INTERESTED TRUSTEE
TRUSTEE
--------
WHALEN
--------
Dollar range of equity securities in the Fund............... $1-
$10,000
Aggregate dollar range of equity securities in all
registered investment companies overseen by trustee in the
Fund Complex.............................................. over
$100,000
25
Including deferred compensation balances (which are amounts deferred and thus
retained by the Fund as described in the Compensation Table), as of December 31,
2006, the most recently completed calendar year prior to the date of this Proxy
Statement, each trustee of the Fund had in the aggregate, combining beneficially
owned equity securities and deferred compensation of the Fund and of all of the
funds in the Fund Complex overseen by the trustee, the dollar range of amounts
specified below.
2006 TRUSTEE BENEFICIAL OWNERSHIP AND
DEFERRED COMPENSATION
INDEPENDENT TRUSTEES
TRUSTEE
--------------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- -------- -------- -------- -------- -------- -------- ------------ --------
Dollar range of
equity securities
and deferred
compensation in the
Fund................ none over over none $1- none none none none
$100,000 $100,000 $10,000
Aggregate dollar
range of equity
securities and
deferred
compensation in all
registered
investment companies
overseen by trustee
in Fund Complex..... over over over over over over over over over
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
INTERESTED TRUSTEE
TRUSTEE
--------
WHALEN
--------
Dollar range of equity
securities and deferred
compensation in the Fund....... $1-
$10,000
Aggregate dollar range of equity
securities and deferred
compensation in all registered
investment companies overseen
by trustee in the Fund
Complex........................ over
$100,000
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934, as amended, require the Fund's Trustees, officers, investment adviser,
affiliated persons of the investment adviser and persons who own more than 10%
of a registered class of the Fund's equity securities to file forms with the SEC
and the New York Stock Exchange or American Stock Exchange, as applicable,
reporting their affiliation with the Fund and reports of ownership and changes
in ownership of Fund Common Shares. These persons and entities are required by
SEC regulation to furnish the Fund with copies of all such forms they file.
Based on a review of
26
these forms furnished to the Fund, the Fund believes that during its last fiscal
year, its Trustees, officers, Adviser and affiliated persons of the Adviser
complied with the applicable filing requirements.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees of the Fund, including a majority of the Trustees who
are not "interested persons" of the Fund (as defined by the 1940 Act), has
selected Deloitte & Touche LLP ("D&T") as the independent auditors to examine
the financial statements for the current fiscal year of the Fund. The selection
of D&T for the current fiscal year was recommended and approved by the Fund's
audit committee and approved by the Fund's Board. The Fund knows of no direct or
indirect financial interest of D&T in the Fund.
AUDIT AND OTHER FEES
The Fund and certain "covered entities" were billed the following amounts by
D&T during the Fund's most recent two fiscal years.
FISCAL YEAR ENDED JUNE 30, 2006
NON-AUDIT FEES
---------------------------------------
AUDIT AUDIT- ALL TOTAL
ENTITY FEES RELATED TAX OTHER NON-AUDIT TOTAL
------ -------- -------- ------ ----- --------- --------
Fund.................. $ 31,800 $ 0 $1,600(3) $0 $ 1,600 $ 33,400
Covered Entities(1)... N/A $244,200(2) $ 0 $0 $244,200 $244,200
FISCAL YEAR ENDED JUNE 30, 2005
NON-AUDIT FEES
---------------------------------------
AUDIT AUDIT- ALL TOTAL
ENTITY FEES RELATED TAX OTHER NON-AUDIT TOTAL
------ ------- -------- ------ ----- --------- --------
Fund................... $30,855 $ 0 $1,600(3) $0 $1,600 $ 32,455
Covered Entities(1).... N/A $321,000(2) $ 0 $0 $ 0 $321,000
---------------
(1) Covered Entities include the Adviser (excluding sub-advisors) and any entity
controlling, controlled by or under common control with the Adviser that
provides ongoing services to the Fund.
(2) Audit-Related Fees represent assurance and related services provided that
are reasonably related to the performance of the audit of the financial
statements of the Covered Entities and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a
SAS 70 Report.
(3) Tax Fees represent tax advice and compliance services provided in connection
with the review of the Fund's tax return.
N/A -- Not Applicable.
27
The audit committee of the Board has considered whether the provision of non-
audit services performed by D&T to the Fund and "covered entities" is compatible
with maintaining D&T's independence in performing audit services. The audit
committee also is required to pre-approve services to "covered entities" to the
extent that the services are determined to have a direct impact on the
operations or financial reporting of the Fund and 100% of such services were
pre-approved by the audit committee pursuant to the audit committee's
pre-approval policies and procedures. The Board's pre-approval policies and
procedures are included as part of the Board's audit committee charter, which is
filed as Annex A hereto.
Representatives of D&T will attend the Meeting, will have the opportunity to
make a statement if they desire to do so and will be available to answer
appropriate questions.
EXPENSES
The expenses of preparing, printing and mailing the enclosed form of proxy,
the accompanying Notice and this Proxy Statement and all other costs, in
connection with the solicitation of proxies will be borne by the Fund. The Fund
will also reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. In order to obtain the necessary quorum at the Meeting, additional
solicitation may be made by mail, telephone, telegraph, facsimile or personal
interview by representatives of the Fund, the Adviser or Van Kampen Investments,
by the transfer agents of the Fund, by dealers or their representatives or by
Computershare Fund Services, a solicitation firm that may be engaged to assist
in proxy solicitation at an estimated cost of approximately [ ].
SHAREHOLDER PROPOSALS
To be considered for presentation at a shareholders' meeting, rules
promulgated by the SEC generally require that, among other things, a
shareholder's proposal must be received at the offices of the Fund a reasonable
time before a solicitation is made. Shareholder proposals intended to be
presented at the year 2008 annual meeting of shareholders for the Fund pursuant
to Rule 14a-8 under the Exchange Act of 1934, as amended (the "Exchange Act"),
must be received by the Fund at the Fund's principal executive offices by
January 9, 2008. In order for proposals made outside of Rule 14a-8 under the
Exchange Act to be considered "timely" within the meaning of Rule 14a-4(c) under
the Exchange Act, such proposals must be received by the Fund at the Fund's
principal executive offices not later than March 25, 2008. Timely submission of
a proposal does not necessarily mean that such proposal will be included. Any
shareholder who wishes to submit a proposal for consideration at a meeting of
the Fund should send such proposal to the Fund at the principal executive
offices of the Fund at 1221 Avenue of the Americas, New York,
28
New York 10020, Attn: Van Kampen Asset Management General Counsel's Office.
GENERAL
Management of the Fund does not intend to present and does not have reason to
believe that others will present any other items of business at the Meeting.
However, if other matters are properly presented to the Meeting for a vote, the
proxies will be voted upon such matters in accordance with the judgment of the
persons acting under the proxies.
A list of shareholders of the Fund entitled to be present and vote at the
Meeting will be available at the offices of the Fund, 1 Parkview Plaza, Oakbrook
Terrace, Illinois 60181-5555, for inspection by any shareholder during regular
business hours for ten days prior to the date of the Meeting.
Failure of a quorum to be present at the Meeting for the Fund may necessitate
adjournment and may subject the Fund to additional expense.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
STEFANIE V. CHANG,
Vice President
May 8, 2007
29
ANNEX A
JOINT AUDIT COMMITTEE CHARTER
OF THE
VAN KAMPEN FUNDS
AS ADOPTED ON JULY 23, 2003(1)
---------------
(1) This Joint Audit Committee Charter, adopted as of the date above, supercedes
and replaces all prior versions that may have been adopted from time to
time.
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1. MISSION STATEMENT
The Audit Committee (the "Audit Committee") is a committee of the Board of
Trustees/Directors/Managing General Partners (referred to herein as the
"Trustees" and collectively as the "Board") of each Van Kampen Fund (each a
"Fund").(2) The purpose of the Audit Committee is to provide assistance to the
Board in fulfilling its legal and fiduciary obligations with respect to matters
involving the accounting, auditing, financial reporting, internal control over
financial reporting and legal compliance functions of the Funds, including,
without limitation; (a) assisting the Board's oversight of (i) the integrity of
the Fund's financial statements, (ii) the Fund's compliance with legal and
regulatory requirements, (iii) the qualifications, independence and performance
of the Fund's independent auditors (the "Independent Auditors") and (iv) the
performance of the Fund's internal audit function, and (b) making the statement
by the Audit Committee pursuant to the rules of the Securities and Exchange
Commission (the "SEC") for inclusion in the Fund's annual proxy statement, or,
if the Fund does not file a proxy statement, in the Fund's annual report.
2. COMPOSITION
The Audit Committee shall be comprised of three or more Trustees of the Board.
Audit Committee members shall be designated by the full Board, and the manner of
selection of the Audit Committee chair shall also be designated by the full
Board.
The duties and responsibilities of an Audit Committee member shall be in
addition to those duties set out for a member of the Board. Audit Committee
members shall undertake this commitment with the understanding that they are
assuming additional responsibilities to prepare for, attend and actively
participate in Audit Committee meetings. This may require members to undertake
training covering their financial oversight responsibilities.
Each member of the Audit Committee shall be qualified to serve on the Audit
Committee pursuant to the requirements of the Sarbanes-Oxley Act of 2002 (the
"Act") and the rules and regulations promulgated by the SEC pursuant to the Act
and any requirements and rules of the New York Stock Exchange (the "NYSE"), the
American Stock Exchange (the "Amex") and/or the Chicago Stock Exchange ("CHX")
as applicable to the Fund. Each member of the Audit Committee shall
---------------
(2) This Joint Audit Committee Charter has been adopted by each Fund. Solely for
the sake of clarity and simplicity, this Joint Audit Committee Charter has
been drafted as if there is a single Fund, a single Audit Committee and a
single Board. The terms "Audit Committee," "Trustees" and "Board" mean the
Audit Committee, Trustees and the Board of each Fund, respectively, unless
the context otherwise requires. The Audit Committee, Trustees and the Board
of each Fund, however, shall act separately and in the best interests of its
respective Fund.
A-2
be "independent" as defined by the Act and any rules and regulations promulgated
by the SEC pursuant to the Act and any requirements and rules of the NYSE, Amex
and/or CHX as applicable to the Fund.
According to the rules and regulations promulgated by the SEC pursuant to the
Act, a member is independent (an "Independent Trustee") if he or she, other than
in his or her capacity as a member of the Board, the Audit Committee or any
other board committee, (a) does not accept directly or indirectly any
consulting, advisory or other compensatory fee from the Fund, other than receipt
of Trustee's fees (including additional amounts, if any, paid to chairs of
committees and committee members) and any pension or other forms of deferred
compensation from the Fund for prior service, so long as such compensation is
not contingent in any way on continued service, and (b) is not an "interested
person" of the Fund as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended (the "1940 Act"). The requirements of the NYSE, Amex and CHX
are set forth in Appendix A hereto.
Each member of the Audit Committee must not have participated, at any time in
the past three years, in the preparation of the financial statements of the
Fund.
Each member of the Audit Committee must be "financially literate" as such
qualification is interpreted by the Board in its business judgment, or must
become financially literate within a reasonable period of time after his or her
appointment to the Audit Committee. At a minimum, each member of the Audit
Committee must be able to read and understand fundamental financial statements,
including a Fund's statement of assets and liabilities, statement of operations,
and statement of changes in net assets. In addition, at least one member of the
Audit Committee must have "accounting or related financial management expertise"
and be "financially sophisticated" as the Board interprets such qualifications
in its business judgment. Further, either (a) at least one member of the Audit
Committee must be determined to be an audit committee "financial expert" (as
such term is defined in the rules and regulations promulgated by the SEC
pursuant to the Act) by the Board, or (b) if no member of the Audit Committee is
an "audit committee financial expert," such fact must be disclosed in the Fund's
annual report filed with the SEC. The Audit Committee shall recommend to the
Board whether one or more of its members should be deemed to be an "audit
committee financial expert" or, if not, why not, and the Board shall make the
final determinations in this regard.
No Trustee may serve as a member of the Audit Committee if such Trustee serves
on the audit committee of more than two other public issuers, unless the Board
determines that such simultaneous service would not impair the ability of such
Trustee to serve effectively on the Audit Committee.
A-3
3. MEETINGS OF THE AUDIT COMMITTEE
The Audit Committee shall fix its own rules of procedure, which shall be
consistent with the Fund's organizational documents and this Joint Audit
Committee Charter. The Audit Committee shall meet on a regular basis, including
at least annually in connection with issuance of the Fund's audited financial
statements, and special meetings may be called as circumstances require. The
Audit Committee, in its discretion, may ask members of management or others to
attend its meetings (or portions thereof) and to provide pertinent information
as necessary. The Audit Committee shall meet separately on a periodic basis with
(a) the principal financial officer of the Fund and persons assisting with the
preparation of the Fund's financial statements, (b) the internal auditors (or
other personnel responsible for the Fund's internal audit function) and (c) the
Independent Auditors, in each case to discuss any matters that the Audit
Committee or any of the above persons or firms believe should be discussed
privately.
The Audit Committee shall cause to be maintained minutes of all meetings and
records relating to those meetings and provide copies of such minutes to the
Board and the Fund.
4. AUTHORITY
The Audit Committee shall have the authority to carry out its duties and
responsibilities as set forth in this Joint Audit Committee Charter.
5. DUTIES AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
In carrying out its duties and responsibilities, the Audit Committee's
policies and procedures will remain flexible, so that it may be in a position to
react or respond to changing circumstances or conditions. The following are the
duties and responsibilities of the Audit Committee:
a. Oversight of the Auditor's Engagement/Independence
i. Instruct the Independent Auditors that they are ultimately
accountable to the Audit Committee (to whom they report directly) and
the Board, as the shareholders' representatives, and that the Audit
Committee has the sole authority and responsibility to select (subject
to ratification by a majority of the Independent Trustees of the
Board), compensate, evaluate, and where appropriate terminate the
Independent Auditors.
ii. Approve the selection (subject to ratification by a majority of
the Independent Trustees of the Board), compensation, evaluation and
termination of the Independent Auditors to audit the books and accounts
of the Fund and its subsidiaries, if any, for each fiscal year.
A-4
iii. Review and, in its sole discretion, approve in advance the
Independent Auditors' annual engagement letter, including the proposed
fees contained therein.
iv. Review and, in its sole discretion, pre-approve (A) all
engagements for audit and non-audit services to be provided by the
Independent Auditors to the Fund and (B) all engagements for non-audit
services to be provided by the Independent Auditors (1) to the Fund's
investment adviser(s) or (2) to any entity controlling, controlled by
or under common control with the Fund's investment adviser(s) that
provides ongoing services to the Fund; but in the case of the services
described in subsection (B)(1) or (2), only if the engagement relates
directly to the operations and financial reporting of the Fund (clauses
(A) and (B), collectively, the "Covered Services" and the entities
referred to in clause (B), collectively, the "Covered Entities");
provided that pre-approval by the Audit Committee of Covered Services
be effected pursuant to the procedures described below in Section VI
captioned "PRE-APPROVAL PROCEDURES"; and provided that this Joint Audit
Committee Charter shall not be violated if pre-approval of any non-
audit Covered Service is not obtained in circumstances in which the
pre-approval requirement is waived under rules promulgated by the SEC
under the Act or the NYSE or Amex listing standards.
v. At least annually, obtain and review a report from the
Independent Auditors describing:
(1) the Independent Auditors' internal quality-control
procedures;
(2) any material issues raised by the most recent internal
quality-control review, or peer review, of the Independent
Auditors, or by any inquiry or investigation by any governmental or
professional authority, within the preceding five years, respecting
one or more independent audits carried out by the Independent
Auditors, and any steps taken to deal with any such issues; and
(3) all relationships between the Independent Auditor and the
Fund.
vi. Review and evaluate at least annually the qualifications,
performance and independence of the Independent Auditors, including the
performance of the lead partner of the Independent Auditors, and, in
its discretion, make decisions regarding the replacement or termination
of the Independent Auditors when circumstances warrant.
A-5
vii. Oversee the independence of the Independent Auditors by, among
other things:
(1) actively engaging in a dialogue with the Independent
Auditors with respect to any disclosed relationships or services
that may impact the objectivity and independence of the Independent
Auditors, and taking appropriate action to satisfy itself of the
auditor's independence;
(2) ensuring that the Independent Auditors' lead (or
coordinating) audit partner or audit partner responsible for
reviewing the audit does not perform audit services for the Fund
for more than four consecutive fiscal years;
(3) ensuring that the Fund's chief executive officer,
controller, chief financial officer, chief accounting officer, or
any person serving in an equivalent position for the Fund, has not
been employed by the Independent Auditors and participated in any
capacity in the audit of the Fund during the 1-year period
preceding the initiation of the audit;
(4) considering whether there should be a regular rotation of
the Independent Auditors; and
(5) obtaining from the Independent Auditors and reviewing a
complete description of all its audit, management consulting, or
other services performed for the Fund, management or its
affiliates, consistent with Independence Standards Board Standard
1.
b. Oversight of Financial Statements and the Audit
i. Review the annual audit plan of the Independent Auditors,
including the scope of audit activities, monitor such plan's progress,
changes thereto and results periodically during the year and review the
results of the year-end audit of the Fund, including any comments or
recommendations of the Independent Auditors.
ii. Obtain and review at least annually for the Fund a report from
the Independent Auditors describing:
(1) all critical accounting policies and practices used;
(2) all alternative treatments within United States generally
accepted accounting principles for policies and practices related
to material items that have been discussed with management of the
Fund, including (1) ramifications of the use of such alternative
disclosures and treatments, and (2) the treatment preferred by the
Independent Auditors;
A-6
(3) other material written communications between the
Independent Auditors and management of the Fund, such as any
management letter or schedule of unadjusted differences; and
(4) all non-audit services provided to any entity in the Fund's
investment company complex that were not pre-approved by the Fund's
Audit Committee pursuant to the Fund's pre-approval procedures.
iii. Review and discuss with the principal financial officer of the
Fund and persons responsible for assisting with the preparation of the
Fund's financial statements, internal audit (or management responsible
for the Fund's internal audit function) and the Independent Auditors,
the following:
(1) the Fund's annual audited financial statements and interim
financial statements and any major issues related thereto,
including any significant matters arising in the preparation of the
annual and interim financial statements;
(2) critical accounting policies and such other accounting
policies of the Fund as are deemed appropriate for review by the
Audit Committee prior to any annual or interim filings with the SEC
or other regulatory body, including any financial reporting issues
which could have a material impact on the Fund's financial
statements;
(3) major issues regarding accounting principles and financial
statements presentations, including any significant changes in the
Funds' selection or application of accounting principles, and major
issues as to the adequacy of the Fund's internal controls and any
special audit steps adopted in light of material control
deficiencies;
(4) any analyses prepared by management and/or the Independent
Auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial
statements, including analyses of the ramifications and effects of
alternative generally accepted accounting principles methods on the
Funds' financial statements;
(5) the Funds' exposure to risk, as well as the Funds' major
financial risk exposures and its guidelines and policies with
respect to risk assessment and risk management;
(6) qualitative judgments made about the appropriateness, not
just the acceptability, of accounting principles and financial
disclosure practices used or proposed to be adopted by the Funds
and,
A-7
particularly, about the degree of neutrality and objectivity of its
accounting principles and underlying estimates;
(7) any uncorrected misstatements whose effects management
believes are immaterial, both individually and in the aggregate, to
the financial statements taken as a whole;
(8) procedures used to assess the representativeness of the
valuations of securities provided by external pricing sources,
particularly where such valuations are not based on prices last
quoted in organized markets;
(9) for securities valued at "fair value" as determined in good
faith under procedures established by the Board, inquire as to
Independent Auditors' conclusions as to the reasonableness of the
"fair value" procedures, management's adherence to such procedures,
and the adequacy of supporting documentation for any valuation
offered under the procedures;
(10) significant tax accounting policies elected by the Funds
(including matters affecting qualification under Subchapter M of
the Internal Revenue Code) and their effect on amounts distributed
and reported to shareholders for Federal tax purposes;
(11) review with counsel legal and regulatory matters that may
have a material effect on the Funds' financial statements, related
compliance policies and programs, and any reports received from
regulators; and
(12) the effect of regulatory, accounting and financial
reporting initiatives on the financial statements of the Fund.
iv. Review on a regular basis with the Independent Auditors any
problems or difficulties encountered by the Independent Auditors in the
course of any audit work, including management's response with respect
thereto, any restrictions on the scope of the Independent Auditors'
activities or on access to requested information, and any significant
disagreements with management. In connection therewith, the Audit
Committee will review with the Independent Auditors the following:
(1) any accounting adjustments that were noted or proposed by
the Independent Auditors but were rejected by management (as
immaterial or otherwise);
(2) any communications between the audit team and the
Independent Auditors' national office respecting auditing or
accounting issues presented by the engagement;
A-8
(3) any "management" or "internal control" letter issued, or
proposed to be issued, by the Independent Auditors to the Fund; and
(4) the responsibilities, budget and staffing of the Fund's
internal audit function.
v. Attempt to resolve all disagreements between the Independent
Auditors and management regarding financial reporting.
vi. Review information obtained from the Independent Auditors
pursuant to Section 10A of the Securities Exchange Act of 1934.
c. Oversight of Internal Control Over Financial Reporting
i. Review periodically a report from the Fund's principal executive
officer, principal financial officer and Independent Auditors, at least
annually, regarding the following:
(1) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting of
the Fund, any entity in the investment company complex (as such
term is defined in Regulation S-X promulgated by the SEC) that is
responsible for the financial reporting or operations of the Fund
(the "Related Entities"), or, to the knowledge of such persons,
other service providers, which are reasonably likely to adversely
affect the Fund's ability to record, process, summarize, and report
financial information, including any material weaknesses in
internal control over financial reporting identified by the
Independent Auditors;
(2) any fraud, whether or not material, that involves
management or other employees of the Fund, the Related Entities,
or, to the knowledge of such persons, other service providers to
the Fund who have a significant role in the Fund's internal control
over financial reporting; and
(3) any change in the Fund's internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Fund's internal control over financial
reporting.
d. Compliance
i. Establish and maintain free and open means of communication
between and among the Board, the Audit Committee, the Independent
Auditors, internal auditors (or other personnel responsible for the
internal audit function), the Fund's management, including the
principal financial officer, management of the Fund's investment
adviser(s), management of the Fund's distributor, and management of
those service providers of the Fund deemed appropriate by the Audit
Committee, including providing
A-9
such parties with appropriate opportunities to meet separately and
privately with the Audit Committee on a periodic basis as the Audit
Committee may deem necessary or appropriate.
ii. Establish procedures for (A) the receipt, retention and
treatment of complaints received by the Fund regarding accounting,
internal accounting controls or auditing matters, and (B) the
confidential, anonymous submission of concerns regarding questionable
accounting or auditing matters by employees of the Fund, the Related
Entities (including the investment adviser, administrator, and
principal underwriter), other service providers responsible for such
services or other persons.
iii. Secure independent expert advice to the extent the Audit
Committee determines it to be appropriate, including retaining, with or
without approval of the Board, independent counsel, accountants,
consultants or others, to assist the Audit Committee in fulfilling its
duties and responsibilities, the cost of such independent expert
advisors to be borne by the Fund.
iv. Discuss the type and presentation of information to be included
in earnings press releases (paying particular attention to any use of
"pro forma" or "adjusted" non-GAAP information), if any, as well as
review any financial information and earnings guidance provided to
analysts and rating agencies, but this discussion may be general in
nature (i.e., discussion of the type of information to be disclosed and
the type of presentation to be made) and need not precede each earnings
release or earnings guidance.
e. Miscellaneous
i. Perform an annual performance evaluation of the Audit Committee,
which evaluation shall compare the performance of the Audit Committee
with the requirements of this Joint Audit Committee Charter and
consider the goals and objectives of the Audit Committee for the
upcoming year. The evaluation shall include a review and assessment of
the adequacy of this Joint Audit Committee Charter and propose any
changes for approval by the Board. The performance evaluation by the
Audit Committee shall be conducted in such manner as the Audit
Committee deems appropriate;
ii. Set clear hiring policies for employees or former employees of
the Independent Auditors;
iii. Report regularly to the Board on its activities, as
appropriate, and review with the Board any issues that arise with
respect to the quality or integrity of the Fund's financial statements,
the Fund's compliance with
A-10
legal or regulatory requirements, the performance and independence of
the Fund's Independent Auditors or the performance of the internal
audit function; and
iv. Perform such additional activities, and consider such other
matters, within the scope of its duties and responsibilities, as the
Audit Committee or the Board deems necessary or appropriate.
6. PRE-APPROVAL PROCEDURES
The Audit Committee shall prepare written pre-approval procedures pursuant to
which it shall pre-approve all auditing services and non-audit services (other
than those exempted in the following paragraph) provided to the Fund by the
Independent Auditors. The Audit Committee, in its discretion, may elect to
delegate to one or more of its members authority to pre-approve non-audit
services to the Fund and Covered Services between regularly scheduled meetings
of the Audit Committee. Any such pre-approval decision must be presented to the
Committee at its next scheduled meeting. Approval by the Audit Committee of a
non-audit service to be performed by the Independent Auditors shall be disclosed
in the next annual or semi-annual report.
The Audit Committee need not pre-approve non-audit services for the Fund if:
(i) the aggregate amount of all such non-audit services provided to the Fund
constitutes not more than five percent of the total amount of revenues paid by
the Fund to the Independent Auditors during the fiscal year in which the
non-audit services are provided; (ii) such services were not recognized by the
Fund at the time of engagement to be non-audit services; and (iii) such services
are promptly brought to the attention of the Audit Committee and approved prior
to the completion of the audit by the Audit Committee or by one or more members
of the Audit Committee.
The Audit Committee shall review and approve its pre-approval procedures at
least annually. The pre-approval procedures in effect from time-to-time shall be
attached to this Joint Audit Committee Charter as Appendix B.
7. REPORTING
The Audit Committee shall report its activities to the Board on a regular
basis, so that the Board is kept informed of its activities on a current basis.
In connection therewith, the Audit Committee will review with the Board any
issues that arise with respect to the quality or integrity of the Fund's
financial statements, the Fund's compliance with legal or regulatory
requirements, the performance and independence of the Independent Auditors, or
the performance of the Fund's internal audit function. In particular, the Audit
Committee will also report to the Board its conclusions or recommendations with
respect to matters the Audit Committee
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considers to be of interest or the Board requests. Reports to the Board may take
the form of an oral report by the chairperson of the Audit Committee or any
other member of the Audit Committee designed by the Audit Committee to make this
report.
The Audit Committee shall make the statement required by the rules of the SEC
to be included in the Fund's annual proxy statement, if any, and determine to
its satisfaction that the Audit Committee has: (a) reviewed and discussed the
audited financial statements with management of the Fund; (b) discussed with the
Independent Auditors the matters required to be discussed by the Statements on
Auditing Standards No. 61; (c) received the written disclosures and the letter
from the Independent Auditors required by ISB Standard No. 1 and have discussed
with the Independent Auditors the auditor's independence; and (d) made a
recommendation to the Board as to whether the financial statements be included
in the Fund's annual report for the past fiscal year, as filed with the SEC.
8. RESOURCES
The Board shall ensure that the Audit Committee has adequate resources, as
determined by the Audit Committee, with which to discharge its responsibilities,
including for the payment of (a) compensation (i) to any firm of Independent
Auditors engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Fund, and (ii) to any
advisors employed by the Audit Committee, including independent counsel,
consultants or other advisors, as the Audit Committee determines necessary to
carry out its duties, and (b) ordinary administrative expenses of the Audit
Committee that are necessary or appropriate in carrying out its duties.
9. LIMITS ON ROLE OF AUDIT COMMITTEE
While the Audit Committee has the duties and responsibilities set forth in
this Joint Audit Committee Charter, the Audit Committee is not responsible for:
- planning or conducting the audit or for determining whether the Fund's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles;
- determining whether the Form N-CSR or Form N-CSRS filed by the Fund with the
SEC contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by the report;
- determining whether the Fund's financial statements and other financial
information included in the Form N-CSR or Form N-CSRS fairly present in all
material respects the financial condition, results of operations, changes in
A-12
net assets and cash flows of the Fund as of, and for, the periods presented
in the Form N-CSR or Form N-CSRS; or
- establishing or maintaining disclosure controls and procedures and internal
control over financial reporting for the Fund.
In fulfilling its responsibilities hereunder, it is recognized that members of
the Audit Committee are not full-time employees of the Fund or the Fund's
investment adviser(s) or the Fund's distributor. The Audit Committee and its
members do not have a duty or responsibility to conduct "field work" or other
types of auditing or accounting reviews or procedures or to set auditor
independence standards, and each member of the Audit Committee shall be entitled
to rely on (a) the integrity of those persons and organizations within and
outside the Fund, the Fund's investment adviser(s), the Fund's distributor and
service providers to the Fund from which it receives information, (b) the
accuracy of the financial and other information provided to the Audit Committee
absent actual knowledge to the contrary (which shall be promptly reported to the
Board) and (c) statements made by management or third parties as to any
information technology, internal audit and other non-audit services provided by
the Independent Auditors to the Fund.
A-13
APPENDIX A
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 25, 2005(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an independent
auditor may not provide to its audit client, as well as the audit committee's
administration of the engagement of the independent auditor. The SEC's rules
establish two different approaches to pre-approving services, which the SEC
considers to be equally valid. Proposed services either: may be pre-approved
without consideration of specific case-by-case services by the Audit Committee
("general pre-approval"); or require the specific pre-approval of the Audit
Committee ("specific pre-approval"). The Audit Committee believes that the
combination of these two approaches in this Policy will result in an effective
and efficient procedure to pre-approve services performed by the Independent
Auditors. As set forth in this Policy, unless a type of service has received
general pre-approval, it will require specific pre-approval by the Audit
Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether such
services are consistent with the SEC's rules on auditor independence. The Audit
Committee will also consider whether the Independent Auditors are best
positioned
---------------
1 This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended from time to time.
2 Terms used in this Policy and not otherwise defined herein shall have the
meanings as defined in the Joint Audit Committee Charter.
A-14
to provide the most effective and efficient services, for reasons such as its
familiarity with the Fund's business, people, culture, accounting systems, risk
profile and other factors, and whether the service might enhance the Fund's
ability to manage or control risk or improve audit quality. All such factors
will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for audit
and non-audit services in deciding whether to pre-approve any such services and
may determine for each fiscal year, the appropriate ratio between the total
amount of fees for Audit, Audit-related and Tax services for the Fund (including
any Audit-related or Tax service fees for Covered Entities that were subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.
The purpose of this Policy is to set forth the policy and procedures by which
the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent
A-15
Auditors to be able to form an opinion on the Fund's financial statements. These
other procedures include information systems and procedural reviews and testing
performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will
monitor the Audit services engagement as necessary, but no less than on a
quarterly basis, and will also approve, if necessary, any changes in terms,
conditions and fees resulting from changes in audit scope, Fund structure or
other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements or, to the extent they are Covered Services, the Covered Entities'
financial statements, or that are traditionally performed by the Independent
Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
A-16
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services. Hence, the Audit Committee believes it may grant
general pre-approval to those Tax services that have historically been provided
by the Independent Auditors, that the Audit Committee has reviewed and believes
would not impair the independence of the Independent Auditors, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the Independent Auditors in connection with a
transaction initially recommended by the Independent Auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be
supported in the Internal Revenue Code and related regulations. The Audit
Committee will consult with Director of Tax or outside counsel to determine that
the tax planning and reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this policy
as Appendix B.5. The SEC's rules and relevant guidance should be consulted to
A-17
determine the precise definitions of these services and the applicability of
exceptions to certain of the prohibitions.
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided by
the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be rendered. The Fund's Chief Financial Officer
will determine whether such services are included within the list of services
that have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the Independent Auditors. Requests or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the Independent Auditors and the Fund's Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC's rules on auditor
independence.
The Audit Committee has designated the Fund's Chief Financial Officer to
monitor the performance of all services provided by the Independent Auditors and
to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. A sample report is included as Appendix
B.7. Both the Fund's Chief Financial Officer and management will immediately
report to the chairman of the Audit Committee any breach of this Policy that
comes to the attention of the Fund's Chief Financial Officer or any member of
management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and
A-18
to assure the auditor's independence from the Fund, such as reviewing a formal
written statement from the Independent Auditors delineating all relationships
between the Independent Auditors and the Fund, consistent with Independence
Standards Board No. 1, and discussing with the Independent Auditors its methods
and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
-- Van Kampen Investments Inc.
-- Van Kampen Asset Management
-- Van Kampen Advisors Inc.
-- Van Kampen Funds Inc.
-- Van Kampen Investor Services Inc.
-- Morgan Stanley Investment Management Inc.
-- Morgan Stanley Trust Company
-- Morgan Stanley Investment Management Ltd.
A-19
ANNEX B
JOINT GOVERNANCE COMMITTEE CHARTER
OF THE
VAN KAMPEN FUNDS
AS ADOPTED ON MARCH 3, 2004
B-1
1. MISSION STATEMENT
The Governance Committee (the "Governance Committee") is a committee of the
Board of Trustees/Directors/Managing General Partners (referred to herein as the
"Trustees" and collectively as the "Board") of each Van Kampen Fund (each a
"Fund")(1). The purpose of the Governance Committee is to (1) identify
individuals qualified to serve on the Board as trustees/directors/managing
general partners that are "independent" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent
Trustees"), and on committees of the Board, and to recommend, for selection by
the Board, the Board nominees for meetings of shareholders, (2) advise the Board
with respect to Board composition, procedures and committees, (3) advise the
Board with respect to Trustee compensation and benefits, and administer the
Fund's deferred compensation plans and retirement plan, (4) develop and
recommend to the Board a set of corporate governance principles applicable to
the Fund, monitor corporate governance matters and make recommendations to the
Board and act as the administrative committee with respect to Board policies and
procedures, committee policies and procedures and (5) oversee periodic
evaluations of the Board and any committees of the Board.
2. COMPOSITION
The Governance Committee shall be comprised of three or more Trustees of the
Board. Governance Committee members shall be designated by the full Board, and
the manner of selection of the Governance Committee chair shall also be
designated by the full Board.
Each member of the Governance Committee shall be qualified as "independent" as
defined by the listing requirements and rules of the New York Stock Exchange
(the "NYSE"), the American Stock Exchange (the "AMEX") and the Chicago Stock
Exchange ("CHX"). Members of the Committee shall also qualify as "non-employee
directors" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, and "outside directors" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended, and shall
satisfy any other necessary standards of independence under applicable laws or
regulations.
---------------
(1)This Joint Governance Committee Charter has been adopted by each Fund. Solely
for the sake of clarity and simplicity, this Joint Governance Committee
Charter has been drafted as if there is a single Fund, a single Governance
Committee and a single Board. The terms "Governance Committee," "Trustees"
and "Board" mean the Governance Committee, Trustees and the Board of each
Fund, respectively, unless the context otherwise requires. The Governance
Committee, Trustees and the Board of each Fund, however, shall act separately
and in the best interests of its respective Fund.
B-2
'3. MEETINGS OF THE GOVERNANCE COMMITTEE
The Governance Committee shall fix its own rules of procedure, which shall be
consistent with the Fund's organizational documents and this Joint Governance
Committee Charter. The Governance Committee shall meet on a regular basis (which
shall be at least two times annually) and special meetings may be called as
circumstances require. The Governance Committee, in its discretion, may ask
Trustees, members of management or others, whose advice and counsel are sought
by the Governance Committee, to attend its meetings (or portions thereof) and to
provide such pertinent information as the Governance Committee requests.
The Governance Committee shall cause to be maintained minutes of all meetings
and records to those meetings and provide copies of such minutes to the Board
and the Fund.
4. AUTHORITY
The Governance Committee shall have the authority to carry out its duties and
responsibilities as set forth in this Joint Governance Committee Charter.
5. DUTIES AND RESPONSIBILITIES OF THE GOVERNANCE COMMITTEE
In carrying out its duties and responsibilities, the Governance Committee's
policies and procedures will remain flexible, so that it may be in a position to
react or respond to changing circumstances or conditions. The following are the
duties and responsibilities of the Governance Committee:
a. Board Candidates and Nominees
The Governance Committee shall have the following goals and
responsibilities with respect to Board candidates and nominees:
i. evaluate the suitability of potential trustee/director/managing
general partner nominees proposed by Trustees, shareholders or others;
ii. recommend, for selection by the Board, the Independent Trustee
nominees for election by the shareholders or appointment by the Board,
as the case may be, pursuant to the Fund's organizational documents.
Persons recommended by the Governance Committee shall possess such
knowledge, experience, skills, expertise and diversity so as to enhance
the Board's ability to manage and direct the affairs and business of
the Fund, including, when applicable, to enhance the ability of
committees of the Board to fulfill their duties and/or to satisfy any
independence requirements imposed by law, regulation or any listing
requirements of the New York Stock Exchange ("NYSE"), the American
Stock Exchange (the "AMEX") and the Chicago Stock Exchange ("CHX") (the
NYSE,
B-3
AMEX and CHX are collectively referred to herein as the "Exchanges");
and
iii. review the suitability for continued service as a
trustee/director/managing general partner of each Independent Trustee
when his or her term expires and at such other times as the Governance
Committee deems necessary or appropriate, and to recommend whether or
not the Independent Trustee should be re-nominated.
b. Board Composition, Procedures and Committees
The Governance Committee shall have the following goals and
responsibilities with respect to the composition, procedures and
committees of the Board as a whole:
i. review periodically with the Board the size and composition of
the Board as a whole and recommend, if necessary, measures to be taken
so that the Board reflects the appropriate balance of knowledge,
experience, skills, expertise and diversity required for the Board as a
whole and contains at least the minimum number of Independent Trustees
required by the 1940 Act and the Exchanges;
ii. make recommendations concerning any other aspect of the
procedures of the Board that the Governance Committee considers
warranted, including but not limited to procedures with respect to the
waiver by the Board of any Fund rule, guideline, procedure, code of
ethics or corporate governance principle;
iii. make recommendations on the requirements for, and means of,
Board orientation;
iv. periodically review and make recommendations concerning the
committee structure of the Board, the members and size of committees
(including the creation or elimination of committees), the orientation
of committee members, the annual review performed, if any, by each
committee, the independence and qualifications of the members of the
audit committee and the overall allocation of responsibilities among
the Board and the committees; and
v. recommend that the Board establish such special committees as
may be desirable or necessary from time to time in order to address
ethical, legal or other matters that may arise. The Governance
Committee's power to make such a recommendation under this Joint
Governance Committee Charter shall be without prejudice to the right of
any other committee of the Board, or any individual
trustee/director/managing general partner, to make such a
recommendation at any time.
B-4
c. Compensation and Benefits
The Governance Committee shall have the following goals and
responsibilities with respect to the Trustees' compensation and
benefits of the Board as a whole:
i. periodically review the goals and objectives of the Trustees'
compensation and benefits and make recommendations concerning such
goals and objectives, the level and structure of Trustee compensation
and the level of Trustee compensation by Fund and the allocation of
Trustee compensation among Funds;
ii. periodically review and make recommendations concerning the
Fund's deferred compensation plan and the Fund's retirement plan; and
iii. act as the administrative committee under the Trustee's
Deferred Compensation Plan and Retirement Plan.
d. Corporate Governance
The Governance Committee shall have the following goals and
principles with respect to Board corporate governance:
i. monitor corporate governance principles for the Fund, which
shall be consistent with any applicable laws, regulations and listing
standards, considering, but not limited to, the following:
(1) trustee/director/managing general partner qualification
standards to reflect the independence requirements of the Sarbanes-
Oxley Act of 2002, as amended ("SOX") and the rules thereunder, the
1940 Act, and the Exchanges; the Governance Committee shall also
develop policies regarding trustee/director/managing general
partner tenure, retirement, removal and succession;
(2) trustee/director/managing general partner duties and
responsibilities, including with respect to attendance at meetings
and advance review of meeting materials;
(3) trustee/director/managing general partner access to
management, and, as necessary and appropriate, independent
advisers;
(4) trustee/director/managing general partner compensation,
deferred compensation and retirement policies; and policies on
reimbursement of out-of-pocket expenses; and
(5) trustee/director/managing general partner orientation and
continuing education;
B-5
ii. review periodically the corporate governance principles adopted
by the Board to assure that they are appropriate for the Fund and
comply with the requirements of SOX, the 1940 Act and the Exchanges,
and to recommend any desirable changes to the Board;
iii. consider other corporate governance issues that arise from
time to time, and to develop appropriate recommendations for the Board;
and
e. Periodic Evaluations and Board Training
The Governance Committee shall be responsible for overseeing the
evaluation of the Board as a whole and each committee. The Governance
Committee shall establish procedures to allow it to exercise this
oversight function.
In conducting this review, the Governance Committee shall evaluate
whether the Board appropriately addresses the matters that are or
should be within its scope pursuant to the set of corporate governance
principles adopted by the Governance Committee. The Governance
Committee shall address matters that the Governance Committee considers
relevant to the Board's performance, including at least the following:
the adequacy, appropriateness and quality of the information and
recommendations presented by management of the Fund to the Board, the
manner in which they were discussed or debated and whether the number
and length of meetings of the Board were adequate for the Board to
complete its work in a thorough and thoughtful manner.
The Governance Committee shall report to the Board on the results
of its evaluation, including any recommended changes to the principles
of corporate governance, and any recommended changes to the Fund's or
the Board's or a Committee's policies or procedures. This report may be
written or oral.
The Governance Committee shall be responsible for making
recommendations on the requirements for, and means of, Board training.
6. EVALUATION OF THE GOVERNANCE COMMITTEE
The Governance Committee shall, on an annual basis, evaluate its performance
under this Joint Governance Committee Charter. In conducting this review, the
Governance Committee shall evaluate whether this Joint Governance Committee
Charter appropriately addresses the matters that are or should be within its
scope. The Governance Committee shall address matters that the Governance
Committee considers relevant to its performance, including at least the
following: the adequacy, appropriateness and quality of the information and
recommendations presented by the Governance Committee to the Board, the manner
in which they were discussed
B-6
or debated, and whether the number and length of meetings of the Governance
Committee were adequate for the Governance Committee to complete its work in a
thorough and thoughtful manner.
The Governance Committee shall report to the Board on the results of its
evaluation, including any recommended amendments to this Joint Governance
Committee Charter, and any recommended changes to the Fund's or the Board's
policies or procedures. This report may be written or oral.
7. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS
The Governance Committee may conduct or authorize investigations into or
studies of matters within the Governance Committee's scope of responsibilities,
and may retain, at the Fund's expense, such independent counsel or other
advisers as it deems necessary.
B-7
[VAN KAMPEN INVESTMENTS LOGO]
VBF 07
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE FORM OF PROXY
VAN KAMPEN BOND FUND
ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned holder of Common Shares of VAN KAMPEN BOND FUND,
a Delaware business trust (the "Fund"), hereby appoints XXXXX,
XXXXX and XXXXX and each of them or their respective designees,
with full power of substitution and revocation, as proxies to
represent the undersigned at the Annual Meeting of Shareholders
to be held at the offices of Van Kampen Investments Inc., 1
Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555, on Friday,
June 22, 2007 at 10:00 a.m., and any and all adjournments thereof
(the "Meeting"), and thereat to vote all XXXXX Shares which the
undersigned would be entitled to vote, with all powers the
undersigned would possess if personally present, in accordance
with the instructions indicated herein.
FOR ALL
1. Authority to vote for the election as Trustees, the nominees FOR WITHHOLD EXCEPT
named below: [ ] [ ] [ ]
Class III Trustees: (01) R Craig Kennedy, (02) Jack E.
Nelson and (03) Hugo F. Sonnenschein
------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK "FOR ALL EXCEPT" AND WRITE THE NOMINEE'S NAME ON THE
LINE BELOW.
------------------------------------------------------------
2. Authority to replace the Fund's fundamental policy regarding FOR AGAINST ABSTAIN
the Fund's ability to invest in securities or obligations of [ ] [ ] [ ]
foreign issuers with a non-fundamental policy.
3. To transact such other business as may properly come before
the Meeting.
If more than one of the proxies, or their substitutes, are
present at the Meeting or any adjournment thereof, they jointly
(or, if only one is present and voting then that one) shall have
authority and may exercise all powers granted hereby. This Proxy,
when properly executed, will be voted in accordance with the
instructions marked by the undersigned on the reverse side. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
PROPOSAL DESCRIBED HEREIN AND IN THE DISCRETION OF THE PROXIES
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING
NOTICE OF MEETING AND JOINT PROXY STATEMENT FOR THE MEETING TO BE
HELD ON JUNE 22, 2007.
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND
RETURN PROMPTLY IN ENCLOSED ENVELOPE
HAS YOUR ADDRESS CHANGED? Date
-------------------------------------------- ------------------
Shareholder signature
------------------------------------------ -------------------------------------------- Date --------------
Co-owner signature (if applicable)
------------------------------------------
------------------------------------------
Mark box at right if an address change has
been noted on the reverse side of this
card. [ ]
Please sign this Proxy exactly as your name
or names appear on the books of the Fund.
When signing as attorney, trustee, executor,
administrator, custodian, guardian or
corporate officer, please give full title.
If common shares are held jointly, each
holder must sign.