VAN KAMPEN SENIOR FLOATING RATE FUND
SC TO-I, 2000-04-20
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<PAGE>   1

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

                                  SCHEDULE TO
                         ISSUER TENDER OFFER STATEMENT
                   UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                              (AMENDMENT NO.    )
                      VAN KAMPEN SENIOR FLOATING RATE FUND
                                (NAME OF ISSUER)

                      VAN KAMPEN SENIOR FLOATING RATE FUND
                      (NAME OF PERSON(S) FILING STATEMENT)

        Common Shares of Beneficial Interest, Par Value $0.01 per Share
                         (Title of Class of Securities)

                                   920960-101
                     (CUSIP Number of Class of Securities)

                              A. Thomas Smith III
            Executive Vice President, General Counsel and Secretary
                          Van Kampen Investments Inc.
                                1 Parkview Plaza
                                 P.O. Box 5555
                        Oakbrook Terrace, IL 60181-5555
                                 (630) 684-6000
      (Name, Address and Telephone Number of Person Authorized to Receive
      Notices and Communications on Behalf of Person(s) Filing Statement)

                                   Copies to:
                             Wayne W. Whalen, Esq.
                              Thomas A. Hale, Esq.
                Skadden, Arps, Slate, Meagher & Flom (Illinois)
                              333 W. Wacker Drive
                            Chicago, Illinois 60606
                                 (312) 407-0700

                           CALCULATION OF FILING FEE
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Transaction Valuation $226,037,782                Amount of Filing Fees: $45,208
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(a)  Calculated as the aggregate maximum purchase price to be paid for
     23,135,904 shares in the offer.

(b)  Calculated as 1/50 of 1% of the Transaction Valuation.

 [ ]   Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
       and identify the filing with which the offsetting fee was previously
       paid. Identify the previous filing by registration statement number, or
       the Form or Schedule and the date of its filing.

     Amount Previously Paid:

     Form or Registration No.:

     Filing Party:

     Date Filed:

 [ ]   Check the box if the filing relates solely to preliminary communications
       made before the commencement of a tender offer.

 Check the appropriate boxes below to designate any transactions to which the
statement relates:

      [ ]   third-party tender offer subject to Rule 14d-1.

      [X]   issuer tender offer subject to Rule 13e-4.

      [ ]   going-private transaction subject to Rule 13e-3.

      [ ]   amendment to Schedule 13D under Rule 13d-2.

 [ ]   Check the following box if the filing is a final amendment reporting the
       results of the tender offer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2

ITEM 1. SUMMARY TERM SHEET.

     Reference is hereby made to the "Summary Term Sheet" of the Offer to
Purchase, dated April 20, 2000 (the "Offer to Purchase"), which is attached
hereto as Exhibit (a)(1)(ii) and incorporated herein by reference.

ITEM 2. SUBJECT COMPANY INFORMATION.

     (a) Name and Address. The name of the issuer is Van Kampen Senior Floating
Rate Fund, a non-diversified, closed-end management investment company organized
as a Massachusetts business trust (the "Trust"). The principal executive office
of the Trust is located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555.
The telephone number of the principal executive office of the Trust is (630)
684-6000.

     (b) Securities. The title of the securities being sought is common shares
of beneficial interest, par value $0.01 per share (the "Common Shares"). As of
April 13, 2000 there were approximately 165,256,455 Common Shares issued and
outstanding.

     (c) Trading Market and Price. The Common Shares are not currently traded
on an established trading market.

ITEM 3. IDENTITY AND BACKGROUND OF THE FILING PERSON.

     The name of the filing person is the Trust. The name, business address and
business telephone number of the Trust is Van Kampen Senior Floating Rate Fund
which is located at: 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555, and can
be reached by telephone at (630) 684-6000. The filing person is the subject
company.

ITEM 4. TERMS OF THE TRANSACTION.

     The Trust is seeking tenders for 23,135,904 Common Shares at the net asset
value per Common Share calculated on the day the tender offer expires, upon the
terms and subject to the conditions set forth in the Offer to Purchase and the
related Letter of Transmittal (which together with the Offer to Purchase
constitute the "Offer"). Tendering shareholders receive cash proceeds from the
tender of Common Shares of the Trust, or tendering shareholders may elect to
have the Trust's depositary invest the cash proceeds from the tender of Common
Shares of the Trust in shares of other investment companies advised by Van
Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and
distributed by Van Kampen Funds Inc. as described in the Offer to Purchase and
related Letter of Transmittal. An "Early Withdrawal Charge" will be imposed on
most Common Shares accepted for payment that have been held for less than one
year. The scheduled expiration date is May 19, 2000, unless extended as
described in the Offer to Purchase (the later of May 19, 2000 or the date of the
extended expiration date is referred to as the "Expiration Date"). As described
in the Offer to Purchase, shareholders may withdraw Common Shares tendered in
the Offer at any time prior to the Expiration Date or, if not yet accepted for
payment, after June 15, 2000. The procedures for tendering and withdrawing
Common Shares, the manner in which Common Shares will be accepted for payment,
the Trust's intentions in the event the Offer is oversubscribed and federal
income tax consequences of the Offer are described in the Offer to Purchase. The
Trust is not aware of any Common Shares to be purchased from any officer,
trustee or affiliate of the Trust pursuant to the Offer. Copies of the Offer to
Purchase and the form of Letter of Transmittal are attached hereto as Exhibit
(a)(1)(ii) and Exhibit (a)(2), respectively and are incorporated herein by
reference.

ITEM 5. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

     Reference is hereby made to Section 10 "Interest of Trustees and Executive
Officers; Transactions and Arrangements Concerning the Common Shares" and
Section 12 "Source and Amount of Funds" of the Offer to Purchase which is
incorporated herein by reference. Except as set forth therein, the Trust does
not know of any agreement, arrangement or understanding, whether or not legally
enforceable, between the Trust, any of the Trust's executive officers or
Trustees, any person controlling the Trust or any officer or director of any
corporation ultimately in control of the Trust and any person with respect to
any securities of the Trust.

                                        2
<PAGE>   3

ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.

     Reference is hereby made to Section 7 "Purpose of the Offer," Section 8
"Plans or Proposals of the Trust," Section 10 "Interest of Trustees and
Executive Officers; Transactions and Arrangements Concerning the Common Shares,"
Section 11 "Certain Effects of the Offer," Section 12 "Source and Amount of
Funds" and Section 13 "Certain Information about the Trust" of the Offer to
Purchase, which are incorporated herein by reference. In addition, the Trust
regularly purchases and sells assets in its ordinary course of business. Except
as set forth above, the Trust has no plans or proposals which relate to or would
result in (a) an extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Trust; (b) any purchase, sale or transfer of a
material amount of assets of the Trust; (c) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Trust; (d) any
change in the present Board of Trustees or management of the Trust, including,
but not limited to, any plans or proposals to change the number or the term of
Trustees, or to fill any existing vacancy on the Board of Trustees or to change
any material term of the employment contract of any executive officer of the
Trust; (e) any other material change in the Trust's corporate structure or
business, including any plans or proposals to make any changes in its investment
policy for which a vote would be required by Section 13 of the Investment
Company Act of 1940, as amended; (f) a class of equity securities of the Trust
to be delisted from a national securities exchange or to cease to be authorized
to be quoted on an inter-dealer quotation system of a registered national
securities association; (g) a class of equity security of the Trust becoming
eligible for termination of registration under the Investment Company Act of
1940, as amended; (h) the suspension of the Trust's obligation to file reports
pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended;
(i) the acquisition by any person of additional securities of the Trust or the
disposition of securities of the Trust; or (j) changes in the Trust's
declaration of trust, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Trust by any person.

ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

     Reference is hereby made to Section 12 "Source and Amounts of Funds" of the
Offer to Purchase, which is incorporated herein by reference.

ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

     Reference is hereby made to Section 10 "Interest of Trustees and Executive
Officers; Transactions and Arrangements Concerning the Common Shares" of the
Offer to Purchase and the financial statements included as part of Exhibit
(a)(1)(ii) attached hereto, which are incorporated herein by reference. Except
as set forth therein, there have not been any transactions involving the Common
Shares of the Trust that were effected during the past 60 days by the Trust, any
executive officer or Trustee of the Trust, any person controlling the Trust, any
executive officer or director of any corporation ultimately in control of the
Trust or by any associate or subsidiary of any of the foregoing, including any
executive officer or director of any such subsidiary.

ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.

     No persons have been employed, retained or are to be compensated by or on
behalf of the Trust to make solicitations or recommendations in connection with
the Offer.

ITEM 10. FINANCIAL INFORMATION.

     (a)-(b) Reference is hereby made to the financial statements included as
part of Exhibit (a)(1)(ii) attached hereto, which are incorporated herein by
reference.

                                        3
<PAGE>   4

ITEM 11. ADDITIONAL INFORMATION.

     (a)(1) Reference is hereby made to Section 10 "Interests of Trustees and
Executive Officers; Transactions and Arrangements Concerning the Common Shares"
of the Offer to Purchase which is incorporated herein by reference.

     (a)(2) through (a)(5) Not applicable.

     (b) The Offer to Purchase, attached hereto as Exhibit (a)(1)(ii), is
incorporated herein by reference in its entirety.

ITEM 12. MATERIAL TO BE FILED AS EXHIBITS.

<TABLE>
    <C>             <S>
       (a)(1)(i)    Advertisement printed in The Wall Street Journal.
            (ii)    Offer to Purchase (including Financial Statements).
          (a)(2)    Form of Letter of Transmittal (including Guidelines for
                    Certification of Taxpayer Identification Number).
       (a)(3)(i)    Form of Letter to Brokers, Dealers, Commercial Banks, Trust
                    Companies and Other Nominees.
            (ii)    Form of Letter to Clients of Brokers, Dealers, Commercial
                    Banks, Trust Companies and Other Nominees.
           (iii)    Form of Letter to Selling Group Members.
            (iv)    Form of Operations Notice
          (a)(4)    Form of Letter to Shareholders who have requested Offer to
                    Purchase.
          (a)(5)    Text of Press Release dated April 20, 2000.
             (b)    Second Amendment and Restatement of Credit Agreement between
                    Van Kampen Prime Rate Income Trust, Van Kampen Senior
                    Floating Rate Fund, Various Financial Institutions and Bank
                    of America National Trust and Savings Association, as agent,
                    dated as of June 14, 1999.
          (d)(1)    Investment Advisory Agreement between Van Kampen Senior
                    Floating Rate Fund and Van Kampen Investment Advisory Corp.,
                    dated as of December 19, 1997.
          (d)(2)    Administration Agreement between Van Kampen Senior Floating
                    Rate Fund and Van Kampen Investments Inc., dated as of
                    December 19, 1997.
          (d)(3)    Offering Agreement between Van Kampen Senior Floating Rate
                    Fund and Van Kampen Funds Inc., dated as of December 19,
                    1997.
          (d)(4)    Service Plan of Van Kampen Senior Floating Rate Fund.
         (g)-(h)    Not applicable.
</TABLE>

ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.

     Not applicable.

                                        4
<PAGE>   5

                                   SIGNATURE

     After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

                                  VAN KAMPEN SENIOR FLOATING RATE FUND

<TABLE>
<S>                                           <C>
Dated: April 20, 2000                         /s/  STEPHEN L. BOYD
                                              -----------------------------------------------------------
                                              Stephen L. Boyd,
                                              Executive Vice President, and Chief Investment Officer
</TABLE>

                                        5
<PAGE>   6

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
      EXHIBIT                                DESCRIPTION
      -------                                -----------
    <S>              <C>
    (a)(1)(i)        Advertisement printed in The Wall Street Journal
    (a)(1)(ii)       Offer to Purchase (including Financial Statements)
    (a)(2)           Form of Letter of Transmittal (including Guidelines for
                     Certification of Tax Identification Number)
    (a)(3)(i)        Form of Letter to Brokers, Dealers, Commercial Banks, Trust
                     Companies and Other Nominees
    (a)(3)(ii)       Form of Letter to Clients of Brokers, Dealers, Commercial
                     Banks, Trust Companies and Other Nominees
    (a)(3)(iii)      Form of Letter to Selling Group Members
    (a)(3)(iv)       Form of Operations Notice
    (a)(4)           Form of Letter to Shareholders who have requested Offer to
                     Purchase
    (a)(5)           Text of Press Release dated April 20, 2000
    (b)              Second Amendment and Restatement of Credit Agreement between
                     Van Kampen Prime Rate Income Trust, Van Kampen Senior
                     Floating Rate Fund, Various Financial Institutions and Bank
                     of America National Trust and Savings Association, as agent,
                     dated as of June 14, 1999
    (d)(1)           Investment Advisory Agreement between Van Kampen Senior
                     Floating Rate Fund and Van Kampen Investment Advisory Corp.,
                     dated as of December 19, 1997
    (d)(2)           Administration Agreement between Van Kampen Senior Floating
                     Rate Fund and Van Kampen Investments Inc., dated as of
                     December 19, 1997
    (d)(3)           Offering Agreement between Van Kampen Senior Floating Rate
                     Fund and Van Kampen Funds Inc., dated as of December 19,
                     1997
    (d)(4)           Service Plan of Van Kampen Senior Floating Rate Fund
</TABLE>

<PAGE>   1

                                                               EXHIBIT (a)(1)(i)

  This announcement is not an offer to purchase or a solicitation of an offer
     to sell Common Shares. The Offer is made only by the Offer to Purchase
          dated April 20, 2000 and the related Letter of Transmittal.
 The Offer is not being made to, nor will tenders be accepted from or on behalf
                                      of,
        holders of Common Shares in any jurisdiction in which making or
          accepting the Offer would violate that jurisdiction's laws.

                      VAN KAMPEN SENIOR FLOATING RATE FUND

                          NOTICE OF OFFER TO PURCHASE
             23,135,904 OF ITS ISSUED AND OUTSTANDING COMMON SHARES
                      AT NET ASSET VALUE PER COMMON SHARE

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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
  EASTERN STANDARD TIME ON FRIDAY, MAY 19, 2000, UNLESS THE OFFER IS EXTENDED.

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    Van Kampen Senior Floating Rate Fund (the "Trust") is offering to purchase
23,135,904 of its issued and outstanding common shares of beneficial interest,
par value of $0.01 per share ("Common Shares"), at a price equal to the net
asset value per Common Share ("NAV") determined as of 5:00 pm Eastern Standard
Time on Friday, May 19, 2000, the Expiration Date, unless extended, upon the
terms and conditions set forth in the Offer to Purchase dated April 20, 2000 and
the related Letter of Transmittal (which together constitute the "Offer"). An
"Early Withdrawal Charge" will be imposed on most Common Shares accepted for
payment that have been held for less than one year. The NAV on April 13, 2000
was $9.77 per Common Share. The purpose of the Offer is to provide liquidity to
shareholders since the Trust is unaware of any secondary market which exists for
the Common Shares. The Offer is not conditioned upon the tender of any minimum
number of Common Shares, but is subject to certain conditions as set forth in
the Offer.
    If more than 23,135,904 Common Shares are duly tendered prior to the
expiration of the Offer, the Trust presently intends to, assuming no changes in
the factors originally considered by the Board of Trustees when it determined to
make the Offer and the other conditions set forth in the Offer, but is under no
obligation to, extend the Offer period, if necessary, and increase the number of
Common Shares that the Trust is offering to purchase to an amount which it
believes will be sufficient to accommodate the excess Common Shares tendered as
well as any Common Shares tendered during the extended Offer period, or purchase
23,135,904 Common Shares (or such greater number of Common Shares sought) on a
pro rata basis.
    Common Shares tendered pursuant to the Offer may be withdrawn at any time
prior to 12:00 Midnight Eastern Standard Time on May 19, 2000, and, if not yet
accepted for payment by the Trust, Common Shares may also be withdrawn after
June 15, 2000.
    The information required to be disclosed by paragraph (d)(1) of Rule 13e-4
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
    The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
    Questions and requests for assistance, for current NAV quotations or for
copies of the Offer to Purchase, Letter of Transmittal and any other tender
offer document, may be directed to Van Kampen Funds Inc. at the address and
telephone number below. Copies will be furnished promptly at no expense to you.
Shareholders who do not own Common Shares directly may tender their Common
Shares through their broker, dealer or nominee.

- --------------------------------------------------------------------------------

      THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
   IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
                        MADE WITH RESPECT TO THE OFFER.

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                             VAN KAMPEN FUNDS INC.
       1 PARKVIEW PLAZA - P.O. BOX 5555 - OAKBROOK TERRACE, IL 60181-5555
                                  800-421-5666
        (Between the hours of 7:00 am to 7:00 pm Central Standard Time)

                                 April 20, 2000

<PAGE>   1

                                                              EXHIBIT (a)(1)(ii)

                                   VAN KAMPEN
                           SENIOR FLOATING RATE FUND

                     OFFER TO PURCHASE FOR CASH 23,135,904
                  OF ITS ISSUED AND OUTSTANDING COMMON SHARES
                      AT NET ASSET VALUE PER COMMON SHARE

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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
EASTERN STANDARD TIME ON FRIDAY, MAY 19, 2000, UNLESS THE OFFER IS EXTENDED. TO
ENSURE PROCESSING OF YOUR REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY SIGNED
FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER
REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY (AS DEFINED BELOW) ON OR
BEFORE MAY 19, 2000.

- --------------------------------------------------------------------------------

To the Holders of Common Shares of
VAN KAMPEN SENIOR FLOATING RATE FUND:

     Van Kampen Senior Floating Rate Fund (the "Trust") is offering to purchase
up to 23,135,904 of its common shares of beneficial interest, with par value of
$0.01 per share ("Common Shares"), at a price (the "Purchase Price") equal to
the net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern
Standard time on the Expiration Date (as defined herein). The tendering,
acceptance and withdrawal of tenders are subject to the terms and conditions set
forth in this Offer to Purchase and the related Letter of Transmittal (which
together constitute the "Offer"). The Offer is scheduled to terminate as of
12:00 Midnight Eastern Standard time on May 19, 2000, unless extended by an
action of the Trust's Board of Trustees. An Early Withdrawal Charge (as defined
in Section 3) will be imposed on most Common Shares accepted for payment that
have been held for less than one year. The Common Shares are not currently
traded on an established trading market. The purpose of the Offer is to provide
liquidity to shareholders since the Trust is unaware of any secondary market
which exists for the Common Shares. The NAV on April 13, 2000 was $9.77. You can
obtain current NAV quotations from Van Kampen Funds Inc. ("VKFI") by calling
(800) 341-2911 between the hours of 7:00 A.M. and 7:00 P.M. Central Standard
time, Monday through Friday, except holidays. See Section 9.

     If more than 23,135,904 Common Shares are duly tendered prior to the
expiration of the Offer, the Trust presently intends to, subject to the
condition that there have been no changes in the factors originally considered
by the Board of Trustees when it determined to make the Offer and the other
conditions set forth in Section 6, but is under no obligation to, extend the
Offer period, if necessary, and increase the number of Common Shares that the
Trust is offering to purchase to an amount which it believes will be sufficient
to accommodate the excess Common Shares tendered as well as any Common Shares
tendered during the extended Offer period or purchase 23,135,904 Common Shares
(or such greater number of Common Shares sought) on a pro rata basis.

           THIS OFFER IS BEING MADE TO ALL SHAREHOLDERS OF THE TRUST
                 AND IS NOT CONDITIONED UPON ANY MINIMUM NUMBER
                        OF COMMON SHARES BEING TENDERED.

          THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 6.

                                                                 09 SFR006-04/00
<PAGE>   2

<TABLE>
<S>                       <C>
SUMMARY TERM SHEET
THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION IN THIS OFFER TO PURCHASE. YOU SHOULD
CAREFULLY READ THE ENTIRE OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL FOR A
MORE COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS OF THE OFFER AND TO FULLY
UNDERSTAND THESE TERMS AND CONDITIONS.
 The Trust                The Trust is a non-diversified, closed-end management
                          investment company organized as a Massachusetts business
                          trust. The Trust seeks to provide a high level of current
                          income, consistent with the preservation of capital. The
                          Trust seeks to achieve its investment objective by investing
                          in a professionally managed portfolio of interests in
                          floating or variable rate senior loans. As of April 13,
                          2000, the Trust had net assets of approximately $1.6 billion
                          and had issued and outstanding 165,256,455 Common Shares. As
                          of April 13, 2000, the Trust's net asset value per Common
                          Share was $9.77. For additional information about the Trust,
                          see Sections 9, 10, 13 and 14.
 The Offer                The Trust is offering to purchase for cash at the Purchase
                          Price up to 23,135,904 of its outstanding Common Shares
                          which are properly tendered and accepted for payment prior
                          to the Expiration Date of the Offer. The tendering,
                          acceptance and withdrawal of tenders are subject to the
                          terms and conditions set forth in this Offer to Purchase and
                          the related Letter of Transmittal. See Sections 1, 2, 5 and
                          6. An early withdrawal charge will be imposed on most Common
                          Shares accepted for payment that have been held for less
                          than one year. See Section 3.
 Purpose of the Offer     The purpose of this Offer is to attempt to provide liquidity
                          to the holders of Common Shares. The Trust currently does
                          not believe that an active secondary market for its Common
                          Shares exists or is likely to develop, and therefore the
                          Trustees consider each quarter making a tender offer to
                          purchase Common Shares at their NAV to attempt to provide
                          liquidity to the holders of Common Shares. There can be no
                          assurance that this Offer will provide sufficient liquidity
                          to all holders of Common Shares that desire to sell their
                          Common Shares or that the Trust will make any such tender
                          offer in the future. The Trustees may terminate the Offer,
                          amend its terms, reject Common Shares tendered for payment
                          or postpone payment, if during the tender period, certain
                          events occur which the Trustees consider make it inadvisable
                          to proceed with the Offer. See Sections 6, 7, 11 and 16.
 The Purchase Price       The purchase price is equal to the NAV per Common Share
                          determined as of 5:00 P.M. Eastern Standard time on the
                          Expiration Date. See Section 1. The cost of purchasing the
                          full 23,135,904 Common Shares pursuant to the Offer would be
                          approximately $226,037,782 (assuming a NAV of $9.77 per
                          Common Share on the Expiration Date). The Trust anticipates
                          that cash necessary to purchase any Common Shares acquired
                          pursuant to the Offer will first be derived from cash on
                          hand, such as proceeds from sales of new common shares of
                          the Trust and specified pay-downs from the senior loans in
                          the Trust's portfolio, and then from the proceeds from the
                          sale of cash equivalents held by the Trust. The Trust also
                          may borrow amounts, if necessary, pursuant to a credit
                          agreement which has been established to provide the Trust
                          with additional liquidity for its tenders offers. See
                          Section 12.
 The Expiration Date      The Offer is scheduled to terminate as of 12:00 Midnight
                          Eastern Standard time on May 19, 2000, unless extended by
                          action of the Trust's Board of Trustees. The later of May
                          19, 2000 or the latest time and date to which the Offer is
                          extended is the "Expiration Date". If the expiration date is
                          extended, the Trust will make a public announcement of the
                          new expiration date. See Sections 1 and 16.
 Tendering Common Shares  Shareholders seeking to tender their Common Shares pursuant
                          to the Offer must send to the Trust's depositary on or
                          before the Expiration Date a properly completed and executed
                          Letter of Transmittal (or manually signed facsimile
                          thereof), Common Share certificates (if applicable) and any
                          other documents required by the Letter of Transmittal. See
                          Section 3.
 Withdrawing Tenders      Shareholders seeking to withdraw their tender of Common
                          Shares must send to the Trust's depositary a written,
                          telegraphic, telex or facsimile transmission notice of
                          withdrawal that specifies the name of the person withdrawing
                          a tender of Common Shares, the number of Common Shares to be
                          withdrawn, and, if certificates representing such Common
                          Shares have been delivered or otherwise identified to the
                          depositary, the name of the registered holder(s) of such
                          Common Shares. Shareholders may withdraw Common Shares
                          tendered at any time prior to the Expiration Date and, if
                          the Common Shares have not yet been accepted for payment by
                          the Trust, at any time after 12:00 Midnight Eastern Standard
                          time
</TABLE>

                                        2
<PAGE>   3

                                   IMPORTANT

     If you desire to tender all or any portion of your Common Shares, you
should either (1) complete and sign the Letter of Transmittal and mail or
deliver it along with any Common Share certificate(s) and any other required
documents to Van Kampen Investor Services Inc. (the "Depositary") or (2) request
your broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for you. If your Common Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, you must
contact such broker, dealer, commercial bank, trust company or other nominee if
you desire to tender your Common Shares.

     NEITHER THE TRUST NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH
SHAREHOLDER'S COMMON SHARES. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL
INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISERS AND MAKE
THEIR OWN DECISIONS WHETHER TO TENDER COMMON SHARES AND, IF SO, HOW MANY COMMON
SHARES TO TENDER.

     NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
TRUST AS TO WHETHER SHAREHOLDERS SHOULD TENDER COMMON SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST.

     Questions and requests for assistance may be directed to VKFI at the
address and telephone number set forth below. Requests for additional copies of
this Offer to Purchase and the Letter of Transmittal should be directed to VKFI.

April 20, 2000                              VAN KAMPEN SENIOR FLOATING
                                              RATE FUND
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
(800) 341-2911
                                            Depositary: Van Kampen Investor
                                            Services Inc.
                                            By Mail, Hand Delivery or Courier:
                                            7501 Tiffany Springs Parkway
                                            Kansas City, MO 64153
                                            Attn: Van Kampen Senior Floating
                                                  Rate Fund

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<PAGE>   4

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                 PAGE
- -------                                                                 ----
<C>       <S>                                                           <C>
   1.     Price; Number of Common Shares..............................     5
   2.     Procedure for Tendering Common Shares.......................     5
   3.     Early Withdrawal Charge.....................................     7
   4.     Withdrawal Rights...........................................     8
   5.     Payment for Shares..........................................     9
   6.     Certain Conditions of the Offer.............................     9
   7.     Purpose of the Offer........................................    10
   8.     Plans or Proposals of the Trust.............................    10
   9.     Price Range of Common Shares; Dividends.....................    11
  10.     Interest of Trustees and Executive Officers; Transactions
          and Arrangements Concerning the Common Shares...............    11
  11.     Certain Effects of the Offer................................    12
  12.     Source and Amount of Funds..................................    12
  13.     Certain Information about the Trust.........................    14
  14.     Additional Information......................................    15
  15.     Certain Federal Income Tax Consequences.....................    15
  16.     Extension of Tender Period; Termination; Amendments.........    16
  17.     Miscellaneous...............................................    17
     EXHIBIT A: Unaudited Financial Statements for the Semiannual
                Period Ended January 31, 2000.........................   A-1
                    Audited Financial Statements for the Fiscal Year
                Ended July 31, 1999...................................  A-23
</TABLE>

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<PAGE>   5

     1. PRICE; NUMBER OF COMMON SHARES. The Trust will, upon the terms and
subject to the conditions of the Offer, accept for payment (and thereby
purchase) 23,135,904 or such lesser number of its issued and outstanding Common
Shares which are properly tendered (and not withdrawn in accordance with Section
4) prior to 12:00 Midnight Eastern Standard time on May 19, 2000 (such time and
date being hereinafter called the "Initial Expiration Date"). The Trust reserves
the right to extend the Offer. See Section 16. The later of the Initial
Expiration Date or the latest time and date to which the Offer is extended is
hereinafter called the "Expiration Date." The Purchase Price of the Common
Shares will be their NAV determined as of 5:00 P.M. Eastern Standard time on the
Expiration Date. The NAV on April 13, 2000 was $9.77 per Common Share. You can
obtain current NAV quotations from VKFI by calling (800) 341-2911 between the
hours of 7:00 A.M. and 7:00 P.M. Central Standard time, Monday through Friday,
except holidays. Shareholders tendering Common Shares remain entitled to receive
dividends declared on such shares up to the settlement date of the Offer. See
Section 9. The Trust will not pay interest on the Purchase Price under any
circumstances. An Early Withdrawal Charge will be imposed on most Common Shares
accepted for payment that have been held for less than one year. See Section 3.

     The Offer is being made to all shareholders of the Trust and is not
conditioned upon any minimum number of Common Shares being tendered. If the
number of Common Shares properly tendered prior to the Expiration Date and not
withdrawn is less than or equal to 23,135,904 Common Shares (or such greater
number of Common Shares as the Trust may elect to purchase pursuant to the
Offer), the Trust will, upon the terms and subject to the conditions of the
Offer, purchase at NAV all Common Shares so tendered. If more than 23,135,904
Common Shares are duly tendered prior to the expiration of the Offer and not
withdrawn, the Trust presently intends to, subject to the condition that there
have been no changes in the factors originally considered by the Board of
Trustees when it determined to make the Offer and the other conditions set forth
in Section 6, but is not obligated to, extend the Offer period, if necessary,
and increase the number of Common Shares that the Trust is offering to purchase
to an amount which it believes will be sufficient to accommodate the excess
Common Shares tendered as well as any Common Shares tendered during the extended
Offer period or purchase 23,135,904 Common Shares (or such greater number of
Common Shares sought) on a pro rata basis.

     On April 13, 2000 there were approximately 165,256,455 Common Shares issued
and outstanding and there were approximately 42,006 holders of record of Common
Shares. The Trust has been advised that no trustees, officers or affiliates of
the Trust intend to tender any Common Shares pursuant to the Offer.

     The Trust reserves the right, in its sole discretion, at any time or from
time to time, to extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. See Section 16. There can be no assurance, however,
that the Trust will exercise its right to extend the Offer. If the Trust
decides, in its sole discretion, to increase (except for any increase not in
excess of 2% of the outstanding Common Shares) or decrease the number of Common
Shares being sought and, at the time that notice of such increase or decrease is
first published, sent or given to holders of Common Shares in the manner
specified below, the Offer is scheduled to expire at any time earlier than the
tenth business day from the date that such notice is first so published, sent or
given, the Offer will be extended at least until the end of such ten business
day period.

     2. PROCEDURE FOR TENDERING COMMON SHARES.

     Proper Tender of Common Shares. Except as otherwise set forth under the
heading "Procedures for Selling Group Members" below, for Common Shares to be
properly tendered pursuant to the Offer, a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) with any required
signature guarantees, any certificates for such Common Shares, and any other
documents required by the Letter of Transmittal, must be received on or before
the Expiration Date by the Depositary at its address set forth on page 3 of this
Offer to Purchase.

     It is a violation of Section 14(e) of the Securities and Exchange Act of
1934 (the "Exchange Act"), and Rule 14e-4 promulgated thereunder, for a person
to tender Common Shares in a partial tender offer for such person's own account
unless at the time of tender and until such time as the securities are accepted
for payment the person so tendering has a net long position equal to or greater
than the amount tendered in
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<PAGE>   6

(i) the Common Shares and will deliver or cause to be delivered such shares for
purposes of tender to the Trust prior to or on the Expiration Date, or (ii) an
equivalent security and, upon the acceptance of his or her tender will acquire
the Common Shares by conversion, exchange, or exercise of such equivalent
security to the extent required by the terms of the Offer, and will deliver or
cause to be delivered the Common Shares so acquired for the purpose of tender to
the Trust prior to or on the Expiration Date.

     Section 14(e) and Rule 14e-4 provide a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person.

     The acceptance of Common Shares by the Trust for payment will constitute a
binding agreement between the tendering shareholder and the Trust upon the terms
and subject to the conditions of the Offer, including the tendering
shareholder's representation that (i) such shareholder has a net long position
in the Common Shares being tendered within the meaning of Rule 14e-4 promulgated
under the Exchange Act and (ii) the tender of such Common Shares complies with
Rule 14e-4.

     Signature Guarantees and Method of Delivery. Signatures on the Letter of
Transmittal are not required to be guaranteed unless (1) the proceeds for the
tendered Common Shares will amount to more than $50,000, (2) the Letter of
Transmittal is signed by someone other than the registered holder of the Common
Shares tendered therewith, or (3) payment for tendered Common Shares is to be
sent to a payee other than the registered owner of such Common Shares and/or to
an address other than the registered address of the registered owner of the
Common Shares. In those instances, all signatures on the Letter of Transmittal
must be guaranteed by a bank or trust company; a broker-dealer; a credit union;
a national securities exchange, registered securities association or clearing
agency; a savings and loan association; or a federal savings bank (an "Eligible
Institution"). If Common Shares are registered in the name of a person or
persons other than the signer of the Letter of Transmittal or (a) if payment is
to be made to, (b) unpurchased Common Shares are to be registered in the name of
or (c) any certificates for unpurchased Common Shares are to be returned to any
person other than the registered owner, then the Letter of Transmittal and, if
applicable, the tendered Common Share certificates must be endorsed or
accompanied by appropriate authorizations, in either case signed exactly as such
name or names appear on the registration of the Common Shares with the
signatures on the certificates or authorizations guaranteed by an Eligible
Institution. If signature is by attorney-in-fact, executor, administrator,
Trustee, guardian, officer of a corporation or another acting in a fiduciary or
representative capacity, other legal documents will be required. See
Instructions 1 and 4 of the Letter of Transmittal.

     Payment for Common Shares tendered and accepted for payment pursuant to the
Offer will be made only after receipt by the Depositary on or before the
Expiration Date of a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal. If your Common Shares are evidenced by certificates,
those certificates must be received by the Depositary on or prior to the
Expiration Date.

     THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING CERTIFICATES FOR COMMON
SHARES, IS AT THE ELECTION AND RISK OF THE PARTY TENDERING COMMON SHARES. IF
DOCUMENTS ARE SENT BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED.

     Procedures for Selling Group Members. If you are a selling group member, in
order for you to tender any Common Shares pursuant to the Offer, you may place a
confirmed wire order with VKFI. All confirmed wire orders used to tender Common
Shares pursuant to this Offer must be placed on the Expiration Date only (wire
orders placed on any other date will not be accepted by the Trust). Common
Shares tendered by a wire order are deemed to be tendered when VKFI receives the
order but subject to the condition subsequent that the settlement instructions,
including (with respect to tendered Common Shares for which the selling group
member is not the registered owner) a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof), any other
documents required by the Letter of Transmittal and any Common Share
certificates, are received by the Depository within three New York Stock
Exchange trading days after receipt by VKFI of such order.

     Determinations of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Trust, in its sole discretion, whose determination shall be

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<PAGE>   7

final and binding. The Trust reserves the absolute right to reject any or all
tenders determined by it not to be in appropriate form or the acceptance of or
payment for which may, in the opinion of the Trust's counsel, be unlawful. The
Trust also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender with respect to any particular Common Share(s)
or any particular shareholder, and the Trust's interpretations of the terms and
conditions of the Offer will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such times as the
Trust shall determine. Tendered Common Shares will not be accepted for payment
unless the defects or irregularities have been cured within such time or waived.
Neither the Trust, VKFI, the Depositary nor any other person shall be obligated
to give notice of any defects or irregularities in tenders, nor shall any of
them incur any liability for failure to give such notice.

     Federal Income Tax Withholding. To prevent backup federal income tax
withholding equal to 31% of the gross payments made pursuant to the Offer, each
shareholder who has not previously submitted a Form W-9 to the Trust or does not
otherwise establish an exemption from such withholding must notify the
Depositary of such shareholder's correct taxpayer identification number (or
certify that such taxpayer is awaiting a taxpayer identification number) and
provide certain other information by completing the Form W-9 enclosed with the
Letter of Transmittal. Foreign shareholders who are resident aliens and who have
not previously submitted a Form W-9, or other foreign shareholders who have not
previously submitted a Form W-8, to the Trust must do so in order to avoid
backup withholding.

     The Depositary will withhold 30% of the gross payments payable to a foreign
shareholder unless the Depositary determines that a reduced rate of withholding
or an exemption from withholding is applicable. (Exemption from backup
withholding does not exempt a foreign shareholder from the 30% withholding). For
this purpose, a foreign shareholder, in general, is a shareholder that is not
(i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of the source of
such income or (iv) a trust whose administration is subject to the primary
jurisdiction of a United States court and which has one or more United States
fiduciaries who have the authority to control all substantial decisions of the
trust. The Depositary will determine a shareholder's status as a foreign
shareholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to the shareholder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding unless facts and circumstances indicate that
reliance is not warranted. A foreign shareholder who has not previously
submitted the appropriate certificates or statements with respect to a reduced
rate of, or exemption from, withholding for which such shareholder may be
eligible should consider doing so in order to avoid over-withholding. A foreign
shareholder may be eligible to obtain a refund of tax withheld if such
shareholder meets one of the three tests for capital gain or loss treatment
described in Section 15 or is otherwise able to establish that no tax or a
reduced amount of tax was due.

     For a discussion of certain other federal income tax consequences to
tendering shareholders, see Section 15.

     3. EARLY WITHDRAWAL CHARGE. The Depositary will impose an early withdrawal
charge (the "Early Withdrawal Charge") on most Common Shares accepted for
payment which have been held less than one year. The Early Withdrawal Charge
will be imposed on a number of Common Shares accepted for payment from a record
holder of Common Shares the value of which exceeds the aggregate value at the
time the tendered Common Shares are accepted for payment of (a) all Common
Shares owned by such holder that were purchased more than one year prior to such
acceptance, (b) all Common Shares owned by such holder that were acquired
through reinvestment of distributions, and (c) the increase, if any, of value of
all other Common Shares owned by such holder (namely, those purchased within the
one year preceding acceptance for payment) over the purchase price of such
Common Shares. The Early Withdrawal Charge will be paid to VKFI on behalf of the
holder of the Common Shares. In determining whether an Early Withdrawal Charge
is payable, Common Shares accepted for payment pursuant to the Offer shall be
deemed to be those Common

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<PAGE>   8

Shares purchased earliest by the Shareholder. Any Early Withdrawal Charge which
is required to be imposed will be made in accordance with the following
schedule.

<TABLE>
<CAPTION>
                                                                EARLY
                     YEAR OF REPURCHASE                       WITHDRAWAL
                       AFTER PURCHASE                           CHARGE
                     ------------------                       ----------
<S>                                                           <C>
First.......................................................     1.0%
Second and following........................................     0.0%
</TABLE>

     Exchanges. Tendering shareholders may elect to have the Depositary invest
the cash proceeds from the tender of Common Shares of the Trust in contingent
deferred sales charge shares ("Class C Shares") of certain open-end investment
companies advised by either Van Kampen Investment Advisory Corp. or Van Kampen
Asset Management Inc. and distributed by VKFI ("VK Funds"), subject to certain
limitations. The Early Withdrawal Charge will be waived for Common Shares
tendered pursuant to this election, however, such Class C Shares immediately
become subject to a contingent deferred sales charge schedule equivalent to the
Early Withdrawal Charge schedule of the Trust. Thus, shares of such VK Funds may
be subject to a contingent deferred sales charge upon a subsequent redemption
from the VK Funds. The purchase of shares of such VK Fund will be deemed to have
occurred at the time of the purchase of the Common Shares of the Trust for
calculating the applicable contingent deferred sales charge.

     The prospectus for each VK Fund describes its investment objectives and
policies. Shareholders can obtain a prospectus without charge by calling
1-800-341-2911 and should consider these objectives and policies carefully
before making the election described above. Tendering shareholders may purchase
Class C Shares of a VK Fund only if shares of such VK Fund are available for
sale, and shareholders establishing a new Class C Share account of a VK Fund
must invest net tender proceeds from Common Shares which have a net asset value
at or above the new account minimum of such VK Fund. An exchange is still deemed
to be a tender of Common Shares causing a taxable event and may result in a
taxable gain or loss for the shareholders.

     A shareholder may make the election described above by completing the
appropriate section on the Letter of Transmittal or by giving proper
instructions to the shareholder's broker or dealer. Although this election to
purchase Class C Shares of a VK Fund has been made available as a convenience to
the Trust's shareholders, neither the Trust nor its Board of Trustees makes any
recommendation as to whether shareholders should invest in shares of another VK
Fund.

     4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Common Shares made pursuant to the Offer will be irrevocable. You may
withdraw Common Shares tendered at any time prior to the Expiration Date and, if
the Common Shares have not yet been accepted for payment by the Trust, at any
time after 12:00 Midnight Eastern Standard time on June 15, 2000.

     To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address
set forth on page 2 of this Offer to Purchase. Any notice of withdrawal must
specify the name of the person having tendered the Common Shares to be
withdrawn, the number of Common Shares to be withdrawn, and, if certificates
representing such Common Shares have been delivered or otherwise identified to
the Depositary, the name of the registered holder(s) of such Common Shares as
set forth in such certificates if different from the name of the person
tendering the Common Shares. If certificates have been delivered to the
Depositary, then, prior to the release of such certificates, you must also
submit the certificate numbers shown on the particular certificates evidencing
such Common Shares and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution.

     All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Trust in its sole discretion,
whose determination shall be final and binding. None of the Trust, VKFI, Van
Kampen Investments Inc. ("VK Inc."), the Depositary or any other person is or
will be obligated to give any notice of any defects or irregularities in any
notice of withdrawal, and none of them will incur any liability for failure to
give any such notice. Common Shares properly withdrawn shall not thereafter be
deemed to be tendered for purposes of the Offer. However, withdrawn Common
Shares may be retendered by following the procedures described in Section 2
prior to the Expiration Date.

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<PAGE>   9

     5. PAYMENT FOR SHARES. For purposes of the Offer, the Trust will be deemed
to have accepted for payment (and thereby purchased) Common Shares which are
tendered and not withdrawn when, as and if it gives oral or written notice to
the Depositary of its acceptance of such Common Shares for payment pursuant to
the Offer.

     Payment for Common Shares purchased pursuant to the Offer will be made by
depositing the aggregate purchase price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Trust and either transmitting payment directly to the tendering
shareholders or, in the case of tendering shareholders electing to invest such
proceeds in another VK Fund, transmitting payment directly to the transfer agent
for purchase of Class C Shares of the designated VK Fund for the account of such
shareholders. In all cases, payment for Common Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary,
as required pursuant to the Offer, of a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof), any certificates
representing such Common Shares, if issued, and any other required documents.
Certificates for Common Shares not purchased (see Sections 1 and 6), or for
Common Shares not tendered included in certificates forwarded to the Depositary,
will be returned promptly following the termination, expiration or withdrawal of
the Offer, without expense to the tendering shareholder.

     The Trust will pay all transfer taxes, if any, payable on the transfer to
it of Common Shares purchased pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted by the
Offer) if unpurchased Common Shares are to be registered in the name of any
person other than the registered holder, or if tendered certificates, if any,
are registered or the Common Shares tendered are held in the name of any person
other than the person signing the Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered holder or such other person)
payable on account of the transfer to such person will be deducted from the
Purchase Price unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted. Shareholders tendering Common Shares remain
entitled to receive dividends declared on such shares up to the settlement date
of the Offer. The Trust will not pay any interest on the Purchase Price under
any circumstances. An Early Withdrawal Charge will be imposed on most Common
Shares accepted for payment that have been held for less than one year. See
Section 3. In addition, if certain events occur, the Trust may not be obligated
to purchase Common Shares pursuant to the Offer. See Section 6.

     ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO HAS NOT PREVIOUSLY SUBMITTED A
COMPLETED AND SIGNED SUBSTITUTE FORM W-9 AND WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 ENCLOSED WITH THE LETTER OF TRANSMITTAL MAY BE
SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS
PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 2.

     6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Trust shall not be required to accept for payment, purchase or
pay for any Common Shares tendered, and may terminate or amend the Offer or may
postpone the acceptance for payment of, the purchase of and payment for Common
Shares tendered, if at any time at or before the time of purchase of any such
Common Shares, any of the following events shall have occurred (or shall have
been determined by the Trust to have occurred) which, in the Trust's sole
judgment in any such case and regardless of the circumstances (including any
action or omission to act by the Trust), makes it inadvisable to proceed with
the Offer or with such purchase or payment: (1) in the reasonable judgment of
the Trustees, there is not sufficient liquidity of the assets of the Trust; (2)
such transactions, if consummated, would (a) impair the Trust's status as a
regulated investment company under federal income tax law (which would make the
Trust a taxable entity, causing the Trust's taxable income to be taxed at the
Trust level) or (b) result in a failure to comply with applicable asset coverage
requirements; or (3) there is, in the Board of Trustees' reasonable judgment,
any (a) material legal action or proceeding instituted or threatened challenging
such transactions or otherwise materially adversely affecting the Trust, (b)
suspension of or limitation on prices for trading securities generally on any
United States national securities exchange or in the over-the-counter market,
(c) declaration of a banking moratorium by federal or state authorities or any
suspension of payment by banks in the United States, (d) limitation affecting
the Trust or the issuers of its portfolio securities imposed by federal or state
authorities on the extension of credit by lending institutions, (e) commencement
of war, armed hostilities or other
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<PAGE>   10

international or national calamity directly or indirectly involving the United
States or (f) other event or condition which would have a material adverse
effect on the Trust or the holders of its Common Shares if the tendered Common
Shares are purchased.

     The foregoing conditions are for the Trust's sole benefit and may be
asserted by the Trust regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Trust), and any such
condition may be waived by the Trust in whole or in part, at any time and from
time to time in its sole discretion. The Trust's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts or circumstances;
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination by the Trust concerning the
events described in this Section 6 shall be final and shall be binding on all
parties.

     If the Trust determines to terminate or amend the Offer or to postpone the
acceptance for payment of or payment for Common Shares tendered, it will, to the
extent necessary, extend the period of time during which the Offer is open as
provided in Section 16. Moreover, in the event any of the foregoing conditions
are modified or waived in whole or in part at any time, the Trust will promptly
make a public announcement of such waiver and may, depending on the materiality
of the modification or waiver, extend the Offer period as provided in Section
16.

     7. PURPOSE OF THE OFFER. The Trust currently does not believe that an
active secondary market for its Common Shares exists or is likely to develop. In
recognition of the possibility that a secondary market may not develop for the
Common Shares of the Trust, or, if such a market were to develop, the Common
Shares might trade at a discount, the Trustees have determined that it would be
in the best interest of its shareholders for the Trust to take action to attempt
to provide liquidity to shareholders or to reduce or eliminate any future market
value discount from NAV that might otherwise exist, respectively. To that end,
the Trustees presently intend each quarter to consider making a tender offer to
purchase Common Shares at their NAV. The purpose of this Offer is to attempt to
provide liquidity to the holders of Common Shares. There can be no assurance
that this Offer will provide sufficient liquidity to all holders of Common
Shares that desire to sell their Common Shares or that the Trust will make any
such tender offer in the future.

     NEITHER THE TRUST NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH
SHAREHOLDER'S COMMON SHARES AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER COMMON SHARES AND, IF SO, HOW MANY COMMON SHARES TO
TENDER.

     8. PLANS OR PROPOSALS OF THE TRUST. Except as set forth in this Section 8,
the Trust has no present plans or proposals which relate to or would result in
any extraordinary transaction such as a merger, reorganization or liquidation
involving the Trust; any purchase, sale or transfer of a material amount of
assets of the Trust other than in its ordinary course of business; any material
changes in the Trust's present capitalization (except as resulting from the
Offer or otherwise set forth herein); or any other material changes in the
Trust's structure or business. The Trust's fundamental investment policies and
restrictions give the Trust the flexibility to pursue its investment objective
through a fund structure commonly known as a "master-feeder" structure. If the
Trust converts to a master-feeder structure, the existing shareholders of the
Trust would continue to hold their shares of the Trust and the Trust would
become a feeder-fund of the master-fund. The value of a shareholder's shares
would be the same immediately after any conversion as the value immediately
before such conversion. Use of this master-feeder structure potentially would
result in increased assets invested among the collective investment vehicle of
which the Trust would be a part, thus allowing operating expenses to be spread
over a larger asset base, potentially achieving economies of scale. The Trust's
Board of Trustees presently does not intend to affect any conversion to a
master-feeder structure.

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<PAGE>   11

     9. PRICE RANGE OF COMMON SHARES; DIVIDENDS. The Trust's NAV per Common
Share from April 13, 1998 through April 13, 2000 ranged from a high of $10.12 to
a low of $9.76. On April 13, 2000, the NAV was $9.77 per Common Share. You can
obtain current NAV quotations from VKFI by calling (800) 341-2911 between the
hours of 7:00 A.M. and 7:00 P.M. Central Standard time, Monday through Friday,
except holidays. NAV quotes also may be obtained through the ICI Pricing Service
which is released each Friday evening and published by the Dow Jones Capital
Markets Wire Service on each Friday; published in the New York Times on each
Saturday; published in the Chicago Tribune on each Sunday; and published weekly
in Barron's magazine. The Trust offers and sells its Common Shares to the public
on a continuous basis through VKFI as principal underwriter. The Trust is not
aware of any secondary market trading for the Common Shares. Dividends on the
Common Shares are declared daily and paid monthly.

     Over the twelve month period preceding the commencement of the Offer, the
Trust paid the following dividends per Common Share held for the entire
respective dividend period:

<TABLE>
<CAPTION>
                     DIVIDEND PAYMENT                       AMOUNT OF DIVIDEND
                           DATE                              PER COMMON SHARE
                     ----------------                       ------------------
<S>                                                         <C>
March 24, 2000............................................. $.063035705
February 25, 2000.......................................... $.0610
January 25, 2000........................................... $.046212125
December 31, 1999.......................................... $0.0148
December 23, 1999.......................................... $0.0575
November 24, 1999.......................................... $0.0575
October 25, 1999........................................... $0.0575
September 24, 1999......................................... $0.0575
August 25, 1999............................................ $0.0561
July 23, 1999.............................................. $0.0550
June 25, 1999.............................................. $0.0550
May 25, 1999............................................... $0.0550
April 23, 1999............................................. $0.0550
</TABLE>

Shareholders tendering Common Shares remain entitled to receive dividends
declared on such Common Shares up to the settlement date of the Offer.

     10. INTEREST OF TRUSTEES AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING THE COMMON SHARES. As of April 13, 2000, the trustees
and executive officers of the Trust as a group beneficially owned no Common
Shares. In connection with the Trust's organization on December 19, 1997, VK
Inc., an affiliate of the Trust's investment adviser, was issued 10,000 Common
Shares for $100,000. The Trust has been informed that no trustee or executive
officer or affiliate of the Trust intends to tender any Common Shares pursuant
to the Offer.

     Except as set forth in this Section 10, based upon the Trust's records and
upon information provided to the Trust by its trustees, executive officers and
affiliates (as such term is used in the Securities Exchange Act of 1934),
neither the Trust nor, to the best of the Trust's knowledge, any of the trustees
or executive officers of the Trust, nor any affiliates of any of the foregoing,
has effected any transactions in the Common Shares during the 60 day period
prior to the date hereof.

     The Board of Trustees has recently appointed Richard F. Powers, III
(President and Chief Executive Officer of Van Kampen Investments Inc.) as a
trustee of the Trust replacing the retiring Don G. Powell (former Chairman and
Director of Van Kampen Investments Inc.). Mr. Powers has also been appointed as
President of the Trust and certain other funds distributed by VKFI. Prior to May
1998, Mr. Powers was Executive Vice President and Director of Marketing at
Morgan Stanley Dean Witter & Co. and Director of Dean Witter Discover & Co. and
Dean Witter Realty. Prior to 1996, Mr. Powers was a Director of Dean Witter
Reynolds Inc. Dennis J. McDonnell retired from the Board of Trustees of the
Trust and retired as Executive Vice President and Chief Investment Officer of
the Trust on March 31, 2000. The Board of Trustees appointed Stephen L. Boyd
(Executive Vice President and Chief Investment Officer of Van Kampen Investments
Inc. and President and Chief Operating Officer of the Adviser) as Executive Vice
President and

                                       11
<PAGE>   12

Chief Investment Officer of the Trust. Mr. Boyd has been named Executive Vice
President and Chief Investment Officer of certain other funds distributed by
VKFI.

     Except as set forth in this Offer to Purchase, neither the Trust nor, to
the best of the Trust's knowledge, any of its affiliates, trustees or executive
officers, is a party to any agreement, arrangement or understanding, whether or
not legally enforceable, between the Trust, any of the Trust's executive
officers or trustees, any person controlling the Trust or any officer or
director of any corporation ultimately in control of the Trust and any other
person with respect to any securities of the Trust.

     11. CERTAIN EFFECTS OF THE OFFER. The purchase of Common Shares pursuant to
the Offer will have the effect of increasing the proportionate interest in the
Trust of shareholders who do not tender their Common Shares. If you retain your
Common Shares you will be subject to any increased risks that may result from
the reduction in the Trust's aggregate assets resulting from payment for the
tendered Common Shares (e.g., greater volatility due to decreased
diversification and higher expenses). However, the Trust believes that since the
Trust is engaged in a continuous offering of the Common Shares, those risks
would be reduced to the extent new Common Shares of the Trust are sold. All
Common Shares purchased by the Trust pursuant to the Offer will be held in
treasury pending disposition.

     12. SOURCE AND AMOUNT OF FUNDS. The total cost to the Trust of purchasing
the full 23,135,904 Common Shares pursuant to the Offer would be approximately
$226,037,782 (assuming a NAV of $9.77 per Common Share on the Expiration Date).
The Trust anticipates that the Purchase Price for any Common Shares acquired
pursuant to the Offer will first be derived from cash on hand, such as proceeds
from sales of new Common Shares of the Trust and specified pay-downs from the
participation interests in senior corporate loans which it has acquired, and
then from the proceeds from the sale of cash equivalents held by the Trust. The
Trust may from time to time enter into one or more credit agreements to provide
the Trust with additional liquidity to meet its obligations to purchase Common
Shares pursuant to any tender offer it may make. The Trust currently is a party
to a credit agreement which will terminate by its terms on June 13, 2000
(described in more detail below). The Trust has never borrowed any amounts
available under such credit arrangements in the past. If, in the judgment of the
Trustees, there is not sufficient liquidity of the assets of the Trust to pay
for tendered Common Shares, the Trust may terminate the Offer. See Section 6.

     The Trust has entered into a Second Amendment and Restatement of Credit
Agreement dated as of June 14, 1999 (the "Credit Agreement") among the Trust and
Van Kampen Prime Rate Income Trust (the "Co-Borrower") as borrowers, the banks
party thereto (the "Financial Institutions"), and Bank of America National Trust
and Savings Association ("BofA"), as agent, pursuant to which the Financial
Institutions have committed to provide a credit facility of up to $500,000,000
to the Trust and the Co-Borrower, which is not secured by the assets of the
Trust or Co-Borrower or other collateral. As of the date hereof, neither the
Trust nor the Co-Borrower has drawn any of the funds available under the Credit
Agreement. The proceeds of any amounts borrowed under the Credit Agreement may
be used to provide the Trust with additional liquidity to meet its obligations
to purchase Common Shares pursuant to any tender offer that it may make. The
Credit Agreement has terms and conditions substantially similar to the
following:

     a. Each of the Trust and the Co-Borrower is entitled to borrow money
        ("Loans") from the Financial Institutions in amounts which in the
        aggregate do not exceed the lesser of (i) the $500 million credit
        facility, provided that the aggregate amount of Loans to the Trust or
        the Co-Borrower on an individual basis cannot exceed twelve and one half
        percent (12.5%) of the net asset value of the Trust or Co-Borrower, as
        the case may be (defined as total assets minus total liabilities minus
        assets subject to liens).

     b. Loans made under the Credit Agreement, if any, will bear interest daily
        at the option of the Trust or Co-Borrower, as applicable, (i) at a rate
        per annum equal to the federal funds rate from time to time plus 0.45%,
        or (ii) at a rate per annum equal to a reserve-adjusted interbank
        offered rate offered by BofA's Grand Cayman Branch ("IBOR") plus 0.45%
        per annum. Each of the Trust and Co-Borrower will bear the expenses of
        any borrowings attributable to it under the Credit Agreement. Such
        interest will be due, in arrears, on the outstanding principal amount of
        each Loan (i) as to any federal funds rate Loan on the last business day
        of each calendar quarter and (ii) as any offshore rate
                                       12
<PAGE>   13

        Loan, from one (1) day to sixty (60) days from the date of the Loan, as
        selected by the Trust or Co-Borrower, as applicable, in advance.
        Interest on the outstanding principal of the Loans will also be due on
        the date of any prepayment of any offshore rate Loan and on demand
        during the existence of an event of default under the Credit Agreement
        payable by the borrower subject to such event of default. Overdue
        payments of principal and interest will bear interest, payable upon
        demand, at a penalty rate. No Loan shall be outstanding for a period of
        more than sixty (60) days, and there shall be no more than three
        Interest Periods as defined in the Credit Agreement in effect.

     c. The Trust paid approximately $5,320 of fees and expenses to BofA or its
        affiliates on the date the Credit Agreement was executed. In addition,
        during the term of the Credit Agreement, the Trust is obligated to pay
        its pro rata share (based on the relative net assets of the Trust and
        Co-Borrower) of a commitment fee computed at the rate of 0.09% per annum
        on the average daily unused amount of the facility.

     d. The principal amount of any Loan made under the Credit Agreement, if
        any, is required to be paid sixty (60) days from the date of the Loan.
        Each of the Trust and Co-Borrower is entitled to prepay a Loan made to
        it in multiples of $1,000,000, provided that the Trust or Co-Borrower,
        as applicable, gives sufficient notices of prepayment. On the Commitment
        Termination Date (as defined below), all outstanding principal and
        accrued interest under the Credit Agreement will be due and payable in
        full.

     e. The drawdown of the initial Loan, if any, under the Credit Agreement is
        subject to certain conditions, including, among other things, the Trust
        and Co-Borrower, as applicable, executing and delivering a promissory
        note made payable to the order of each Financial Institution, in the
        form attached to the Credit Agreement (the "Promissory Notes"). The
        drawdown of each Loan, if any, is further conditioned upon the
        satisfaction of additional conditions, including, without limitation,
        (i) the providing of notice with respect to the Loan; (ii) the asset
        coverage ratio for the applicable borrower being at least 8 to 1; (iii)
        there being no default or event of default in existence with respect to
        the applicable borrower; (iv) the representations and warranties with
        respect to the applicable borrower made in the Credit Agreement
        continuing to be true; and (v) there being no Loans outstanding with
        respect to the applicable borrower for more than sixty (60) days on the
        day preceding the proposed borrowing.

     f.  The Credit Agreement contains various affirmative and negative
         covenants of the Trust and Co-Borrower, including, without limitation,
         obligations: (i) to provide periodic financial information; (ii) with
         limited exceptions, to not consolidate with or merge into any other
         entity or have any other entity merge into it and to not sell all or
         any substantial part of its assets; (iii) to continue to engage in its
         current type of business and to maintain its existence as a business
         trust; (iv) to comply with applicable laws, rules and regulations; (v)
         to maintain insurance on its property and business; (vi) to limit the
         amount of its debt based upon 12.5% of the net asset value of the
         applicable borrower; and (vii) to not create any lien on any of its
         assets, with certain exceptions.

     g. The Credit Agreement also contains various events of default (with
        certain specified grace periods), including, without limitation: (i)
        failure to pay when due any amounts required to be paid to the Financial
        Institutions under the Credit Agreement or the Promissory Notes; (ii)
        any material misrepresentations in the Credit Agreement or documents
        delivered to the Financial Institutions; (iii) failure to observe or
        perform certain terms, covenants and agreements contained in the Credit
        Agreement, the Promissory Notes or other documents delivered to the
        Financial Institutions; (iv) failure to comply with the Trust's or
        Co-Borrower's, as applicable, fundamental investment policies or
        investment restrictions; (v) failure to comply by the Trust or
        Co-Borrower, as applicable, with all material provisions of the
        Investment Company Act of 1940; (vi) the voluntary or involuntary
        bankruptcy of the Trust or Co-Borrower, as applicable; (vii) the entry
        of judgments for the payment of money in excess of $5,000,000 in the
        aggregate which remains unsatisfied or unstayed for a period of 30 days;
        and (viii) a change in control of the Trust's or Co-Borrower's, as
        applicable, investment adviser.

                                       13
<PAGE>   14

     h. The credit facility provided pursuant to the Credit Agreement will
        terminate on June 13, 2000 (the "Commitment Termination Date"), unless
        extended or earlier terminated pursuant to the terms thereof, and all
        accrued interest and principal will be due thereon.

     Pursuant to guidelines applicable to the Trust and the Co-Borrower, any
Loans to the Trust and Co-Borrower will be made on a first-come, first-serve
basis. If, at any time, the demand for borrowings by the Trust and Co-Borrower
exceeds amounts available under the Credit Agreement, such borrowing will be
allocated on a fair and equitable basis, taking into consideration factors,
including without limitation, relative net assets of the Trust and Co-Borrower,
amounts requested by the Trust and Co-Borrower, and availability of other
sources of cash to meet each parties needs.

     The Trust intends to repay any Loans under the Credit Agreement from
proceeds from the specified pay-downs from the interests in Senior Loans (as
defined below) which will be acquired and from proceeds from the sale of Common
Shares.

     The foregoing descriptions of the Credit Agreement do not purport to be
complete or final, and are qualified in their entirety by reference to the
Credit Agreement included as Exhibit (b) to the Issuer Tender Offer Statement on
Schedule TO of the Trust. See Section 14.

     13. CERTAIN INFORMATION ABOUT THE TRUST. The Trust was organized as a
Massachusetts business trust on December 19, 1997 and is a non-diversified,
closed-end management investment company under the Investment Company Act of
1940. The Trust's investment objective is to provide a high level of current
income, consistent with preservation of capital. The Trust seeks to achieve its
investment objective by investing in a professionally managed portfolio of
interests in floating or variable rate senior loans ("Senior Loans") to
corporations, partnerships and other entities ("Borrowers") which operate in a
variety of industries and geographical regions. Although the Trust's NAV will
vary, the Trust's policy of acquiring interests in floating or variable rate
Senior Loans is expected to minimize fluctuations in the Trust's NAV as a result
of changes in interest rates. Senior Loans in which the Trust will invest
generally pay interest at rates which are periodically redetermined by reference
to a base lending rate plus a premium. These base lending rates are generally
the prime rate offered by one or more major United States banks ("Prime Rate"),
the London Inter-Bank Offered Rate ("LIBOR"), the certificate of deposit rate or
other base lending rates used by commercial lenders. The Senior Loans in the
Trust's portfolio at all times have a dollar-weighted average time until next
interest rate redetermination of 90 days or less. As a result, as short-term
interest rates increase, the interest payable to the Trust from its investments
in Senior Loans should increase, and as short-term interest rates decrease, the
interest payable to the Trust on its investments in Senior Loans should
decrease. The amount of time required to pass before the Trust realizes the
effects of changing short-term market interest rates on its portfolio varies
with the dollar-weighted average time until the next interest rate
redetermination on securities in the Trust's portfolio.

     The Trust has registered as a "non-diversified" investment company so that,
subject to its investment restrictions, it is able to invest more than 5% of the
value of its assets in the obligations of any single issuer, including Senior
Loans of a single Borrower or participations in Senior Loans purchased from a
single lender. To the extent the Trust invests a relatively high percentage of
its assets in obligations of a limited number of issuers, the Trust will be more
susceptible than a more widely diversified investment company to any single
corporate, economic, political or regulatory occurrence.

     The Trust is advised by Van Kampen Investment Advisory Corp. (the
"Adviser") pursuant to an Investment Advisory Agreement under which the Trust
accrues daily and pays monthly to the Adviser an investment management fee based
on the per annum rate of: 0.95% of the first $4.0 billion of average daily net
assets of the Trust, 0.90% on the next $3.5 billion, 0.875% on the next $2.5
billion and 0.85% on average daily net assets over $10.0 billion. Howard Tiffen,
Vice President of the Trust and Senior Vice President and Director of Senior
Loans of the Adviser, has primary responsibility for the day-to-day management
of the Trust. Mr. Tiffen also has primary responsibility for the day-to-day
management of the portfolio of the Van Kampen Prime Rate Income Trust, a
continuously offered closed end investment company, and Van Kampen Senior Income
Trust, a closed end investment company listed on the New York Stock Exchange,
both investing primarily in Senior Loans and having investment objectives and
policies substantially similar to those of the Fund. Mr. Tiffen
                                       14
<PAGE>   15

is also Senior Vice President and Director of Senior Loans of Van Kampen Asset
Management Inc. and Van Kampen Management Inc. Mr. Tiffen has over 25 years of
investment experience and manages over $13 billion in senior loan assets for Van
Kampen Investments Inc. Prior to joining the Adviser, Mr. Tiffen was senior
portfolio manager for Pilgrim Investments' Senior Floating Rate Investment
Management business from 1995 to 1999, where he managed the Pilgrim Prime Rate
Trust and other structured senior loan portfolios. From 1982 to 1995, Mr. Tiffen
held positions in the lending and capital markets functions at Bank of America,
and its predecessor, Continental Bank. The Trust is a party to an Administration
Agreement with VK Inc. Under the Administration Agreement, the Trust pays VK
Inc. a monthly fee based on the per annum rate of 0.25% of the Trust's average
daily net assets. The Trust is a party to an Offering Agreement with VKFI. Under
the Offering Agreement, the Trust offers and sells its Common Shares to the
public on a continuous basis through VKFI as principal underwriter. The Adviser,
VK Inc. and VKFI are each indirect wholly owned subsidiaries of Morgan Stanley
Dean Witter & Co. VKFI compensates broker-dealers participating in the
continuous offering of the Trust's Common Shares at a rate of 0.75% of the
dollar value of Common Shares purchased from the Trust by such broker-dealers.
VKFI also compensates broker-dealers who have entered into sales agreements with
VKFI at an annual rate, paid quarterly, equal to an amount up to 0.75% of the
value of Common Shares sold by each respective broker-dealer and remaining
outstanding after one year from the date of their original purchase. VKFI also
may provide, from time to time, additional cash incentives to broker-dealers
which employ representatives who sell a minimum dollar amount of the Common
Shares. All such compensation is or will be paid by VKFI out of its own assets,
and not out of the assets of the Trust. The compensation paid to such
broker-dealers and to VKFI, including the compensation paid at the time of
purchase, the quarterly payments, any additional incentives paid from time to
time and the Early Withdrawal Charge, if any, will not in the aggregate exceed
applicable limitations. In addition, the Trust may make service fee payments
pursuant to the Trust's Service Plan for personal services and/or the
maintenance of shareholder accounts to VKFI and broker-dealers and other persons
in amounts not exceeding 0.25% of the Trust's average daily net assets for any
fiscal year. The Trustees have initially implemented the Service Plan by
authorizing service fee payments to VKFI and broker-dealers and other persons in
amounts not expected to exceed 0.15% of the Trust's average daily net assets.

     The principal executive offices of the Trust are located at 1 Parkview
Plaza, Oakbrook Terrace, IL 60181-5555.

     Reference is hereby made to Section 9 of this Offer to Purchase and the
financial statements attached hereto as Exhibit A which are incorporated herein
by reference.

     14. ADDITIONAL INFORMATION. The Trust has filed an Issuer Tender Offer
Statement on Schedule TO with the Securities and Exchange Commission (the
"Commission") which includes certain additional information relating to the
Offer. Such material may be inspected and copied at prescribed rates at the
Commission's public reference facilities at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; Jacob K. Javits Federal Building, 26 Federal
Plaza, New York, New York 10278; and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may also be obtained by mail at prescribed rates from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, the Issuer Tender Offer Statement on Schedule TO is
available along with other related materials at the Commission's internet
website (http://www.sec.gov).

     15. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
general summary of the federal income tax consequences of a sale of Common
Shares pursuant to the Offer. Shareholders should consult their own tax advisers
regarding the tax consequences of a sale of Common Shares pursuant to the Offer,
as well as the effects of state, local and foreign tax laws and any proposed tax
law changes.

     The sale of Common Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes, either as a "sale or exchange," or
under certain circumstances, as a "dividend." Under Section 302(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), a sale of Common Shares
pursuant to the Offer generally will be treated as a "sale or exchange" if the
receipt of cash by the shareholder or by the Depositary on behalf of the
shareholder, in the case of a tendering shareholder electing to invest cash
proceeds from the tender of Common Shares in Class C Shares of a designated VK
Fund: (a) results in a "complete termination" of the shareholder's interest in
the Trust, (b) is "substantially disproportionate" with

                                       15
<PAGE>   16

respect to the shareholder, or (c) is "not essentially equivalent to a dividend"
with respect to the shareholder. In determining whether any of these tests has
been met, Common Shares actually owned, as well as Common Shares considered to
be owned by the shareholder by reason of certain constructive ownership rules
set forth in Section 318 of the Code, generally must be taken into account. If
any of these three tests for "sale or exchange" treatment is met, a shareholder
will recognize gain or loss equal to the difference between the amount of cash
received by the shareholder or by the Depositary on behalf of the shareholder,
in the case of a tendering shareholder electing to invest cash proceeds from the
tender of Common Shares in Class C Shares of a designated VK Fund, pursuant to
the Offer and the tax basis of the Common Shares sold. If such Common Shares are
held as a capital asset, the gain or loss will be a capital gain or loss. The
maximum tax rate applicable to net capital gains recognized by individuals and
other non-corporate taxpayers is (i) the same as the applicable ordinary income
rate for capital assets held for one year or less or (ii) 20% for capital assets
held for more than one year. The maximum long-term capital gains rate for
corporations is 35%.

     If none of the tests set forth in Section 302(b) of the Code is met,
amounts received by a shareholder or by the Depositary on behalf of a
shareholder, as the case may be, who sells Common Shares pursuant to the Offer
will be taxable to the shareholder as a "dividend" to the extent of such
shareholder's allocable share of the Trust's current or accumulated earnings and
profits, and the excess of such amounts received over the portion that is
taxable as a dividend would constitute a non-taxable return of capital (to the
extent of the shareholder's tax basis in the Common Shares sold pursuant to the
Offer) and any amounts in excess of the shareholder's tax basis would constitute
taxable gain. Thus, a shareholder's tax basis in the Common Shares sold will not
reduce the amount of the "dividend." Any remaining tax basis in the Common
Shares tendered to the Trust will be transferred to any remaining Common Shares
held by such shareholder. In addition, if a tender of Common Shares is treated
as a "dividend" to a tendering shareholder, a constructive dividend under
Section 305(c) of the Code may result to a non-tendering shareholder whose
proportionate interest in the earnings and assets of the Trust has been
increased by such tender. The Trust believes, however, that the nature of the
repurchase will be such that a tendering shareholder will qualify for "sale or
exchange" treatment (as opposed to "dividend" treatment).

     16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.  The Trust
reserves the right, at any time and from time to time, to extend the period of
time during which the Offer is pending by making a public announcement thereof.
In the event that the Trust so elects to extend the tender period, the Purchase
Price for the Common Shares tendered will be determined as of 5:00 P.M. Eastern
Standard time on the Expiration Date, as extended, and the Offer will terminate
as of 12:00 Midnight Eastern Standard time on the Expiration Date, as extended.
During any such extension, all Common Shares previously tendered and not
purchased or withdrawn will remain subject to the Offer. The Trust also reserves
the right, at any time and from time to time up to and including the Expiration
Date, to (a) terminate the Offer and not to purchase or pay for any Common
Shares or, subject to applicable law, postpone payment for Common Shares upon
the occurrence of any of the conditions specified in Section 6, and (b) amend
the Offer in any respect by making a public announcement thereof. Such public
announcement will be issued no later than 9:00 A.M. Eastern Standard time on the
next business day after the previously scheduled Expiration Date and will
disclose the approximate number of Common Shares tendered as of that date.
Without limiting the manner in which the Trust may choose to make a public
announcement of extension, termination or amendment, except as provided by
applicable law, the Trust shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
release to the Dow Jones News Service.

     If the Trust materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Trust will extend the Offer to the extent required by Rule 13e-4 promulgated
under the Exchange Act. These rules require that the minimum period during which
an offer must remain open following material changes in the terms of the offer
or information concerning the offer (other than a change in price or a change in
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. If (i) the
Trust increases or decreases the price to be paid for Common Shares, or the
Trust increases the number of Common Shares being sought by an amount exceeding
2% of the outstanding Common Shares, or the Trust decreases the number of Common
Shares being sought and (ii) the Offer is scheduled to expire at any time
earlier than the

                                       16
<PAGE>   17

expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given,
the Offer will be extended at least until the expiration of such period of ten
business days.

     17. MISCELLANEOUS. The Offer is not being made to, nor will the Trust
accept tenders from, owners of Common Shares in any jurisdiction in which the
Offer or its acceptance would not comply with the securities or Blue Sky laws of
such jurisdiction. The Trust is not aware of any jurisdiction in which the
making of the Offer or the tender of Common Shares would not be in compliance
with the laws of such jurisdiction. However, the Trust reserves the right to
exclude holders in any jurisdiction in which it is asserted that the Offer
cannot lawfully be made. So long as the Trust makes a good-faith effort to
comply with any state law deemed applicable to the Offer, the Trust believes
that the exclusion of holders residing in such jurisdiction is permitted under
Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction the
securities or Blue Sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the Trust's behalf by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.

April 20, 2000                          VAN KAMPEN SENIOR FLOATING RATE FUND

                                       17
<PAGE>   18

                                                      BY THE NUMBERS

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR FUND AT THE END OF THE
REPORTING PERIOD(1).

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            VARIABLE RATE** SENIOR LOAN INTERESTS  80.1%
            AEROSPACE/DEFENSE  1.9%
$  4,933    Aerostructures Corp.,
            Term Loan...............  NR        BB-     12/31/03               $    4,933,479
  13,850    Decrane Finance Co.,
            Term Loan...............  B2        B+      09/30/05 to 04/23/06       13,849,379
   6,419    High Performance
            Plastics, Inc., Term
            Loan....................  NR        NR      03/31/05                    6,417,676
   7,449    Stellex Technologies,
            Inc., Term Loan.........  B2        B+      09/30/06                    7,448,209
                                                                               --------------
                                                                                   32,648,743
                                                                               --------------
            AUTOMOTIVE  3.4%
   4,868    Breed Technologies,
            Inc., Term
            Loan (a)(b).............  NR        NR      04/27/04 to 04/27/06        3,894,256
     949    Breed Technologies,
            Inc., Revolving Credit
            Agreement (a)(b)........  NR        NR      04/27/04                      758,983
     193    Breed Technologies,
            Inc., Debtor In
            Possession (b)..........  NR        NR      09/30/00                      193,425
   5,000    Exide Corp., Term
            Loan....................  Ba3       NR      03/18/05                    5,012,360
  12,632    J.L. French Automotive
            Castings, Inc., Term
            Loan....................  B1        B+      10/21/06                   12,632,091
   9,967    Metalforming
            Technologies, Inc., Term
            Loan....................  NR        NR      06/30/06                    9,965,795
   4,000    Polypore, Inc., Term
            Loan....................  Ba3       B+      12/31/06                    3,999,807
   4,947    Safelite Glass Corp.,
            Term Loan...............  B1        B+      12/23/03                    3,907,641
   2,000    Safelite Glass Corp.,
            Revolving Credit
            Agreement...............  B1        B+      12/23/03                    1,579,480
  15,000    Tenneco Automotive,
            Inc., Term Loan.........  Ba3       BB      11/04/07 to 07/04/08       15,107,295
                                                                               --------------
                                                                                   57,051,133
                                                                               --------------
</TABLE>

See Notes to Financial Statements

                                       A-1
<PAGE>   19

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            BEVERAGE, FOOD & TOBACCO  2.8%
$ 39,284    Agrilink Foods, Inc.,
            Term Loan...............  B1        B+      09/30/04 to 09/30/05   $   39,038,558
   9,250    B & G Foods, Inc., Term
            Loan....................  B1        B+      03/31/06                    9,246,161
                                                                               --------------
                                                                                   48,284,719
                                                                               --------------
            BROADCASTING--CABLE  0.6%
   9,310    Fairchild Corp., Term
            Loan....................  Ba3       BB-     04/30/06                    9,310,954
                                                                               --------------

            BROADCASTING--DIVERSIFIED  0.9%
  10,000    Comcord Broadcasting,
            Term Loan...............  NR        NR      06/30/07                    9,999,773
   4,550    White Knight, Term
            Loan....................  NR        NR      06/30/07                    4,550,894
                                                                               --------------
                                                                                   14,550,667
                                                                               --------------
            BROADCASTING--RADIO  0.4%
   7,000    Cumulus Media, Inc.,
            Term Loan...............  B1        B+      09/30/07 to 02/28/08        6,999,931
                                                                               --------------

            BROADCASTING--TELEVISION  1.0%
   8,000    Quoram Broadcasting,
            Inc., Term Loan.........  NR        NR      09/30/07                    7,999,300
   9,333    Sinclair Broadcast
            Group, Inc., Term
            Loan....................  Ba2       BB-     09/15/05                    9,331,821
                                                                               --------------
                                                                                   17,331,121
                                                                               --------------
            BUILDINGS & REAL ESTATE  1.0%
   4,954    Builders FirstSource,
            Inc., Term Loan.........  NR        BB-     12/30/05                    4,955,136
  12,500    Prison Realty Trust,
            Inc., Term Loan.........  Ba3       BB      12/31/02                   12,502,029
                                                                               --------------
                                                                                   17,457,165
                                                                               --------------
            CHEMICAL, PLASTICS & RUBBER  4.7%
  10,000    Georgia Gulf Corp., Term
            Loan....................  Ba1       BBB-    11/12/06                   10,058,330
   1,148    Huntsman Corp., Term
            Loan....................  Ba2       BB      12/31/02                    1,147,892
   2,659    Huntsman Corp.,
            Revolving Credit
            Agreement...............  Ba2       BB      12/31/02                    2,658,382
  24,063    Lyondell Chemical Co.,
            Term Loan...............  Ba3       NR      06/30/05 to 05/17/06       24,461,323
</TABLE>

                                               See Notes to Financial Statements

                                       A-2
<PAGE>   20

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            CHEMICAL, PLASTICS & RUBBER (CONTINUED)
$  5,000    MetoKote Corp., Term
            Loan....................  NR        NR      11/02/05               $    4,999,669
   8,075    Pioneer Americas, Inc.,
            Term Loan...............  B3        B+      12/31/06                    8,066,504
   6,278    Sterling Pulp Chemicals,
            Inc., Term Loan.........  B3        BB-     09/30/04                    6,278,381
  17,113    Sybron Chemicals, Inc.,
            Term Loan...............  NR        NR      07/31/04                   17,083,973
   5,713    West American Rubber,
            Term Loan...............  NR        NR      06/30/05                    5,713,000
                                                                               --------------
                                                                                   80,467,454
                                                                               --------------
            CONSTRUCTION MATERIALS  2.7%
  20,875    American Building Co.,
            Term Loan...............  NR        NR      11/15/05                   20,861,807
   5,216    Flextek Components,
            Inc., Term Loan (a).....  NR        NR      02/28/05                    2,625,755
  12,103    Hexcel Corp., Term
            Loan....................  Ba3       BB-     09/14/05 to 09/15/05       12,100,439
   9,950    Mueller Group, Inc.,
            Term Loan...............  NR        B+      08/16/06 to 08/16/07       10,008,038
                                                                               --------------
                                                                                   45,596,039
                                                                               --------------
            CONTAINERS, PACKAGING & GLASS  2.3%
  10,960    Dr. Pepper Holdings,
            Inc., Term Loan.........  NR        NR      10/07/07                   10,986,260
  10,000    LLS Corp., Term Loan....  B1        B+      07/31/06                    9,998,518
  14,925    Mediapak Corp., Term
            Loan....................  NR        NR      12/31/05 to 12/31/06       14,927,269
   3,894    Stone Container Corp.,
            Term Loan...............  Ba3       B+      10/01/03                    3,906,946
                                                                               --------------
                                                                                   39,818,993
                                                                               --------------
            DIVERSIFIED MANUFACTURING  1.3%
   9,975    Blount, Inc., Term
            Loan....................  B1        B+      09/30/06                    9,971,692
  12,500    Citation Corp., Term
            Loan....................  NR        B+      12/01/07                   12,500,525
                                                                               --------------
                                                                                   22,472,217
                                                                               --------------
</TABLE>

See Notes to Financial Statements

                                       A-3
<PAGE>   21

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            ECOLOGICAL  3.0%
$ 50,000    Allied Waste North
            America, Inc., Term
            Loan....................  Ba3       BB      07/23/06 to 07/23/07   $   48,465,150
   3,188    Safety-Kleen Corp., Term
            Loan....................  Ba3       BB      04/03/05 to 04/03/06        3,182,412
                                                                               --------------
                                                                                   51,647,562
                                                                               --------------
            ELECTRONICS  2.3%
   7,500    Amphenol Corp., Term
            Loan....................  Ba3       BB      05/19/04                    7,414,845
   7,500    Computer Associates
            International, Inc.,
            Term Loan...............  Baa1      BBB+    05/26/04                    7,492,181
   8,946    Dynamic Details, Inc.,
            Term Loan...............  B1        NR      04/22/05                    8,946,000
   4,957    EG&G Technical Services,
            Inc., Term Loan.........  B1        NR      08/20/07                    4,956,777
   4,953    Stratus Computers, Inc.,
            Term Loan...............  NR        NR      12/31/04                    4,978,126
   5,000    Stream International,
            Term Loan...............  NR        NR      12/31/06                    5,000,100
                                                                               --------------
                                                                                   38,788,029
                                                                               --------------
            ENTERTAINMENT & LEISURE  4.1%
  10,000    Aspen Marketing, Inc.,
            Term Loan...............  NR        NR      06/30/06                   10,002,286
  12,500    Bally Total Fitness
            Holding Corp., Term
            Loan....................  B1        B+      11/10/04                   12,491,717
  10,000    Fitness Holdings
            Worldwide, Inc., Term
            Loan....................  NR        B+      11/02/06 to 11/02/07        9,988,750
  15,000    SFX Entertainment, Inc.,
            Term Loan...............  B1        B+      06/30/06                   14,981,250
  17,000    Six Flags Theme Parks,
            Inc., Term Loan.........  Ba2       B+      09/30/05                   17,107,763
   4,610    True Temper Sports,
            Inc., Term Loan.........  B1        BB-     09/30/05                    4,609,858
                                                                               --------------
                                                                                   69,181,624
                                                                               --------------
</TABLE>

                                               See Notes to Financial Statements

                                       A-4
<PAGE>   22

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            FINANCE  3.1%
$  9,950    Bridge Information
            Systems, Inc., Term
            Loan....................  NR        NR      05/29/05               $    9,952,422
  16,958    Outsourcing Solutions,
            Term Loan...............  B2        NR      06/01/06                   16,957,100
  10,000    Paul G. Allen, Term
            Loan....................  NR        NR      06/10/03                    9,996,063
  16,000    Sovereign Bancorp, Inc.,
            Term Loan...............  Ba3       NR      11/14/03                   16,053,328
                                                                               --------------
                                                                                   52,958,913
                                                                               --------------
            GROCERY  1.6%
  27,615    The Pantry, Inc., Term
            Loan....................  B1        BB-     01/31/06                   27,678,769
                                                                               --------------

            HEALTHCARE  3.1%
  15,000    Alliance Imaging, Inc.,
            Term Loan...............  B1        NR      11/02/07 to 11/02/08       14,997,339
   9,975    Charles River
            Laboratories, Inc., Term
            Loan....................  B1        B+      09/29/07                    9,968,571
   4,988    Unilab Corp., Term
            Loan....................  B1        B+      11/23/06                    4,987,690
  18,119    Vencor, Inc., Term Loan
            (a)(b)..................  Caa2      NR      01/15/05                   15,763,784
   7,900    Wilson Greatbatch, Ltd.,
            Term Loan...............  NR        NR      07/30/04                    7,899,944
                                                                               --------------
                                                                                   53,617,328
                                                                               --------------
            HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER
            PRODUCTS  1.7%
  21,398    Imperial Home Decor
            Group, Inc., Term Loan
            (b).....................  Caa3      D       03/13/06                   12,223,212
  16,519    Rent-A-Center, Inc.,
            Term Loan...............  Ba3       BB-     01/31/06 to 01/31/07       16,405,000
                                                                               --------------
                                                                                   28,628,212
                                                                               --------------
</TABLE>

See Notes to Financial Statements

                                       A-5
<PAGE>   23

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            HOTELS, MOTELS, INNS & GAMING  1.9%
$ 10,000    Aladdin Gaming, LLC,
            Term Loan...............  B2        NR      08/25/06 to 08/26/06   $   10,000,695
   6,987    Meditrust Corp.,
            Revolving Credit
            Agreement...............  NR        NR      07/17/01                    6,986,042
  16,000    Starwood Hotel and
            Resorts Worldwide, Inc.,
            Term Loan...............  Ba1       NR      02/23/03                   15,999,487
                                                                               --------------
                                                                                   32,986,224
                                                                               --------------
            INSURANCE  0.3%
   5,000    Brera Gab Robins, Inc.,
            Term Loan...............  NR        NR      12/01/05                    4,999,963
                                                                               --------------

            MACHINERY  2.4%
   4,078    Numantics, Inc., Term
            Loan....................  Ba3       B       03/19/04 to 09/19/05        4,078,763
  15,000    Ocean Rig (Norway), Term
            Loan....................  NR        NR      06/01/08                   14,997,821
  10,000    Terex Corp., Term
            Loan....................  Ba3       BB-     03/06/06                   10,029,690
  12,500    United Rentals, Inc.,
            Term Loan...............  Ba2       BB+     06/30/06                   12,476,563
                                                                               --------------
                                                                                   41,582,837
                                                                               --------------
            MINING, STEEL, IRON & NON-PRECIOUS METALS  0.6%
   9,850    Ispat Inland, Term
            Loan....................  Ba3       BB      07/16/05 to 07/16/06        9,800,750
                                                                               --------------

            PERSONAL & MISCELLANEOUS SERVICES  0.9%
   1,842    Boyds Collection, Ltd.,
            Term Loan...............  Ba3       B+      04/21/06                    1,831,020
  13,500    Dimac Corp., Term
            Loan....................  NR        NR      06/30/06 to 12/30/06       13,521,808
                                                                               --------------
                                                                                   15,352,828
                                                                               --------------
            PHARMACEUTICALS  1.0%
  17,471    King Pharmaceuticals,
            Inc., Term Loan.........  B1        BB-     12/18/06                   17,517,899
                                                                               --------------

            PRINTING & PUBLISHING  3.6%
   6,380    Advanstar
            Communications, Inc.,
            Term Loan...............  Ba3       B+      04/30/05                    6,361,063
  16,000    Big Flower Press
            Holdings, Inc., Term
            Loan....................  B1        NR      12/06/08                   15,999,550
</TABLE>

                                               See Notes to Financial Statements

                                       A-6
<PAGE>   24

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>

            PRINTING & PUBLISHING (CONTINUED)
$  4,923    Check Printers, Inc.,
            Term Loan...............  NR        NR      06/30/05               $    4,923,026
  10,000    Haights Cross
            Communications, Inc.,
            Term Loan...............  B2        B+      12/10/06                   10,000,000
   8,789    Pacifica Papers, Inc.,
            Term Loan...............  Ba2       BB      03/12/06                    8,790,383
   6,429    Penton Media, Inc., Term
            Loan....................  Ba3       BB-     06/30/07                    6,427,143
   4,984    Reiman Publications,
            Inc., Term Loan.........  NR        NR      12/10/05                    5,003,005
   4,135    TWP Capital Corp., Term
            Loan....................  NR        NR      10/01/04                    4,135,399
                                                                               --------------
                                                                                   61,639,569
                                                                               --------------
            RESTAURANTS & FOOD SERVICE  1.8%
   3,640    AFC Enterprises, Inc.,
            Term Loan...............  Ba3       BB-     06/30/02                    3,640,014
   1,384    Carvel Corp., Term
            Loan....................  NR        NR      06/30/00                    1,383,750
  24,805    Domino's, Inc., Term
            Loan....................  B1        B+      12/21/06 to 12/21/07       24,895,255
                                                                               --------------
                                                                                   29,919,019
                                                                               --------------
            RETAIL--OFFICE PRODUCTS  0.9%
   7,000    Buhrmann US, Inc., Term
            Loan....................  Ba3       BB-     10/26/07                    7,037,191
   8,810    U.S. Office Products
            Co., Term Loan..........  B3        B       06/09/06                    8,809,858
                                                                               --------------
                                                                                   15,847,049
                                                                               --------------
            RETAIL--OIL & GAS  0.6%
   9,334    Superior Energy
            Services, Inc., Term
            Loan....................  Ba3       BB-     06/30/06                    9,332,915
                                                                               --------------

            RETAIL--STORES  1.3%
  14,813    Duane Reade, Inc., Term
            Loan....................  B1        B+      02/15/06                   14,814,163
   7,123    Kirkland's Holdings,
            Term Loan...............  NR        NR      06/30/02                    7,123,145
                                                                               --------------
                                                                                   21,937,308
                                                                               --------------
</TABLE>

See Notes to Financial Statements

                                       A-7
<PAGE>   25

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            TELECOMMUNICATIONS--CELLULAR  0.9%
$ 15,000    Wireless One Network,
            L.P., Term Loan.........  NR        NR      09/30/07               $   15,000,375
                                                                               --------------

            TELECOMMUNICATIONS--HYBRID 3.4%
   5,000    Cincinnati Bell, Inc.,
            Term Loan...............  Ba1       BB+     12/30/06                    4,999,745
  13,500    Nextel Finance Co., Term
            Loan....................  Ba2       BB-     06/30/08 to 12/31/08       13,682,817
  15,000    Orius Corp., Term
            Loan....................  NR        B+      12/14/06                   14,999,157
  24,000    Pacific Crossing Ltd.,
            Term Loan...............  NR        NR      07/28/06                   24,000,000
                                                                               --------------
                                                                                   57,681,719
                                                                               --------------
            TELECOMMUNICATIONS--PERSONAL COMMUNICATION SYSTEMS  7.1%
  38,300    BCP SP Ltd., Term
            Loan....................  NR        NR      03/31/00                   37,917,000
  18,810    Davel Financing Co......  NR        NR      06/23/05                   18,813,496
  15,000    Nextel Partners
            Operating Corp., Term
            Loan....................  B2        B-      07/29/08                   14,993,745
  29,034    Omnipoint
            Communications, Inc.,
            Term Loan...............  B2        NR      02/01/06 to 02/17/06       29,194,367
   6,000    Omnipoint Midwest
            Holdings, Term Loan.....  NR        NR      12/31/06                    5,997,815
   5,000    TeleCorp PCS, Inc., Term
            Loan....................  B2        NR      12/05/07                    4,989,585
   9,694    Telespectrum Worldwide,
            Inc., Term Loan.........  NR        NR      12/31/01 to 12/31/03        9,692,133
                                                                               --------------
                                                                                  121,598,141
                                                                               --------------
            TELECOMMUNICATIONS--WIRELESS MESSAGING  1.8%
  55,000    Iridium Operating LLC,
            Term Loan (a)(b)........  NR        D       12/29/00                   20,350,127
  11,000    TSR Wireless LLC, Term
            Loan....................  NR        NR      06/30/05                   11,025,226
                                                                               --------------
                                                                                   31,375,353
                                                                               --------------
            TEXTILES & LEATHER  3.2%
   8,155    American Marketing
            Industries, Inc., Term
            Loan....................  NR        NR      11/30/04 to 11/30/05        8,156,178
  19,242    Glenoit Corp., Term
            Loan....................  B1        B       12/31/03 to 06/30/04       19,242,102
</TABLE>

                                               See Notes to Financial Statements

                                       A-8
<PAGE>   26

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
PRINCIPAL                                BANK LOAN
 AMOUNT                                  RATINGS+
  (000)             BORROWER          MOODY'S    S&P      STATED MATURITY*         VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            TEXTILES & LEATHER (CONTINUED)
$  5,400    Humphrey's, Inc., Term
            Loan....................  B2        NR      01/15/03               $    5,401,608
   3,385    Joan Fabrics Corp., Term
            Loan....................  NR        NR      06/30/05                    3,376,887
   4,994    Norcorp, Inc., Term
            Loan....................  NR        NR      05/30/06 to 11/30/06        4,993,185
  13,825    Norcross Safety
            Products, Term Loan.....  NR        NR      10/02/05                   13,825,000
                                                                               --------------
                                                                                   54,994,960
                                                                               --------------
            TRANSPORTATION--CARGO  1.8%
   4,821    Gemini Leasing, Inc.,
            Term Loan...............  B1        NR      08/12/05                    4,813,937
  17,000    North American Van
            Lines, Inc., Term
            Loan....................  B1        B+      11/18/07                   16,998,159
   8,059    OmniTrax Railroads, LLC,
            Term Loan...............  NR        NR      05/14/05                    8,060,365
                                                                               --------------
                                                                                   29,872,461
                                                                               --------------
            TRANSPORTATION--MANUFACTURING COMPONENTS  1.0%
  17,188    SPX Corp., Term Loan....  Ba2       BB+     09/30/06                   17,273,438
                                                                               --------------

            TRANSPORTATION--PERSONAL  3.7%
  40,000    Avis Rent A Car, Inc.,
            Term Loan...............  Ba3       BB+     06/30/06 to 06/30/07       40,261,140
  23,084    Motor Coach Industries
            International, Inc.,
            Term Loan...............  Ba3       BB-     06/15/06                   23,066,570
                                                                               --------------
                                                                                   63,327,710
                                                                               --------------

TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS  80.1%
  (Cost $1,412,077,633).....................................................   $1,366,530,091
                                                                               --------------
</TABLE>

See Notes to Financial Statements

                                       A-9
<PAGE>   27

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
                                                                                   VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            SHORT-TERM INVESTMENTS  18.3%
            COMMERCIAL PAPER  16.1%
            Armstrong World Industries ($5,000,000 par, maturing 02/23/00,
            yielding 5.74%).................................................   $    4,982,461
            Ashland, Inc. ($20,000,000 par, maturing 02/10/00 to 02/18/00,
            yielding 5.75% to 5.83%)........................................       19,958,095
            Autoliv ASP, Inc. ($8,774,000 par, maturing 02/29/00, yielding
            5.90%)..........................................................        8,733,737
            Baxter International, Inc. ($25,000,000 par, maturing 02/02/00,
            yielding 5.50%).................................................       24,996,181
            Bell Atlantic Network ($20,984,000 par, maturing 02/08/00 to
            02/15/00, yielding 5.58% to 5.60%)..............................       20,954,693
            CSX Corp. ($10,000,000 par, maturing 02/16/00, yielding 5.85%)..        9,975,625
            Conagra, Inc. ($10,000,000 par, maturing 02/02/00, yielding
            5.70%)..........................................................        9,998,417
            Cox Communications, Inc. ($20,000,000 par, maturing 02/11/00 to
            02/17/00, yielding 5.80% to 5.95%)..............................       19,963,644
            Dial Corp. ($6,800,000 par, maturing 02/03/00, yielding
            5.75%)..........................................................        6,797,828
            Dominion Resources, Inc. ($25,000,000 par, maturing 02/08/00 to
            02/24/00, yielding 5.75% to 5.86%)..............................       24,932,661
            FDX Corp. ($20,000,000 par, maturing 02/03/00 to 02/18/00,
            yielding 5.73% to 5.75%)........................................       19,969,664
            Fluor Corp. ($7,200,000 par, maturing 02/16/00, yielding
            5.64%)..........................................................        7,183,080
            Grainger W.W., Inc. ($10,000,000 par, maturing 02/15/00,
            yielding 5.60%).................................................        9,978,222
            Hertz Corp. ($10,000,000 par, maturing 02/10/00, yielding
            5.55%)..........................................................        9,986,125
            Illinois Power Co. ($5,000,000 par, maturing 02/04/00, yielding
            5.70%)..........................................................        4,997,625
            Nabisco, Inc. ($10,620,000 par, maturing 02/15/00, yielding
            5.70%)..........................................................       10,596,459
            RPM, Inc. ($22,000,000 par, maturing 02/04/00 to 02/09/00,
            yielding 5.80% to 5.85%)........................................       21,981,200
            Safeway, Inc. ($10,000,000 par, maturing 02/07/00, yielding
            5.75%)..........................................................        9,990,417
            Texas Utilities Co. ($15,000,000 par, maturing 02/07/00 to
            02/25/00, yielding 5.72% to 5.95%)..............................       14,970,633
            Wal Mart Stores, Inc. ($10,000,000 par, maturing 02/14/00,
            yielding 5.59%).................................................        9,979,814
            Xtra, Inc. ($4,000,000 par, maturing 02/04/00, yielding
            5.72%)..........................................................        3,998,093
                                                                               --------------

            TOTAL COMMERCIAL PAPER..........................................      274,924,674
                                                                               --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-10
<PAGE>   28

YOUR FUND'S INVESTMENTS

January 31, 2000 (Unaudited)

<TABLE>
<CAPTION>
                                                                                   VALUE
<C>         <S>                       <C>       <C>     <C>                    <C>
            SHORT-TERM LOAN PARTICIPATIONS  2.1%
            Comdisco Inc. ($6,000,000 par, maturing 02/01/00, yielding
            6.00%)..........................................................   $    6,000,000
            Cox Communications, Inc. ($5,000,000 par, maturing 02/01/00,
            yielding 6.00%).................................................        5,000,000
            Praxair, Inc. ($25,000,000 par, maturing 02/01/00, yielding
            6.40%)..........................................................       25,000,000
                                                                               --------------

            TOTAL SHORT-TERM LOAN PARTICIPATIONS............................       36,000,000
                                                                               --------------

            TIME DEPOSIT  0.1%
            State Street Bank & Trust Corp. ($2,000,000 par, 5.00% coupon,
            dated 01/31/00, to be sold on 02/01/00 at $2,000,278)...........        2,000,000
                                                                               --------------

TOTAL SHORT-TERM INVESTMENTS  18.3%
  (Cost $312,924,674).......................................................      312,924,674
                                                                               --------------

TOTAL INVESTMENTS  98.4%
  (Cost $1,725,002,307).....................................................    1,679,454,765

OTHER ASSETS IN EXCESS OF LIABILITIES  1.6%.................................       27,860,543
                                                                               --------------

NET ASSETS  100.0%..........................................................   $1,707,315,308
                                                                               ==============
</TABLE>

NR=Not Rated
 +  Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
    Standard & Poor's Group are considered to be below investment grade.
 1  Industry percentages are calculated as a percentage of net assets.
(a) This Senior Loan interest is non-income producing.
(b) This Borrower has filed for protection in federal bankruptcy court.
 *  Senior Loans in the Fund's portfolio generally are subject to mandatory
    and/or optional prepayment. Because of these mandatory prepayment conditions
    and because there may be significant economic incentives for a Borrower to
    prepay, prepayments of Senior Loans in the Fund's portfolio may occur. As a
    result, the actual remaining maturity of Senior Loans held in the Fund's
    portfolio may be substantially less than the stated maturities shown.
    Although the Fund is unable to accurately estimate the actual remaining
    maturity of individual Senior Loans, the Fund estimates that the actual
    average maturity of the Senior Loans held in its portfolio will be
    approximately 18-24 months.
 **  Senior Loans in which the Fund invests generally pay interest at rates
     which are periodically redetermined by reference to a base lending rate
     plus a premium. These base lending rates are generally (i) the lending rate
     offered by one or more major European banks, such as the London Inter-Bank
     Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major
     United States banks and (iii) the certificate of deposit rate. Senior loans
     are generally considered to be restricted in that the Fund ordinarily is
     contractually obligated to receive approval from the Agent Bank and/or
     borrower prior to the disposition of a Senior Loan.

See Notes to Financial Statements

                                      A-11
<PAGE>   29

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
January 31, 2000 (Unaudited)

<TABLE>
<S>                                                           <C>
ASSETS:
Total Investments (Cost $1,725,002,307).....................  $1,679,454,765
Cash........................................................      17,688,765
Receivables:
  Interest..................................................      13,202,529
  Fund Shares Sold..........................................       7,159,471
  Investments Sold..........................................       2,613,998
Prepaid Expenses............................................         738,865
Other.......................................................         309,128
                                                              --------------
      Total Assets..........................................   1,721,167,521
                                                              --------------
LIABILITIES:
Payables:
  Investments Purchased.....................................       9,560,981
  Income Distributions......................................       2,039,823
  Investment Advisory Fee...................................       1,426,091
  Administrative Fee........................................         394,957
  Distributor and Affiliates................................         282,171
  Initial Offering and Registration Costs...................          41,558
Trustees' Deferred Compensation and Retirement Plans........          53,856
Accrued Expenses............................................          52,776
                                                              --------------
      Total Liabilities.....................................      13,852,213
                                                              --------------
NET ASSETS..................................................  $1,707,315,308
                                                              ==============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 173,671,374 shares issued and
  outstanding)..............................................  $    1,736,714
Paid in Surplus.............................................   1,744,154,325
Accumulated Undistributed Net Investment Income.............       6,088,149
Accumulated Net Realized Gain...............................         883,662
Net Unrealized Depreciation.................................     (45,547,542)
                                                              --------------
NET ASSETS..................................................  $1,707,315,308
                                                              ==============
NET ASSET VALUE PER COMMON SHARE ($1,707,315,308 divided by
  173,671,374 shares outstanding)...........................  $         9.83
                                                              ==============
</TABLE>

                                               See Notes to Financial Statements

                                      A-12
<PAGE>   30

Statement of Operations
For the Six Months Ended January 31, 2000 (Unaudited)

<TABLE>
<S>                                                           <C>
INVESTMENT INCOME:
Interest....................................................  $ 70,674,892
Fees........................................................        16,239
Other.......................................................       706,003
                                                              ------------
    Total Income............................................    71,397,134
                                                              ------------
EXPENSES:
Investment Advisory Fee.....................................     7,733,324
Administrative Fee..........................................     2,035,085
Service Fee.................................................     1,221,051
Shareholder Services........................................       545,403
Custody.....................................................       272,132
Legal.......................................................       154,400
Amortization of Organizational Costs........................       102,254
Trustees' Fees and Related Expenses.........................        45,988
Other.......................................................       455,473
                                                              ------------
    Total Expenses..........................................    12,565,110
                                                              ------------
NET INVESTMENT INCOME.......................................  $ 58,832,024
                                                              ============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain...........................................  $  1,110,577
                                                              ------------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................      (911,892)
  End of the Period.........................................   (45,547,542)
                                                              ------------
Net Unrealized Depreciation During the Period...............   (44,635,650)
                                                              ------------
NET REALIZED AND UNREALIZED LOSS............................  $(43,525,073)
                                                              ============
NET INCREASE IN NET ASSETS FROM OPERATIONS..................  $ 15,306,951
                                                              ============
</TABLE>

See Notes to Financial Statements

                                      A-13
<PAGE>   31

Statement of Changes in Net Assets
For the Six Months Ended January 31, 2000 and the Year Ended July 31, 1999
(Unaudited)

<TABLE>
<CAPTION>
                                                       SIX MONTHS
                                                         ENDED            YEAR ENDED
                                                    JANUARY 31, 2000    JULY 31, 1999
                                                    ----------------------------------
<S>                                                 <C>                 <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................    $   58,832,024     $   58,912,884
Net Realized Gain................................         1,110,577            891,210
Net Unrealized Depreciation During the Period....       (44,635,650)        (1,472,606)
                                                     --------------     --------------
Change in Net Assets from Operations.............        15,306,951         58,331,488
                                                     --------------     --------------
Distributions from Net Investment Income.........       (56,047,850)       (56,436,224)
Distributions from Net Realized Gain.............        (1,076,619)           (39,076)
                                                     --------------     --------------
    Total Distributions..........................       (57,124,469)       (56,475,300)
                                                     --------------     --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
  ACTIVITIES.....................................       (41,817,518)         1,856,188
                                                     --------------     --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................       415,319,512      1,133,265,976
Net Asset Value of Shares Issued Through Dividend
  Reinvestment...................................        40,301,672         39,411,306
Cost of Shares Repurchased.......................      (178,440,995)      (114,016,137)
                                                     --------------     --------------
NET CHANGE IN NET ASSETS FROM CAPITAL
  TRANSACTIONS...................................       277,180,189      1,058,661,145
                                                     --------------     --------------
TOTAL INCREASE IN NET ASSETS.....................       235,362,671      1,060,517,333
NET ASSETS:
Beginning of the Period..........................     1,471,952,637        411,435,304
                                                     --------------     --------------
End of the Period (Including undistributed net
  investment income of $6,088,149 and $3,303,975,
  respectively)..................................    $1,707,315,308     $1,471,952,637
                                                     ==============     ==============
</TABLE>

                                               See Notes to Financial Statements

                                      A-14
<PAGE>   32

Statement of Cash Flows
For the Six Months Ended January 31, 2000 (Unaudited)

<TABLE>
<S>                                                           <C>
CHANGE IN NET ASSETS FROM OPERATIONS........................  $  15,306,951
                                                              -------------
Adjustments to Reconcile the Change in Net Assets from
  Operations to Net Cash Used for Operating Activities:
  Increase in Investments at Value..........................   (228,705,381)
  Increase in Interest Receivable...........................     (5,716,487)
  Increase in Receivable for Investments sold...............     (2,363,998)
  Increase in Prepaid Expenses..............................       (490,230)
  Decrease in Unamortized Organizational Costs..............        102,254
  Increase in Other Assets..................................       (296,386)
  Increase in Payable for Investments Purchased.............      9,560,981
  Increase in Investment Advisory Fees Payable..............        231,234
  Increase in Administrative Fees Payable...................         60,851
  Decrease in Distributor & Affiliates Payable..............        (39,042)
  Decrease in Accrued Expenses..............................       (210,196)
  Increase in Trustees' Deferred Compensation and Retirement
    Plans...................................................         19,414
                                                              -------------
    Total Adjustments.......................................   (227,846,986)
                                                              -------------
NET CASH USED FOR OPERATING ACTIVITIES......................   (212,540,035)
                                                              -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shares Sold...................................    427,452,185
Change in Intra-day Credit Line with Custodian Bank.........     (2,093,112)
Payments on Shares Repurchased..............................   (178,440,995)
Cash Dividends Paid.........................................    (15,612,659)
Capital Gain Distributions Paid.............................     (1,076,619)
                                                              -------------
  Net Cash Provided by Financing Activities.................    230,228,800
                                                              -------------
NET INCREASE IN CASH........................................     17,688,765
Cash at Beginning of the Period.............................            -0-
                                                              -------------
CASH AT END OF THE PERIOD...................................  $  17,688,765
                                                              =============
</TABLE>

See Notes to Financial Statements

                                      A-15
<PAGE>   33

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             MARCH 27, 1998
                                             SIX MONTHS                      (COMMENCEMENT
                                                ENDED                        OF INVESTMENT
                                             JANUARY 31,     YEAR ENDED      OPERATIONS) TO
                                                2000        JULY 31, 1999    JULY 31, 1998
                                             ----------------------------------------------
<S>                                          <C>            <C>              <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD....  $ 10.085        $ 10.037          $10.000
                                              --------        --------          -------
  Net Investment Income.....................      .360            .652             .213
  Net Realized and Unrealized Gain/Loss.....     (.261)           .037             .034
                                              --------        --------          -------
Total from Investment Operations............      .099            .689             .247
                                              --------        --------          -------
Less:
  Distributions from Net Investment
    Income..................................      .347            .640             .210
  Distributions from Realized Gain..........      .006            .001              -0-
                                              --------        --------          -------
Total Distributions.........................      .353            .641             .210
                                              --------        --------          -------
NET ASSET VALUE, END OF THE PERIOD..........  $  9.831        $ 10.085          $10.037
                                              ========        ========          =======
Total Return* (a)...........................     1.02%**         7.09%            2.52%**
Net Assets at End of the Period (In
  millions).................................  $1,707.3        $1,472.0          $ 411.4
Ratio of Expenses to Average Net Assets*....     1.54%           1.60%            1.70%
Ratio of Net Investment Income to Average
  Net Assets*...............................     7.21%           6.66%            6.33%
Portfolio Turnover (b)......................       19%**           23%               4%**
 * If certain expenses had not been waived by Van
   Kampen, Total Return would have been lower and the
   ratios would have been as follows:
    Ratio of Expenses to Average Net
      Assets................................       N/A           1.61%            1.92%
    Ratio of Net Investment Income to
      Average Net Assets....................       N/A           6.65%            6.11%
</TABLE>

** Non-Annualized
N/A = Not Applicable.
(a) Total return assumes an investment at the beginning of the period indicated,
    reinvestment of all distributions for the period and tender of all shares at
    the end of the period indicated, excluding payment of 1% imposed on most
    shares accepted by the Fund for repurchase which have been held for less
    than one year. If the early withdrawal charge was included, total return
    would be lower.
(b) Calculation includes the proceeds from principal repayments and sales of
    variable rate senior loan interests.

                                               See Notes to Financial Statements

                                      A-16
<PAGE>   34

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Senior Floating Rate Fund (the "Fund") is registered as a non-
diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to provide a
high level of current income, consistent with preservation of capital. The Fund
seeks to achieve its objective by investing primarily in a portfolio of
interests in floating or variable rate senior loans to corporations,
partnerships and other entities which operate in a variety of industries and
geographical regions. The Fund commenced investment operations on March 27,
1998.

    The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION The Fund's Variable Rate Senior Loan interests ("Loan
interests") are valued by the Fund following guidelines established and
periodically reviewed by the Fund's Board of Trustees. Subject to criteria
established by the Fund's Board of Trustees about the availability and
reliability of market indicators obtained from independent pricing sources,
certain Loan interests are valued at the mean of bid and ask market indicators
supplied by independent pricing sources approved by the Fund's Board of
Trustees. All other Loan interests are valued by considering a number of factors
including consideration of market indicators, transactions in instruments which
Van Kampen Investment Advisory Corp. (the "Adviser") believes may be comparable
(including comparable credit quality, interest rate, interest rate
redetermination period and maturity), the credit worthiness of the Borrower, the
current interest rate, the period until next interest rate redetermination and
the maturity of such Loan interests. Consideration of comparable instruments may
include commercial paper, negotiable certificates of deposit and short-term
variable rate securities which have adjustment periods comparable to the Loan
interests in the Fund's portfolio. The fair value of Loan interests are reviewed
and approved by the Fund's Valuation Committee and by the Fund's Board of
Trustees. The fair value of a Loan interest may differ significantly from the
market value that would have been used had there been a ready and reliable
market for that Loan interest.

    Short-term securities with remaining maturities of 60 days or less are
valued at amortized cost. Short-term loan participations are valued at cost in
the absence of any indication of impairment.

                                      A-17
<PAGE>   35

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.

C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Facility
fees received are treated as market discounts. Market premiums and discounts are
amortized over the stated life of each applicable security. Other income is
comprised primarily of amendment fees. Amendment fees are earned as compensation
for agreeing to changes in loan agreements.

D. ORGANIZATIONAL COSTS The Fund has agreed to reimburse Van Kampen Funds Inc.
or its affiliates (collectively "Van Kampen") for costs incurred in connection
with the Fund's organization in the amount of $140,000. These costs normally are
amortized over a 60 month period beginning on the date of the Fund's initial
public offering of its shares. However, AICPA Statement of Position 98-5, which
is effective for fiscal years beginning after December 15, 1998, requires that
unamortized organizational costs on the Fund's statement of assets and
liabilities be written off. Therefore, the Fund wrote off the remaining
unamortized organizational costs in August 1999.

E. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.

    Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.

    At January 31, 2000, for federal income tax purposes the cost of long- and
short-term investments is $1,725,004,944, the aggregate gross unrealized
appreciation is $7,278,392 and the aggregate gross unrealized depreciation is
$52,828,571 resulting in net unrealized depreciation on long- and short-term
investments of $45,550,179.

F. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included as ordinary income for
tax purposes.

                                      A-18
<PAGE>   36

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:

<TABLE>
<CAPTION>
                     AVERAGE NET ASSETS                         % PER ANNUM
<S>                                                             <C>
First $4.0 billion..........................................    .950 of 1%
Next $3.5 billion...........................................    .900 of 1%
Next $2.5 billion...........................................    .875 of 1%
Over $10.0 billion..........................................    .850 of 1%
</TABLE>

    In addition, the Fund will pay a monthly administrative fee to Van Kampen
Funds Inc., the Fund's Administrator, at an annual rate of .25% of the average
net assets of the Fund. The administrative services to be provided by the
Administrator include monitoring the provisions of the loan agreements and any
agreements with respect to participations and assignments, record keeping
responsibilities with respect to interests in Variable Rate Senior Loans in the
Fund's portfolio and providing certain services to the holders of the Fund's
securities.

    For the six months ended January 31, 2000, the Fund recognized expenses of
approximately $115,200 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

    For the six months ended January 31, 2000, the Fund recognized expenses of
approximately $9,100 representing Van Kampen's cost of providing legal services
to the Fund.

    Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the six months ended January
31, 2000, the Fund recognized expenses for their services of approximately
$447,700. Transfer agency fees are determined through negotiations with the
Fund's Board of Trustees and are based on competitive market benchmarks.

    Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.

    The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

                                      A-19
<PAGE>   37

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

3. CAPITAL TRANSACTIONS

At January 31, 2000 and July 31, 1999, paid in surplus aggregated $1,744,154,325
and $1,467,251,336 respectively.

    Transactions in common shares were as follows:

<TABLE>
<CAPTION>
                                                           SIX MONTHS
                                                             ENDED           YEAR ENDED
                                                        JANUARY 31, 2000    JULY 31, 1999
<S>                                                     <C>                 <C>
Beginning Shares....................................      145,951,374         40,992,495
                                                          -----------        -----------
  Shares Sold.......................................       41,528,218        112,343,843
  Shares Issued Through Dividend Reinvestment.......        4,038,542          3,904,175
  Shares Repurchased................................      (17,846,760)       (11,289,139)
                                                          -----------        -----------
  Net Increase in Shares............................       27,720,000        104,958,879
                                                          -----------        -----------
Ending Shares.......................................      173,671,374        145,951,374
                                                          ===========        ===========
</TABLE>

4. INVESTMENT TRANSACTIONS

During the period, the costs of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $489,727,594 and $238,544,595,
respectively.

5. TENDER OF SHARES

The Board of Trustees currently intends, each quarter, to consider authorizing
the Fund to make tender offers for all or a portion of its then outstanding
common shares at the net asset value of the common shares at that time. For the
six months ended January 31, 2000, 17,846,760 shares were tendered and
repurchased by the Fund.

6. EARLY WITHDRAWAL CHARGE

An early withdrawal charge to recover offering expenses will be imposed in
connection with most common shares held for less than one year which are
accepted by the Fund for repurchase pursuant to tender offers. The early
withdrawal charge of 1.00% will be payable to Van Kampen. For the six months
ended January 31, 2000, Van Kampen received early withdrawal charges of
approximately $470,300 in connection with tendered shares of the Fund.

7. COMMITMENTS/BORROWINGS

Pursuant to the terms of certain of the Variable Rate Senior Loan agreements,
the Fund had unfunded loan commitments of approximately $7,113,261 as of January
31, 2000. The Fund generally will maintain with its custodian short-term

                                      A-20
<PAGE>   38

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

investments having an aggregate value at least equal to the amount of unfunded
loan commitments.

    The Fund, along with the Van Kampen Prime Rate Income Trust, has entered
into a revolving credit agreement with a syndicate led by Bank of America for an
aggregate of $500,000,000, which will terminate on June 13, 2000. The proceeds
of any borrowing by the Fund under the revolving credit agreement may only be
used, directly or indirectly, for liquidity purposes in connection with the
consummation of a tender offer by the Fund for its shares. Annual commitment
fees of .09% are charged on the unused portion of the credit line. Borrowings
under this facility will bear interest at either the LIBOR rate or the Federal
Funds rate plus .45%. There have been no borrowings under this agreement to
date.

8. SENIOR LOAN PARTICIPATION COMMITMENTS

The Fund invests primarily in participations, assignments, or acts as a party to
the primary lending syndicate of a Variable Rate Senior Loan interest to
corporations, partnerships, and other entities. When the Fund purchases a
participation of a Senior Loan interest, the Fund typically enters into a
contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk of the Borrower, Selling Participant or other persons
interpositioned between the Fund and the Borrower.

    At January 31, 2000, the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Fund on a participation
basis.

<TABLE>
<CAPTION>
                                                                PRINCIPAL
                                                                 AMOUNT       VALUE
                    SELLING PARTICIPANT                           (000)       (000)
<S>                                                             <C>          <C>
Lehman Brothers.............................................     $12,500     $12,502
Bankers Trust...............................................       8,155       8,156
Canadian Imperial Bank of Commerce..........................       7,700       7,700
Citibank....................................................       7,500       7,492
Credit Suisse...............................................       6,998       7,011
                                                                 -------     -------
Total.......................................................     $42,853     $42,861
                                                                 =======     =======
</TABLE>

9. SERVICE PLAN

The Fund has adopted a Service Plan (the "Plan") designed to meet the service
fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. The Plan governs payments for personal services and/or
the maintenance of shareholder accounts.

                                      A-21
<PAGE>   39

NOTES TO

FINANCIAL STATEMENTS

January 31, 2000 (Unaudited)

    Annual fees under the Plan of .15% (.25% maximum) of net assets are accrued
daily and paid quarterly. For the six months ended January 31, 2000, the Fund
paid service fees of $1,221,100 to Van Kampen.

                                      A-22
<PAGE>   40

                       REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of
Van Kampen Senior Floating Rate Fund:

     We have audited the accompanying statement of assets and liabilities of Van
Kampen Senior Floating Rate Fund (the "Fund"), including the portfolio of
investments, as of July 31, 1999, and the related statements of operations and
cash flows for the year then ended, the statement of changes in net assets for
the year then ended and for the period from March 27, 1998 (commencement of
investment operations) to July 31, 1998, and the financial highlights for each
of the periods presented. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1999, by correspondence with the custodian and selling or agent banks; where
replies were not received we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

     In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Senior Floating Rate Fund as of July 31, 1999, the results of its
operations and cash flows for the year then ended, the changes in its net assets
for the year then ended and for the period from March 27, 1998 (commencement of
investment operations) to July 31, 1998, and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles.

                                                                        KPMG LLP

Chicago, Illinois

September 14, 1999

                                      A-23
<PAGE>   41

                            PORTFOLIO OF INVESTMENTS

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal                                        Bank Loan
 Amount                                          Ratings*             Stated
  (000)                 Borrower               Moody's   S&P        Maturity**            Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
            VARIABLE RATE *** SENIOR LOAN INTERESTS  78.7%
            AEROSPACE/DEFENSE  1.8%
 $ 4,952    Aerostructures Corp., Term
            Loan.............................   NR       BB-         12/31/03         $    4,948,658
  13,920    Decrane Finance Co., Term Loan...   B2       B+    09/30/05 to 04/23/06       13,912,566
   7,483    Stellex Technologies, Inc., Term
            Loan.............................   B2       B+          09/30/06              7,476,987
                                                                                      --------------
                                                                                          26,338,211
                                                                                      --------------
            AUTOMOTIVE  1.9%
   4,868    Breed Technologies, Inc., Term
            Loan.............................  Caa1      CCC   04/27/04 to 04/27/06        4,866,610
     717    Breed Technologies, Inc.,
            Revolving Credit Agreement.......  Caa1      CCC         04/27/04                717,137
  12,632    JL French Automotive Castings,
            Inc., Term Loan..................   B1       B+          10/21/06             12,630,974
  10,000    Metalforming Technologies, Inc.,
            Term Loan........................   NR       NR          06/30/06              9,990,325
                                                                                      --------------
                                                                                          28,205,046
                                                                                      --------------
            BEVERAGE, FOOD & TOBACCO  3.3%
  39,940    Agrilink Foods, Term Loan........   B1       BB-   09/30/04 to 09/30/05       39,937,063
   9,250    B & G Foods, Inc., Term Loan.....   B1       B+          03/31/06              9,243,122
                                                                                      --------------
                                                                                          49,180,185
                                                                                      --------------
            BROADCASTING  2.2%
  10,000    Comcorp Broadcasting, Inc., Term
            Loan.............................   NR       NR          06/30/07              9,999,726
   4,376    Fairchild Corp., Term Loan.......   Ba3      BB-         04/30/06              4,374,840
   8,000    Quoram Broadcasting, Inc., Term
            Loan.............................   Ba1      BB          09/30/07              8,009,522
   9,667    Sinclair Broadcasting, Term
            Loan.............................   Ba2      BB-         09/15/05              9,654,995
                                                                                      --------------
                                                                                          32,039,083
                                                                                      --------------
            BUILDINGS & REAL ESTATE  0.3%
   4,979    BSL Holdings, Term Loan..........   NR       BB-         12/30/05              4,975,019
                                                                                      --------------
            CHEMICALS, PLASTICS & RUBBER  5.0%
   6,451    High Performance Plastics, Inc.,
            Term Loan........................   NR       NR          03/31/05              6,446,921
  24,170    Lyondell Petrochemical Co., Term
            Loan.............................   Ba3      NR    06/30/05 to 05/17/06       24,162,755
   5,000    MetoKote Corp., Term Loan........   NR       NR          11/02/05              4,999,730
   8,125    Pioneer Americas Acquisition
            Corp., Term Loan.................   B2       B+          12/31/06              8,111,409
   6,575    Sterling Pulp Chemicals, Inc.,
            Term Loan........................   B3       BB-         09/30/04              6,571,201
  17,806    Sybron Chemicals, Inc., Term
            Loan.............................   NR       NR          07/31/04             17,802,942
   5,742    West American Rubber, Term
            Loan.............................   NR       NR          06/30/05              5,741,504
                                                                                      --------------
                                                                                          73,836,462
                                                                                      --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-24
<PAGE>   42
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal                                        Bank Loan
 Amount                                          Ratings*             Stated
  (000)                 Borrower               Moody's   S&P        Maturity**            Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
            COMMUNICATIONS -- TELEPHONE  1.9%
 $18,937    Davel Financing Co., LLC, Term
            Loan.............................   NR       NR          06/23/05         $   18,918,326
   9,819    Telespectrum Worldwide, Inc.,
            Term Loan........................   NR       NR    12/31/01 to 12/31/03        9,815,712
                                                                                      --------------
                                                                                          28,734,038
                                                                                      --------------
            CONSTRUCTION MATERIALS  2.4%
  21,000    American Buildings Co., Term
            Loan.............................   NR       NR          11/15/05             20,999,978
   5,216    Flextek Components, Inc., Term
            Loan (a).........................   NR       NR          02/28/05              4,182,641
  10,114    Hexcel Corp., Term Loan..........   Ba2      BB          09/14/05             10,105,369
                                                                                      --------------
                                                                                          35,287,988
                                                                                      --------------
            CONTAINERS, PACKAGING & GLASS  1.3%
   5,925    American Bottling Co., Term
            Loan.............................   NR       NR          05/01/07              5,924,050
   1,148    Huntsman Packaging Corp., Term
            Loan.............................   Ba2      NR          12/31/02              1,148,028
   2,093    Huntsman Packaging Corp.,
            Revolving Credit Agreement.......   Ba2      NR          12/31/02              2,093,316
   4,947    Safelite Glass Corp., Term
            Loan.............................   B1       B+          12/23/03              4,944,638
   1,200    Safelite Glass Corp., Revolving
            Credit Agreement.................   B1       B+          12/23/03              1,199,729
   3,911    Stone Container Corp., Term
            Loan.............................   Ba3      B+          10/01/03              3,910,712
                                                                                      --------------
                                                                                          19,220,473
                                                                                      --------------
            DIVERSIFIED MANUFACTURING  0.6%
   7,792    Intesys Technologies, Inc., Term
            Loan.............................   NR       NR    06/30/04 to 06/30/06        7,786,137
     672    Intesys Technologies, Inc.,
            Revolving Credit Agreement.......   NR       NR          06/30/04                672,000
                                                                                      --------------
                                                                                           8,458,137
                                                                                      --------------
            ECOLOGICAL  3.6%
  50,000    Allied Waste North America, Inc.,
            Term Loan........................   Ba3      NR    07/23/06 to 07/23/07       50,000,000
   3,204    Safety-Kleen Corp., Term Loan....   Ba3      BB    04/03/05 to 04/03/06        3,202,946
                                                                                      --------------
                                                                                          53,202,946
                                                                                      --------------
            ELECTRONICS  1.5%
   7,500    Amphenol Corp., Term Loan........   Ba3      B+          05/19/04              7,493,775
   8,982    Details Capital Corp., Term
            Loan.............................   B1       B+          04/22/05              8,981,225
   4,984    Stratus Computers, Inc., Term
            Loan.............................   NR       NR          12/31/04              5,007,542
                                                                                      --------------
                                                                                          21,482,542
                                                                                      --------------
            ENTERTAINMENT & LEISURE  0.3%
   4,963    True Temper Sports, Inc., Term
            Loan.............................   B1       BB-         09/30/05              4,958,950
                                                                                      --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-25
<PAGE>   43
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal                                        Bank Loan
 Amount                                          Ratings*             Stated
  (000)                 Borrower               Moody's   S&P        Maturity**            Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
            FARMING & AGRICULTURE  0.3%
 $ 4,887    Walco International, Inc., Term
            Loan.............................   NR       NR          03/31/04         $    4,918,047
                                                                                      --------------
            FINANCE  1.8%
  10,000    Bridge Information Systems, Inc.,
            Term Loan........................   NR       NR          05/29/05              9,993,589
   6,961    Outsourcing Solutions, Term
            Loan.............................   B2       BB-         10/15/04              6,957,363
  10,000    Paul G. Allen, Term Loan.........   NR       NR          06/10/03              9,999,150
                                                                                      --------------
                                                                                          26,950,102
                                                                                      --------------
            GROCERY  1.9%
  27,759    The Pantry, Inc., Term Loan......   B1       BB-         01/31/06             27,758,315
                                                                                      --------------
            HEALTHCARE  2.2%
   6,908    Meditrust Corp., Term Loan.......   NR       NR          07/17/01              6,907,522
  18,151    Vencor, Inc., Term Loan (b)......  Caa2      NR          01/15/05             17,241,865
   7,900    Wilson Greatbatch, Ltd., Term
            Loan.............................   NR       NR          07/30/04              7,898,611
                                                                                      --------------
                                                                                          32,047,998
                                                                                      --------------
            HOME & OFFICE FURNISHINGS,
            HOUSEWARES & DURABLE CONSUMER
            PRODUCTS  2.6%
  21,500    Imperial Home Decor Group, Inc.,
            Term Loan........................   B1        B    03/13/05 to 03/13/06       21,573,296
  16,583    Renters Choice, Inc., Term
            Loan.............................   Ba3      BB-   01/31/06 to 01/31/07       16,583,642
                                                                                      --------------
                                                                                          38,156,938
                                                                                      --------------
            HOTELS, MOTELS, INNS, & GAMING  3.4%
  10,000    Aladdin Gaming, LLC, Term Loan...   B2       NR    08/25/06 to 08/26/06        9,997,342
  40,000    Starwood Hotels & Resorts
            Worldwide, Inc., Term Loan.......   Ba1      NR          02/23/03             40,011,547
                                                                                          50,008,889
                                                                                      --------------
            MACHINERY  1.3%
   4,187    Numatics, Inc., Term Loan........   Ba3       B    03/19/04 to 09/19/05        4,184,097
  15,000    Ocean Rig (Norway), Term Loan....   NR       NR          06/01/08             14,992,358
                                                                                      --------------
                                                                                          19,176,455
                                                                                      --------------
            MINING, STEEL, IRON &
            NON-PRECIOUS METALS  1.0%
   9,900    Ispat Inland, Term Loan..........   Ba3      BB    07/16/05 to 07/16/06        9,893,616
   5,000    White Knight Resources, Ltd.,
            Term Loan........................   NR       NR          06/30/07              5,001,004
                                                                                      --------------
                                                                                          14,894,620
                                                                                      --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-26
<PAGE>   44
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal                                        Bank Loan
 Amount                                          Ratings*             Stated
  (000)                 Borrower               Moody's   S&P        Maturity**            Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
            PAPER & FOREST PRODUCTS  1.6%
 $14,850    Le Group Forex, Inc., Term
            Loan.............................   NR       BB          06/30/05         $   14,850,000
   8,833    Pacifica Papers, Inc., Term
            Loan.............................   Ba2      BB          03/12/06              8,832,072
                                                                                      --------------
                                                                                          23,682,072
                                                                                      --------------
            PERSONAL & MISCELLANEOUS
            SERVICES  1.1%
   2,131    Boyds Collection, Ltd., Term
            Loan.............................   Ba3      B+          04/21/06              2,128,845
  13,500    Dimac Corp., Term Loan...........  Caa1      B-    06/30/06 to 12/30/06       13,527,759
                                                                                      --------------
                                                                                          15,656,604
                                                                                      --------------
            PHARMACEUTICALS  1.2%
  17,559    King Pharmaceuticals, Inc., Term
            Loan.............................   B1       BB-         12/18/06             17,558,824
                                                                                      --------------
            PRINTING & PUBLISHING 1.8%
   6,474    Advanstar Communications, Term
            Loan.............................   Ba3      B+          04/30/05              6,473,441
   4,948    Check Printers, Inc., Term
            Loan.............................   NR       NR          06/30/05              4,948,221
   5,566    Penton Media, Inc., Term Loan....   Ba3      BB-         05/31/06              5,565,960
   4,984    Reiman Publications, Inc., Term
            Loan.............................   NR       NR          12/10/05              4,983,950
   4,190    TransWestern Publishing, LP, Term
            Loan.............................   Ba3      B+          10/01/04              4,189,907
                                                                                      --------------
                                                                                          26,161,479
                                                                                      --------------
            RESTAURANTS & FOOD SERVICE  2.1%
   4,171    Americas Favorite Chicken, Inc.,
            Term Loan........................   Ba3      BB-         06/30/02              4,168,827
   1,384    Carvel Corp., Term Loan..........   NR       NR          06/30/00              1,382,250
  24,918    Domino's Pizza, Term Loan........   B1       B+    12/21/06 to 12/21/07       24,908,997
                                                                                      --------------
                                                                                          30,460,074
                                                                                      --------------
            RETAIL -- OFFICE PRODUCTS  0.7%
   9,985    U.S. Office Products Co., Term
            Loan.............................   B2        B          06/09/06              9,984,561
                                                                                      --------------
            RETAIL -- STORES  1.5%
  14,888    Duane Reade, Inc., Term Loan.....   B1       B+          02/15/06             14,892,722
   7,159    Kirklands Holdings, Term Loan....   NR       NR          06/30/02              7,158,350
                                                                                      --------------
                                                                                          22,051,072
                                                                                      --------------
            TELECOMMUNICATIONS -- CELLULAR  3.8%
  38,300    BCP SP Ltd., Term Loan...........   NR       NR          03/31/00             37,938,261
   3,000    Cellular, Inc. Financial Corp.
            (CommNet), Term Loan.............   B1       NR          09/30/05              2,994,465
  15,000    Wireless One Network, LP, Term
            Loan.............................   NR       NR          09/30/07             14,973,525
                                                                                      --------------
                                                                                          55,906,251
                                                                                      --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-27
<PAGE>   45
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal                                        Bank Loan
 Amount                                          Ratings*             Stated
  (000)                 Borrower               Moody's   S&P        Maturity**            Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
            TELECOMMUNICATIONS -- HYBRID  3.8%
 $32,000    Nextel Finance Co., Term Loan....   Ba3       B    09/30/06 to 03/31/07   $   32,001,236
  24,000    Pacific Crossing, Ltd., Term
            Loan.............................   NR       NR          07/28/06             23,998,088
                                                                                      --------------
                                                                                          55,999,324
                                                                                      --------------
            TELECOMMUNICATIONS -- PERSONAL COMMUNICATIONS SYSTEMS  2.3%
  29,133    Omnipoint Communications, Inc.,
            Term Loan........................   B2       NR    02/01/06 to 02/17/06       29,553,419
   5,000    Telecorp PCS, Inc., Term Loan....   B2       NR          12/05/07              4,998,546
                                                                                      --------------
                                                                                          34,551,965
                                                                                      --------------
            TELECOMMUNICATIONS -- WIRELESS MESSAGING  7.0%
  45,000    Arch Paging, Inc., Term Loan.....   B2        B          06/30/06             42,266,962
  55,000    Iridium Operating, LLC, Term Loan
            (b)..............................   NR       CC          12/29/00             49,496,314
  11,000    TSR Wireless, LLC, Term Loan.....   NR       NR          06/30/05             10,996,383
                                                                                      --------------
                                                                                         102,759,659
                                                                                      --------------
            TEXTILES & LEATHER  3.6%
   8,196    American Marketing Industries,
            Inc., Term Loan..................   NR       NR    11/30/04 to 11/30/05        8,193,262
  20,000    Glenoit Corp., Term Loan.........   B1       BB-   12/31/03 to 06/30/04       19,995,312
   5,400    Humphrey's, Inc., Term Loan......   B2       NR          01/15/03              5,389,878
   4,822    Joan Fabrics Corp., Term Loan....   NR       NR          06/30/05              4,817,305
  13,895    Norcross Safety Products, Term
            Loan.............................   NR       NR          10/02/05             13,893,518
                                                                                      --------------
                                                                                          52,289,275
                                                                                      --------------
            TRANSPORTATION -- CARGO  0.9%
   4,450    Gemini Air Cargo, Inc., Term
            Loan.............................   B1       NR          12/12/02              4,446,759
   8,100    OmniTrax Railroads, LLC, Term
            Loan.............................   NR       NR          05/14/05              8,098,386
                                                                                      --------------
                                                                                          12,545,145
                                                                                      --------------
            TRANSPORTATION -- MANUFACTURING COMPONENTS  3.3%
  24,813    SPX Corp., Term Loan.............   Ba3      BB          09/30/06             24,809,445
  23,200    Transportation Manufacturing,
            Inc., Term Loan..................   NR       BB-         06/15/06             23,200,000
                                                                                      --------------
                                                                                          48,009,445
                                                                                      --------------
            TRANSPORTATION -- PERSONAL  3.4%
  50,000    Avis Rent A Car, Inc., Term
            Loan.............................   Ba3      BB+   06/30/06 to 06/30/07       50,000,234
                                                                                      --------------
TOTAL VARIABLE RATE *** SENIOR LOAN INTERESTS  78.7%
  (Cost $1,158,358,320)............................................................   $1,157,446,428
                                                                                      --------------
</TABLE>

                                               See Notes to Financial Statements

                                      A-28
<PAGE>   46
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                          Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
SHORT-TERM INVESTMENTS  19.9%
COMMERCIAL PAPER  14.4%
  Alabama Power Co. ($10,000,000 par, maturing 08/03/99, yielding 5.10%)...........    $   9,997,167
  Baxter International, Inc. ($144,000 par, maturing 08/03/99, yielding 5.10%).....          143,959
  CSX Corp. ($15,000,000 par, maturing 08/24/99, yielding 5.27%)...................       14,949,496
  Centex Corp. ($1,181,000 par, maturing 08/05/99, yielding 5.23%).................        1,180,314
  Comdisco, Inc. ($21,500,000 par, maturing 08/10/99 to 08/11/99, yielding 5.27% to
    5.30%).........................................................................       21,469,121
  Compaq Computer Corp. ($8,122,000 par, maturing 08/25/99, yielding 5.28%)........        8,093,411
  Cox Communications, Inc. ($20,900,000 par, maturing 08/09/99 to 08/10/99,
    yielding 5.22% to 5.25%).......................................................       20,875,552
  General Electric Capital Corp. ($1,450,000 par, maturing 08/23/99, yielding
    5.07%).........................................................................        1,445,507
  General Motors Corp. ($505,000 par, maturing 08/05/99, yielding 5.05%)...........          504,717
  Halliburton Co. ($4,591,000 par, maturing 08/02/99, yielding 5.07%)..............        4,590,353
  Hunt (J.B.) Transportation Services, Inc. ($4,000,000 par, maturing 08/04/99,
    yielding 5.18%)................................................................        3,998,273
  Pfizer, Inc. ($3,788,000 par, maturing 08/12/99 to 08/13/99, yielding 5.06%).....        3,781,890
  Praxair, Inc. ($1,479,000 par, maturing 08/19/99, yielding 5.25%)................        1,475,118
  Raytheon Co. ($10,000,000 par, maturing 08/09/99, yielding 5.22%)................        9,988,400
  Rite Aid Corp. ($22,000,000 par, maturing 08/09/99 to 08/12/99, yielding
    5.25%).........................................................................       21,971,271
  Safeway, Inc. ($17,500,000 par, maturing 08/02/99, yielding 5.28% to 5.30%)......       17,497,432
  TRW, Inc. ($15,675,000 par, maturing 08/16/99, yielding 5.30%)...................       15,640,384
  Tampa Electric Co. ($5,585,000 par, maturing 08/19/99, yielding 5.04%)...........        5,570,926
  Tandy Corp. ($15,700,000 par, maturing 08/23/99 to 08/25/99, yielding 5.18%).....       15,647,797
  Temple Inland, Inc. ($9,787,000 par, maturing 08/02/99, yielding 5.25%)..........        9,785,573
  Western Resources, Inc. ($8,512,000 par, maturing 08/02/99 to 08/25/99, yielding
    5.25% to 5.27%)................................................................        8,486,075
  Xtra, Inc. ($14,576,000 par, maturing 08/05/99 to 08/24/99, yielding 5.22% to
    5.30%).........................................................................       14,540,220
                                                                                      --------------
TOTAL COMMERCIAL PAPER.............................................................      211,632,956
                                                                                      --------------
SHORT-TERM LOAN PARTICIPATIONS  5.5%
  Cummins Engine, Inc. ($10,000,000 par, maturing 08/02/99, yielding 5.23%)........       10,000,000
  Englehard Corp. ($12,707,000 par, maturing 08/18/99, yielding 5.27%).............       12,707,000
  Enron Oil & Gas Co. ($2,000,000 par, maturing 08/02/99, yielding 5.28%)..........        2,000,000
  Gillette Co. ($5,000,000 par, maturing 08/02/99, yielding 5.16%).................        5,000,000
  National Rural Utilities Coop Finance Corp. ($3,600,000 par, maturing 08/12/99,
    yielding 5.10%)................................................................        3,600,000
  Ralston Purina Co. ($10,000,000 par, maturing 08/03/99, yielding 5.23%)..........       10,000,000
</TABLE>

                                               See Notes to Financial Statements

                                      A-29
<PAGE>   47
                      PORTFOLIO OF INVESTMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                          Value
- ----------------------------------------------------------------------------------------------------
<C>         <S>                                <C>       <C>   <C>                    <C>
SHORT-TERM LOAN PARTICIPATIONS (CONTINUED)
  Sprint Capital Corp. ($12,863,000 par, maturing 08/17/99 to 08/24/99, yielding
    5.26% to 5.27%)................................................................   $   12,863,000
  Temple Inland, Inc. ($5,000,000 par, maturing 08/03/99, yielding 5.24%)..........        5,000,000
  Universal Corp. ($15,000,000 par, maturing 08/03/99 to 08/24/99, yielding 5.27%
    to 5.28%)......................................................................       15,000,000
  Western Resources, Inc. ($5,500,000 par, maturing 08/06/99, yielding 5.28%)......        5,500,000
                                                                                      --------------
TOTAL SHORT-TERM LOAN PARTICIPATIONS  5.5%.........................................       81,670,000
                                                                                      --------------
TOTAL SHORT-TERM INVESTMENTS  19.9%
  (Cost $293,302,956)..............................................................      293,302,956
                                                                                      --------------
TOTAL INVESTMENTS  98.6%
  (Cost $1,451,661,276)............................................................    1,450,749,384
OTHER ASSETS IN EXCESS OF LIABILITIES 1.4%.........................................       21,203,253
                                                                                      --------------
NET ASSETS  100.0%.................................................................   $1,471,952,637
                                                                                      ==============
</TABLE>

NR = Not Rated

(a) This Senior Loan interest is non-income producing.
(b) Subsequent to the year ended July 31, 1999, this borrower has filed for
    protection in federal bankruptcy court.
*  Bank loans rated below Baa by Moody's Investor Services, Inc. or BBB by
   Standard & Poor's Group are considered to be below investment grade.

**  Senior Loans in the Fund's portfolio generally are subject to mandatory
    and/or optional prepayment. Because of these mandatory prepayment conditions
    and because there may be significant economic incentives for a Borrower to
    prepay, prepayments of Senior Loans in the Fund's portfolio may occur. As a
    result, the actual remaining maturity of Senior Loans held in the Fund's
    portfolio may be substantially less than the stated maturities shown.
    Although the Fund is unable to accurately estimate the actual remaining
    maturity of individual Senior Loans, the Fund estimates that the actual
    average maturity of the Senior Loans held in its portfolio will be
    approximately 18-24 months.

*** Senior Loans in which the Fund invests generally pay interest at rates which
    are periodically redetermined by reference to a base lending rate plus a
    premium. These base lending rates are generally (i) the lending rate offered
    by one or more major European banks, such as the London Inter-Bank Offered
    Rate ("LIBOR"), (ii) the prime rate offered by one or more major United
    States banks, and (iii) the certificate of deposit rate. Senior loans are
    generally considered to be restricted in that the Fund ordinarily is
    contractually obligated to receive approval from the Agent Bank and/or
    borrower prior to the disposition of a Senior Loan.

                                               See Notes to Financial Statements

                                      A-30
<PAGE>   48

                      STATEMENT OF ASSETS AND LIABILITIES

                                 July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                           <C>
ASSETS:
Total Investments (Cost $1,451,661,276).....................  $1,450,749,384
Receivables:
  Fund Shares Sold..........................................      19,292,144
  Interest..................................................       7,486,042
  Funding Fee...............................................         250,000
Prepaid Expenses............................................         248,635
Unamortized Organizational Costs............................         102,254
Other.......................................................          12,742
                                                              --------------
      Total Assets..........................................   1,478,141,201
                                                              --------------
LIABILITIES:
Payables:
  Custodian Bank............................................       2,093,112
  Income Distributions......................................       1,906,304
  Investment Advisory Fee...................................       1,194,857
  Administrative Fee........................................         334,106
  Distributor and Affiliates................................         321,213
  Initial Offering and Registration Costs...................          41,558
Accrued Expenses............................................         262,972
Trustees' Deferred Compensation and Retirement Plans........          34,442
                                                              --------------
      Total Liabilities.....................................       6,188,564
                                                              --------------
NET ASSETS..................................................  $1,471,952,637
                                                              ==============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 145,951,374 shares issued and
  outstanding)..............................................  $    1,459,514
Paid in Surplus.............................................   1,467,251,336
Accumulated Undistributed Net Investment Income.............       3,303,975
Accumulated Net Realized Gain...............................         849,704
Net Unrealized Depreciation.................................        (911,892)
                                                              --------------
NET ASSETS..................................................  $1,471,952,637
                                                              ==============
NET ASSET VALUE PER COMMON SHARE
  ($1,471,952,637 divided by 145,951,374 shares
  outstanding)..............................................  $        10.09
                                                              ==============
</TABLE>

                                               See Notes to Financial Statements

                                      A-31
<PAGE>   49

                            STATEMENT OF OPERATIONS

                        For the Year Ended July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                             <C>

INVESTMENT INCOME:
Interest....................................................    $72,161,646
Fees........................................................        183,161
Other.......................................................        694,082
                                                                -----------
    Total Income............................................     73,038,889
                                                                -----------
EXPENSES:
Investment Advisory Fee.....................................      8,398,576
Administrative Fee..........................................      2,210,152
Service Fee.................................................      1,326,091
Shareholder Services........................................        593,110
Legal.......................................................        250,491
Custody.....................................................        179,791
Trustees' Fees and Related Expenses.........................         44,013
Amortization of Organizational Costs........................         28,003
Other.......................................................      1,191,214
                                                                -----------
    Total Expenses..........................................     14,221,441
    Investment Advisory Fee Reduction.......................         95,436
                                                                -----------
    Net Expenses............................................     14,126,005
                                                                -----------
NET INVESTMENT INCOME.......................................    $58,912,884
                                                                ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain...........................................    $   891,210
                                                                -----------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................        560,714
  End of the Period.........................................       (911,892)
                                                                -----------
Net Unrealized Depreciation During the Period...............     (1,472,606)
                                                                -----------
NET REALIZED AND UNREALIZED LOSS............................    $  (581,396)
                                                                ===========
NET INCREASE IN NET ASSETS FROM OPERATIONS..................    $58,331,488
                                                                ===========
</TABLE>

                                               See Notes to Financial Statements

                                      A-32
<PAGE>   50

                       STATEMENT OF CHANGES IN NET ASSETS

         For the Year Ended July 31, 1999 and the Period March 27, 1998
            (Commencement of Investment Operations) to July 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    Year Ended     Period Ended
                                                  July 31, 1999    July 31, 1998
- --------------------------------------------------------------------------------
<S>                                               <C>              <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...........................  $   58,912,884   $  5,120,997
Net Realized Gain/Loss..........................         891,210         (2,430)
Net Unrealized Appreciation/Depreciation During
  the Period....................................      (1,472,606)       560,714
                                                  --------------   ------------
Change in Net Assets from Operations............      58,331,488      5,679,281
                                                  --------------   ------------
Distributions from Net Investment Income........     (56,436,224)    (4,980,066)
Distributions from Net Realized Gain............         (39,076)           -0-
                                                  --------------   ------------
  Total Distributions...........................     (56,475,300)    (4,980,066)
                                                  --------------   ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
  ACTIVITIES....................................       1,856,188        699,215
                                                  --------------   ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................   1,133,265,976    408,647,472
Net Asset Value of Shares Issued Through
  Dividend Reinvestment.........................      39,411,306      3,263,134
Cost of Shares Repurchased......................    (114,016,137)    (1,274,517)
                                                  --------------   ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
  TRANSACTIONS..................................   1,058,661,145    410,636,089
                                                  --------------   ------------
TOTAL INCREASE IN NET ASSETS....................   1,060,517,333    411,335,304
NET ASSETS:
Beginning of the Period.........................     411,435,304        100,000
                                                  --------------   ------------
End of the Period (Including undistributed net
  investment income of $3,303,975 and $309,945,
  respectively).................................  $1,471,952,637   $411,435,304
                                                  ==============   ============
</TABLE>

                                               See Notes to Financial Statements

                                      A-33
<PAGE>   51

                            STATEMENT OF CASH FLOWS

                        For the Year Ended July 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                             <C>

CHANGE IN NET ASSETS FROM OPERATIONS........................    $    58,331,488
                                                                ---------------
Adjustments to Reconcile the Change in Net Assets from
  Operations to Net Cash Used for Operating Activities:
  Increase in Investments at Value..........................     (1,057,228,835)
  Increase in Interest Receivable...........................         (4,953,617)
  Increase in Receivable for Funding Fee....................           (250,000)
  Decrease in Prepaid Expenses..............................            230,851
  Decrease in Unamortized Organizational Costs..............             28,003
  Decrease in Other Assets..................................              6,370
  Increase in Investment Advisory Fees Payable..............            886,398
  Increase in Administrative Fees Payable...................            236,132
  Increase in Distributor & Affiliates Payable..............            201,797
  Decrease in Organizational Costs Payable..................           (135,000)
  Decrease in Offering & Registration Fees Payable..........           (430,251)
  Increase in Accrued Expenses..............................            145,577
  Increase in Trustees' Deferred Compensation and Retirement
    Plans Payable...........................................             28,631
                                                                ---------------
    Total Adjustments.......................................     (1,061,233,944)
                                                                ---------------
NET CASH USED FOR OPERATING ACTIVITIES......................     (1,002,902,456)
                                                                ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shares Sold...................................      1,130,436,489
Change in Intra-day Credit Line with Custodian Bank.........          2,093,112
Payments on Shares Repurchased..............................       (114,016,137)
Cash Dividends Paid.........................................        (15,610,394)
Capital Gain Distributions Paid.............................            (39,076)
                                                                ---------------
  Net Cash Provided by Financing Activities.................      1,002,863,994
                                                                ---------------
NET DECREASE IN CASH........................................            (38,462)
Cash at Beginning of the Period.............................             38,462
                                                                ---------------
CASH AT END OF THE PERIOD...................................    $           -0-
                                                                ===============
</TABLE>

                                               See Notes to Financial Statements

                                      A-34
<PAGE>   52

                              FINANCIAL HIGHLIGHTS

     The following schedule presents financial highlights for one share of
             the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      March 27, 1998
                                                                      (Commencement
                                                                      of Investment
                                                       Year Ended     Operations) to
                                                      July 31, 1999   July 31, 1998
- ------------------------------------------------------------------------------------
<S>                                                   <C>             <C>
Net Asset Value, Beginning of the Period.............    $10.037         $10.000
                                                         -------         -------
  Net Investment Income..............................       .652            .213
  Net Realized and Unrealized Gain...................       .037            .034
                                                         -------         -------
Total from Investment Operations.....................       .689            .247
                                                         -------         -------
Less:
  Distributions from Net Investment Income...........       .640            .210
  Distributions from Realized Gain...................       .001             -0-
                                                         -------         -------
Total Distributions..................................       .641            .210
                                                         -------         -------
Net Asset Value, End of the Period...................    $10.085         $10.037
                                                         =======         =======
Total Return* (a)....................................      7.09%           2.52%**
Net Assets at End of the Period (In millions)........    $1,472.0        $ 411.4
Ratio of Expenses to Average Net Assets*.............      1.60%           1.70%
Ratio of Net Investment Income to Average Net
  Assets*............................................      6.66%           6.33%
Portfolio Turnover (b)...............................        23%              4%**
* If certain expenses had not been waived by Van Kampen, Total
  Return would have been lower and the ratios would have been as
  follows:
Ratio of Expenses to Average Net Assets..............      1.61%           1.92%
Ratio of Net Investment Income to Average Net
  Assets.............................................      6.65%           6.11%
</TABLE>

**Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
    the contingent deferred sales charge.
(b) Calculation includes the proceeds from principal repayments and sales of
    variable rate senior loan interests.

                                               See Notes to Financial Statements

                                      A-35
<PAGE>   53

                         NOTES TO FINANCIAL STATEMENTS

                                 July 31, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Senior Floating Rate Fund (the "Fund"), is registered as a
non-diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to provide a
high level of current income, consistent with preservation of capital. The Fund
seeks to achieve its objective by investing primarily in a portfolio of
interests in floating or variable rate senior loans to corporations,
partnerships and other entities which operate in a variety of industries and
geographical regions. The Fund commenced investment operations on March 27,
1998.
    The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION--The value of the Fund's Variable Rate Senior Loan
interests, totaling $1,157,446,428 (78.7% of net assets) is determined by Van
Kampen Investment Advisory Corp. (the "Adviser") following guidelines and
procedures established, and periodically reviewed, by the Board of Trustees. The
value of a Variable Rate Senior Loan interest in the Fund's portfolio is
determined with reference to changes in market interest rates and to the
creditworthiness of the underlying obligor. In valuing Variable Rate Senior Loan
interests, the Adviser considers market quotations and transactions in
instruments that the Adviser believes may be comparable to such Variable Rate
Senior Loan interests. In determining the relationship between such instruments
and the Variable Rate Senior Loan interest, the Adviser considers such factors
as the creditworthiness of the underlying obligor, the current interest rate,
the interest rate redetermination period and the maturity date. To the extent
that reliable secondary market transactions in Variable Rate Senior Loan
interest have occurred, the Adviser also considers pricing information derived
from such secondary market transactions in valuing Variable Rate Senior Loan
interests. Because of uncertainty in the nature of the valuation process, the
estimated value of a Variable Rate Senior Loan interest may differ significantly
from the value that would have been used had there been reliable market activity
for that Variable Rate Senior Loan interest. Short-term securities with
remaining maturities of 60 days or less are valued at

                                      A-36
<PAGE>   54
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

amortized cost. Short-term loan participations are valued at cost in the absence
of any indication of impairment.

B. SECURITY TRANSACTIONS--Investment transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.

C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Facility
fees received are treated as market discounts. Market premiums and discounts are
amortized over the stated life of each applicable security. Other income is
comprised primarily of amendment fees. Amendment fees are earned as compensation
for agreeing to changes in loan agreements.

D. ORGANIZATIONAL COSTS--The Fund has agreed to reimburse Van Kampen Funds Inc.
or its affiliates (collectively "Van Kampen") for costs incurred in connection
with the Fund's organization in the amount of $140,000. These costs normally are
amortized over a 60 month period beginning on the date of the Fund's initial
public offering of its shares. However, AICPA Statement of Position 98-5, which
is effective for fiscal years beginning after December 15, 1998, requires that
unamortized organizational costs on the Fund's statement of assets and
liabilities be written off. Therefore, the Fund will write off the remaining
unamortized organizational costs in August 1999. The Adviser has agreed that in
the event any of the initial shares of the Fund originally purchased by Van
Kampen are redeemed, the Fund will be reimbursed for any unamortized
organizational costs in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

E. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
    Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
    At July 31, 1999, for federal income tax purposes the cost of long- and
short-term investments is $1,451,663,912, the aggregate gross unrealized
appreciation is $5,579,324 and the aggregate gross unrealized depreciation is
$6,493,852 resulting in net unrealized depreciation on long- and short-term
investments of $914,528.

                                      A-37
<PAGE>   55
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included as ordinary income for
tax purposes.
    Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between financial and tax basis
reporting for the 1999 fiscal year have been identified and appropriately
reclassified. Permanent differences of $479,486 relating to certain offering
costs which are not deductible for tax purposes and $37,884 relating to expenses
not deductible for tax purposes have been reclassified from capital to
accumulated undistributed net investment income.

2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:

<TABLE>
<CAPTION>
                  AVERAGE NET ASSETS                      % PER ANNUM
- ---------------------------------------------------------------------
<S>                                                       <C>
First $4.0 billion....................................    .950 of 1%
Next $3.5 billion.....................................    .900 of 1%
Next $2.5 billion.....................................    .875 of 1%
Over $10.0 billion....................................    .850 of 1%
</TABLE>

    In addition, the Fund will pay a monthly administrative fee to Van Kampen
Funds Inc., the Fund's Administrator, at an annual rate of .25% of the average
net assets of the Fund. The administrative services to be provided by the
Administrator include monitoring the provisions of the loan agreements and any
agreements with respect to participations and assignments, record keeping
responsibilities with respect to interests in Variable Rate Senior Loans in the
Fund's portfolio and providing certain services to the holders of the Fund's
securities.
    For the year ended July 31, 1999, the Adviser voluntarily waived $95,436 of
its investment advisory fees. This waiver is voluntary in nature and can be
discontinued at the Adviser's discretion.
    For the year ended July 31, 1999, the Fund recognized expenses of
approximately $226,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

                                      A-38
<PAGE>   56
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

    For the year ended July 31, 1999, the Fund recognized expenses of
approximately $23,800 representing Van Kampen's cost of providing legal services
to the Fund.
    Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the year ended July 31, 1999,
the Fund recognized expenses for their services of approximately $484,500.
Transfer agency fees are determined through negotiations with the Fund's Board
of Trustees and are based on competitive market benchmarks.
    Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
    The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

3. CAPITAL TRANSACTIONS
At July 31, 1999 and 1998, paid in surplus aggregated $1,467,251,336 and
$410,157,150, respectively.
    Transactions in common shares were as follows:

<TABLE>
<CAPTION>
                                                 Year Ended      Period Ended
                                                July 31, 1999    July 31, 1998
- ------------------------------------------------------------------------------
<S>                                             <C>              <C>
Beginning Shares............................      40,992,495          10,000
                                                 -----------      ----------
  Shares Sold...............................     112,343,843      40,784,384
  Shares Issued Through Dividend
     Reinvestment...........................       3,904,175         325,311
  Shares Repurchased........................     (11,289,139)       (127,200)
                                                 -----------      ----------
  Net Increase in Shares....................     104,958,879      40,982,495
                                                 -----------      ----------
Ending Shares...............................     145,951,374      40,992,495
                                                 ===========      ==========
</TABLE>

4. INVESTMENT TRANSACTIONS
During the period, the costs of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $1,005,714,746 and $176,166,968,
respectively.

                                      A-39
<PAGE>   57
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

5. TENDER OF SHARES
The Board of Trustees currently intends, each quarter, to consider authorizing
the Fund to make tender offers for all or a portion of its then outstanding
common shares at the net asset value of the common shares at that time. For the
year ended July 31, 1999, 11,289,139 shares were tendered and repurchased by the
Fund.

6. EARLY WITHDRAWAL CHARGE
An early withdrawal charge to recover offering expenses will be imposed in
connection with most common shares held for less than one year which are
accepted by the Fund for repurchase pursuant to tender offers. The early
withdrawal charge of 1.00% will be payable to Van Kampen. For the year ended
July 31, 1999, Van Kampen received early withdrawal charges of approximately
$528,221 in connection with tendered shares of the Fund.

7. COMMITMENTS/BORROWINGS
Pursuant to the terms of certain of the Variable Rate Senior Loan agreements,
the Fund had unfunded loan commitments of approximately $8,233,701 as of July
31, 1999. The Fund generally will maintain with its custodian short-term
investments having an aggregate value at least equal to the amount of unfunded
loan commitments.
    The Fund, along with the Van Kampen Prime Rate Income Trust, has entered
into a revolving credit agreement with a syndicate led by Bank of America for an
aggregate of $500,000,000, which will terminate on June 13, 2000. The proceeds
of any borrowing by the Fund under the revolving credit agreement may only be
used, directly or indirectly, for liquidity purposes in connection with the
consummation of a tender offer by the Fund for its shares. Annual commitment
fees of .09% are charged on the unused portion of the credit line. Borrowings
under this facility will bear interest at either the LIBOR rate or the Federal
Funds rate plus .45%, except during the period from December 17, 1999 through
January 14, 2000 the applicable margin shall be .575%. There have been no
borrowings under this agreement to date.

8. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in participations, assignments, or acts as a party to
the primary lending syndicate of a Variable Rate Senior Loan interest to
corporations, partnerships, and other entities. When the Fund purchases a
participation of a Senior Loan interest, the Fund typically enters into a
contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk

                                      A-40
<PAGE>   58
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 July 31, 1999
- --------------------------------------------------------------------------------

of the Borrower, Selling Participant or other persons interpositioned between
the Fund and the Borrower.
    At July 31, 1999, the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Fund on a participation
basis.

<TABLE>
<CAPTION>
                                                      PRINCIPAL
                                                       AMOUNT       VALUE
               SELLING PARTICIPANT                      (000)       (000)
- --------------------------------------------------------------------------
<S>                                                   <C>          <C>
Bankers Trust.....................................     $ 8,196     $ 8,193
Canadian Imperial Bank of Commerce................      12,152      12,147
                                                       -------     -------
Total.............................................     $20,348     $20,340
                                                       =======     =======
</TABLE>

9. SERVICE PLAN
The Fund has adopted a Service Plan (the "Plan") designed to meet the service
fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. The Plan governs payments for personal services and/or
the maintenance of shareholder accounts.
    Annual fees under the Plan of .15% (.25% maximum) of net assets are accrued
daily and paid quarterly. For the year ended July 31, 1999, the Fund paid
service fees of $1,327,950 to Van Kampen.

                                      A-41

<PAGE>   1

 -------------------------------------------------------------------------------

                                                                  EXHIBIT (a)(2)
                             LETTER OF TRANSMITTAL
                            REGARDING COMMON SHARES
                                       OF

                      VAN KAMPEN SENIOR FLOATING RATE FUND
                   TENDERED PURSUANT TO THE OFFER TO PURCHASE
                              DATED APRIL 20, 2000

   THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT EASTERN STANDARD

               TIME ON MAY 19, 2000, UNLESS THE OFFER IS EXTENDED

     Ladies and Gentlemen:

     The undersigned hereby tenders to the Van Kampen Senior Floating Rate Fund,
a non-diversified, closed-end management investment company organized as a
Massachusetts business trust (the "Trust"), the common shares of beneficial
interest, par value $0.01 per share, of the Trust (the "Common Shares")
described below in Box No. 1, at a price (the "Purchase Price") equal to the net
asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Standard
time on the Expiration Date (as defined in the Offer to Purchase), upon the
terms and conditions set forth in the Offer to Purchase, dated April 20, 2000,
receipt of which is hereby acknowledged, and in this Letter of Transmittal and
the Instructions hereto (which together constitute the "Offer"). An Early
Withdrawal Charge (as defined in the Offer to Purchase) will be imposed on most
Common Shares accepted for payment which have been held for less than one year.

     Subject to and effective upon acceptance for payment of the Common Shares
tendered hereby in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to all Common Shares
tendered hereby that are purchased pursuant to the Offer and hereby irrevocably
constitutes and appoints Van Kampen Investor Services Inc. (the "Depositary") as
attorney-in-fact of the undersigned with respect to such Common Shares, with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Common Shares or transfer ownership of such Common Shares on the Trust's
books, together in either such case with all accompanying evidences of transfer
and authenticity, to or upon the order of the Trust, upon receipt by the
Depositary, as the undersigned's agent, of the NAV per Common Share with respect
to such Common Shares; (b) present certificates for such Common Shares, if any,
for cancellation and transfer on the Trust's books; (c) deduct from the Purchase
Price deposited with the Depositary any applicable Early Withdrawal Charge and
remit such charge to Van Kampen Funds Inc.; and (d) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Common Shares,
subject to the next paragraph, all in accordance with the terms of the Offer.
<PAGE>   2

     The undersigned hereby represents and warrants that: (a) the undersigned
has a "net long position" in the Common Shares tendered hereby within the
meaning of Rule 14e-4 promulgated under the Securities Act of 1934, as amended,
and has full power and authority to validly tender, sell, assign and transfer
the Common Shares tendered hereby; (b) when and to the extent the Trust accepts
the Common Shares for purchase, the Trust will acquire good, marketable and
unencumbered title to them, free and clear of all security interests, liens,
charges, encumbrances, conditional sales agreements or other obligations
relating to their sale or transfer, and not subject to any adverse claim; (c) on
request, the undersigned will execute and deliver any additional documents the
Depositary or the Trust deems necessary or desirable to complete the assignment,
transfer and purchase of the Common Shares tendered hereby; and (d) the
undersigned has read and agrees to all of the terms of this Offer.

     The names and addresses of the registered owners should be printed, if they
are not already printed, in Box 1 as they appear on the registration of the
Common Shares. The number of Common Shares that the undersigned wishes to tender
should be indicated in Box No. 1, which number may be determined by indicating
in Option B of such box the dollar amount of proceeds the undersigned desires to
receive pursuant to the tender offer after any applicable Early Withdrawal
Charge has been deducted from such proceeds. The undersigned may elect to have
the Depositary invest the cash proceeds of the Offer in Class C Shares of
certain open-end investment companies advised by either Van Kampen Investment
Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen
Funds Inc., subject to certain limitations, by indicating in Option C. If the
Common Shares tendered hereby are in certificate form, the certificates
representing such Common Shares must be returned together with this Letter of
Transmittal.

     The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Trust may terminate or amend the Offer or may not be
required to purchase any of the Common Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Common Shares not
purchased, if any, will be returned to the undersigned at the address indicated
below in Box No. 1 unless otherwise indicated under the Special Payment and
Delivery Instructions in Box No. 2.

     The undersigned understands that acceptance of Common Shares by the Trust
for payment will constitute a binding agreement between the undersigned and the
Trust upon the terms and subject to the conditions of the Offer.

     The check for the Purchase Price of the tendered Common Shares purchased,
minus any applicable Early Withdrawal Charge, will be issued to the order of the
undersigned and mailed to the address indicated below in Box No. 1, unless
otherwise indicated below in Box No. 2. Shareholders tendering Common Shares
remain entitled to receive dividends declared on such shares up to the
settlement date of the Offer. The Trust will not pay interest on the Purchase
Price under any circumstances.

     All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and all obligations of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.

  DELIVERY TO AN ADDRESS OTHER THAN THAT SHOWN BELOW DOES NOT CONSTITUTE VALID
                                   DELIVERY.

             SEND TO: VAN KAMPEN INVESTOR SERVICES INC., Depositary

<TABLE>
<S>                                                 <C>
                 By Regular Mail,                               By, Certified, Registered,
        Van Kampen Investor Services Inc.                       Overnight Mail or Courier
                 P.O. Box 218256                            Van Kampen Investor Services Inc.
            Kansas City, MO 64121-8256                         7501 Tiffany Springs Parkway
             Attn: Van Kampen Senior                              Kansas City, MO 64153
            Floating Rate Fund Tender                            Attn: Van Kampen Senior
                                                                Floating Rate Fund Tender
</TABLE>

                        FOR ADDITIONAL INFORMATION CALL:
                                 (800) 341-2911
                                                              09 SFR004(a)-04/00
<PAGE>   3

 -------------------------------------------------------------------------------

     THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY IF THE COMMON SHARES TO BE
TENDERED ARE REGISTERED IN THE

SHAREHOLDER'S NAME AND THE NECESSARY DOCUMENTS WILL BE TRANSMITTED TO THE
DEPOSITARY BY THE SHAREHOLDER OR HIS BROKER, DEALER OR OTHER SELLING GROUP
MEMBER. DO NOT USE THIS FORM IF A BROKER, DEALER OR OTHER SELLING GROUP MEMBER
IS THE REGISTERED OWNER OF THE COMMON SHARES AND IS EFFECTING THE TRANSACTION
FOR THE SHAREHOLDER.

     IF THE COMMON SHARES TENDERED HEREBY ARE IN CERTIFICATE FORM, THE
CERTIFICATES REPRESENTING SUCH COMMON SHARES MUST BE RETURNED TOGETHER WITH THIS
LETTER OF TRANSMITTAL. PLEASE NOTE THAT WE SUGGEST THAT SUCH CERTIFICATES BE
RETURNED VIA CERTIFIED OR REGISTERED MAIL.

     TO ENSURE PROCESSING OF YOUR REQUEST, THIS LETTER OF TRANSMITTAL OR A
MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON
SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON
OR BEFORE THE EXPIRATION DATE (MAY 19, 2000).
- --------------------------------------------------------------------------------

<TABLE>
<S>                                                 <C>
                                  BOX NO. 1: SHAREHOLDER INFORMATION
- ---------------------------------------------------
       Name and Address of Registered Owner                       Shareholder Information
- ---------------------------------------------------

                                                            PLEASE PROVIDE:Social Security No.
                                                                        Confirm No.
                                                                      (if applicable)
                                                                       ACCOUNT NO.:
- ---------------------------------------------------
</TABLE>

         CHECK ONE OF THE FOLLOWING AND FILL IN THE APPROPRIATE AMOUNT

   OPTION A: [ ] I hereby tender ALL COMMON SHARES of the Trust. I understand
                 that an Early Withdrawal Charge will be imposed on most
                 Common Shares accepted for payment that have been held for
                 less than one year and that such charge, if any, will be
                 deducted from the proceeds from such Common Shares. (See
                 Instruction 3 and 4(f)).

   OPTION B: [ ] I hereby tender __________ Common Shares of the Trust or
                 that certain number of Common Shares of the Trust necessary
                 to receive $__________ from the Trust after the Early
                 Withdrawal Charge, if any, is to be deducted from tendering
                 these Common Shares. (See Instruction 3 and 4(f)).

   OPTION C: [ ] I hereby tender __________ Common Shares of the Trust and
                 elect to have the proceeds from such tender invested into
                 Class C Shares of __________________________________ Fund
                 Acct. No. __________ (if applicable). (See Instruction 3).
- --------------------------------------------------------------------------------

 PLEASE NOTE:
 1. Additional legal documentation may be required.
 2. If the account indicated by the account number in this Box No. 1 is a Van
    Kampen FIDUCIARY IRA ACCOUNT, an IRA DISTRIBUTION FORM MUST be submitted
    with this Letter of Transmittal.
 3. If the SOCIAL SECURITY NUMBER OR TAX IDENTIFICATION NUMBER IS NOT
    CERTIFIED, OR THE ACCOUNT IS BEING TRANSFERRED TO A NEW SOCIAL SECURITY
    NUMBER OR TAX IDENTIFICATION NUMBER, THE ENCLOSED FORM W-9 MUST be
    completed and signed by the account owner. (Estate accounts must be signed
    by the legal representative of the estate and bear the estate tax
    identification number and not the social security number of the deceased.
    Completion of the Form W-9 certifies the tax identification number.
    Certification will prevent a 31% withholding pursuant to Internal Revenue
    Service regulations.)

               PLEASE BE SURE TO COMPLETE BOTH SIDES OF THIS FORM
<PAGE>   4

<TABLE>
    <S>                                               <C>
    -----------------------------------------------
           BOX NO. 2: SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 2, 3 AND 4)
    -----------------------------------------------
    To be completed ONLY if any checks are to be sent or wired to someone other than the undersigned
    and/or any checks or certificates for Common Shares not tendered or not purchased are to be sent
    to the undersigned at an address other than that shown above in Box No. 1. A SIGNATURE GUARANTEE
    IS REQUIRED IF THIS PORTION IS COMPLETED.
    -----------------------------------------------
    CHECK/CERTIFICATE INFORMATION                     BANK WIRE INFORMATION
    -----------------------------------------------
    PAYEE:                                            Wire Proceeds To:  [ ] Checking       [
    If you would like the check and/or certificates   ] Savings
    PAYABLE to someone other than who the account     (Minimum $5,000 to be wired)
    is registered, please provide the following:
                                                      Bank
    Name(s)                                                 (NAME)
    (PLEASE PRINT)
                                                      Address
    Address
                                                      ABA Routing No.
    (INCLUDE ZIP CODE)                                Account No.
                                                                    (SHAREHOLDER'S BANK ACCOUNT NO.)
    MAILING:
    If you would like the check and/or certificates   Bank Account Registration
    MAILED to an address other than the account                                 (NAME)
    registration, please provide the following:       Please attach a voided check or deposit slip if
                                                      possible.
    Name(s)
    (PLEASE PRINT)
    Address
    (INCLUDE ZIP CODE)
    -----------------------------------------------
</TABLE>

<TABLE>
<S>     <C>
- -------
</TABLE>

                BOX NO. 3: SIGNATURES (SEE INSTRUCTIONS 2, 3 AND 4)
- --------------------------------------------------------------------------------

  A. By signing this Letter of Transmittal, you represent that you have read
     the letter printed on the other side of this page and the Instructions
     enclosed herewith, which Instructions form part of the terms and
     conditions of the Offer.

  B. This Letter of Transmittal must be signed by the registered owner(s) of
     the Common Shares tendered hereby or by person(s) authorized to become
     registered owner(s) by documents transmitted herewith. If signature is by
     attorney-in-fact, executor, administrator, trustee, guardian, officer of
     a corporation or another acting in a fiduciary or representative
     capacity, please set forth the name and full title of such authorized
     signor and include the required additional legal documentation regarding
     the authority of the signor. See Instruction 4.

     NOTE: ANY QUESTIONS REGARDING ADDITIONAL LEGAL DOCUMENTATION WHICH MAY BE
     REQUIRED SHOULD BE
     DIRECTED TO OUR INVESTOR SERVICES DEPARTMENT AT (800) 341-2911.

  C. YOUR SIGNATURE MUST BE GUARANTEED and you MUST complete the signature
     guarantee in this Box No. 3 if (i) the value of the Common Shares
     tendered herewith pursuant to the OFFER IS GREATER THAN $50,000, (ii)
     this LETTER OF TRANSMITTAL IS SIGNED BY SOMEONE OTHER THAN THE REGISTERED
     HOLDER OF THE COMMON SHARES TENDERED HEREWITH, or (iii) you REQUEST
     PAYMENT FOR THE COMMON SHARES TENDERED HEREWITH TO BE SENT TO A PERSON
     OTHER THAN THE REGISTERED OWNER of such Common Shares for the benefit of
     such owner(s) and/or TO AN ADDRESS OTHER THAN THE REGISTERED ADDRESS OF
     THE REGISTERED OWNER of the Common Shares. For information with respect
     to what constitutes an acceptable guarantee, please see Instruction 4(f).

  D. See Instruction 8 and Form W-9 enclosed herewith regarding backup
     withholding.

 ................................................................................
 ................................................................................
                 (SIGNATURE(S) OF OWNER(S) EXACTLY AS REGISTERED)

     Dated ....................................................,
     20....                                      DAYTIME TELEPHONE NUMBER(   )
     ...........................................

        SIGNATURE GUARANTEE (IF
              APPLICABLE):

    ............................................................................
               Bank Name

    ............................................................................
        Print Name of Authorized
                 Signer

     Telephone Number (   )
     ............................... (Affix signature guarantee stamp above if
                                                     required)
- --------------------------------------------------------------------------------
                                                              09 SFR004(b)-04/00
<PAGE>   5

 -------------------------------------------------------------------------------

                                  INSTRUCTIONS
             FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

     1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used only if the Common Shares to be tendered are
registered in the shareholder's name and the necessary documents will be
transmitted to the Depositary by the shareholder or his broker, dealer or other
selling group member. Do not use this form if a broker, dealer or other selling
group member is the registered owner of the Common Shares and is effecting the
transaction for the shareholder. A PROPERLY COMPLETED AND DULY EXECUTED LETTER
OF TRANSMITTAL OR MANUALLY SIGNED FACSIMILE OF IT, ANY CERTIFICATES REPRESENTING
COMMON SHARES TENDERED AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF
TRANSMITTAL SHOULD BE MAILED OR DELIVERED TO THE DEPOSITARY AT THE ADDRESS SET
FORTH IN THE LETTER OF TRANSMITTAL AND MUST BE RECEIVED BY THE DEPOSITARY ON OR
PRIOR TO THE EXPIRATION DATE (MAY 19, 2000).

     THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR COMMON
SHARES, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.

     THE TRUST WILL NOT ACCEPT ANY ALTERNATIVE, CONDITIONAL OR CONTINGENT
TENDERS. ALL TENDERING SHAREHOLDERS, BY EXECUTION OF THE LETTER OF TRANSMITTAL
(OR A MANUALLY SIGNED FACSIMILE OF IT), WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF
THE ACCEPTANCE OF THEIR TENDER.

     2. COMPLETING THE LETTER OF TRANSMITTAL.  If you intend to tender any
Common Shares pursuant to the Offer, please complete the Letter of Transmittal
as follows:

          (a) Read the Letter of Transmittal in its entirety. By signing the
     Letter of Transmittal in Box No. 3, you agree to its terms.

          (b) Complete Box No. 1 by providing your Social Security Number, a
     Confirm Number, if applicable, and selecting and completing either Option
     A, Option B or Option C.

          (c) Complete Box No. 2 if certificates for Common Shares not tendered
     or not purchased and/or any check issued in the name of a person other than
     the signer of the Letter of Transmittal are to be sent or wired to someone
     other than such signer or to the signer at an address other than that shown
     in Box No. 1.

          (d) Complete Box No. 3 in accordance with Instruction 4 set forth
     below.

     3. PARTIAL TENDERS, UNPURCHASED SHARES AND EXCHANGES. If fewer than all of
the Common Shares evidenced by any certificate submitted are to be tendered and
if any tendered Common Shares are purchased, a new certificate for the remainder
of the Common Shares evidenced by your old certificate(s) will be issued and
sent to the registered owner, unless otherwise specified in Box No. 2 of the
Letter of Transmittal, as soon as practicable after the Expiration Date of the
Offer.

     Tendering shareholders who elect to have the Depositary invest the cash
proceeds from the tender of Common Shares of the Trust in Class C Shares of
certain open-end investment companies advised by either Van Kampen Investment
Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen
Funds Inc. should select and complete Option C. The Early Withdrawal Charge will
be waived for Common Shares tendered for reinvestment pursuant to this election;
however, such Class C Shares immediately become subject to a contingent deferred
sales charge schedule equivalent to the Early Withdrawal Charge schedule of the
Trust.

     4. SIGNATURES ON LETTER OF TRANSMITTAL, AUTHORIZATIONS AND ENDORSEMENTS.

          (a) If this Letter of Transmittal is signed by the registered owner(s)
     of the Common Shares tendered hereby, the signature(s) must correspond
     exactly with the name(s) in which the Common Shares are registered.

          (b) If the Common Shares are held of record by two or more joint
     owners, each such owner must sign this Letter of Transmittal.

          (c) If any tendered Common Shares are registered in different names,
     it will be necessary to complete, sign and submit as many separate Letters
     of Transmittal (or manually signed facsimiles of it) as there are different
     registrations of Common Shares.

          (d) When this Letter of Transmittal is signed by the registered
     owner(s) of the Common Shares listed and transmitted hereby, no
     endorsements of any certificate(s) representing such Common Shares or
     separate authorizations are required. If, however, payment is to be made to
     a person other than the registered owner(s), any unpurchased Common Shares
     are to be registered in the name of any person other than the registered
     owner(s) or any certificates for unpurchased Common Shares are to be issued
     to a person other than the registered owner(s), then the Letter of
     Transmittal and, if applicable, the certificate(s) transmitted hereby, must
     be endorsed or accompanied by appropriate authorizations, in either case
     signed exactly as such name(s) appear on the registration of the Common
     Shares and on the face of the certificate(s) and such endorsements or
     authorizations must be guaranteed by an institution described in Box No. 3.

          (e) If this Letter of Transmittal or any certificates or
     authorizations are signed by trustees, executors, administrators,
     guardians, attorneys-in-fact, officers of corporations or others acting in
     a fiduciary or representative capacity, such persons should so indicate
     when signing and must submit proper evidence satisfactory to the Trust of
     their authority so to act. Please contact our Investor Services Department
     for assistance at (800) 341-2911.

                                                          09 SFR005-04/00
<PAGE>   6

          (f) Your signature MUST be guaranteed and you MUST complete the
     signature guarantee in Box No. 3 if (i) the value of the Common Shares
     tendered herewith pursuant to the Offer is greater than $50,000, (ii) this
     Letter of Transmittal is signed by someone other than the registered holder
     of the Common Shares tendered herewith, or (iii) you request payment for
     the Common Shares tendered herewith to be sent to a payee other than the
     registered owner of such Common Shares and/or to an address other than the
     registered address of the registered owner of the Common Shares. An
     acceptable guarantee is one made by a bank or trust company; a
     broker-dealer; a credit union; a national securities exchange, registered
     securities association or clearing agency; a savings and loan association;
     or a federal savings bank. The guarantee must state the words "Signature
     Guaranteed" along with the name of the granting institution. Shareholders
     should verify with the institution that it is an eligible guarantor prior
     to signing. A guarantee from a notary public is not acceptable.

     5. TRANSFER TAXES. The Trust will pay all share transfer taxes, if any,
payable on the transfer to it of Common Shares purchased pursuant to the Offer.
If, however, (a) payment of the Purchase Price is to be made to any person other
than the registered owner(s), (b) (in the circumstances permitted by the Offer)
unpurchased Common Shares are to be registered in the name(s) of any person
other than the registered owner(s) or (c) tendered certificates are registered
in the name(s) of any person other than the person(s) signing this Letter of
Transmittal, the amount of any transfer taxes (whether imposed on the registered
owner(s) or such other persons) payable on account of the transfer to such
person(s) will be deducted from the Purchase Price by the Depositary unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted.

     6. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Common Shares will
be determined by the Trust in its sole discretion, whose determination shall be
final and binding on all parties. The Trust reserves the absolute right to
reject any or all tenders determined by it not to be in appropriate form or the
acceptance of or payment for any Common Shares which may, in the opinion of the
Trust's counsel, be unlawful. The Trust also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in tender
of any particular Common Shares or any particular shareholder, and the Trust's
interpretations of the terms and conditions of the Offer (including these
Instructions) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as the Trust shall determine. Tendered Common Shares will not be accepted
for payment unless all defects and irregularities have either been cured within
such time or waived by the Trust. None of the Trust, Van Kampen Funds Inc., Van
Kampen Investments Inc., the Depositary, or any other person shall be obligated
to give notice of defects or irregularities in tenders, nor shall any of them
incur any liability for failure to give any such notice.

     7. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, and additional copies of the
Offer to Purchase and this Letter of Transmittal may be obtained from Van Kampen
Funds Inc. located at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL
60181-5555, or by telephoning (800) 341-2911.

     8. FORM W-9. Each tendering shareholder who has not already submitted a
completed and signed Form W-9 to the Trust is required to provide the Depositary
with a correct taxpayer identification number ("TIN") on Form W-9 which is
enclosed herewith. Failure to provide the information on the form may subject
the tendering shareholder to 31% federal income tax withholding on the payments
made to the shareholder or other payee with respect to Common Shares purchased
pursuant to the Offer.

     9. WITHHOLDING ON FOREIGN SHAREHOLDERS. The Depositary will withhold
federal income taxes equal to 30% of the gross payments payable to a foreign
shareholder unless the Depositary determines that a reduced rate of withholding
or an exemption from withholding is applicable. For this purpose, a foreign
shareholder is any shareholder that is not (i) a citizen or resident of the
United States, (ii) a corporation or partnership created or organized in or
under the laws of the United States or any political subdivision thereof, (iii)
any estate the income of which is subject to United States federal income
taxation regardless of the source of such income or (iv) a trust whose
administration is subject to the primary jurisdiction of a United States court
and which has one or more United States fiduciaries who have authority to
control all substantial decisions of the trust. The Depositary will determine a
shareholder's status as a foreign shareholder and eligibility for a reduced rate
of, or an exemption from, withholding by reference to the shareholder's address
and to any outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding unless facts and circumstances
indicate that reliance is not warranted. A foreign shareholder who has not
previously submitted the appropriate certificates or statements with respect to
a reduced rate of, or an exemption from, withholding for which such shareholder
may be eligible should consider doing so in order to avoid overwithholding. A
foreign shareholder may be eligible to obtain a refund of tax withheld if such
shareholder meets one of the three tests for capital gain or loss treatment
described in Section 15 of the Offer to Purchase or is otherwise able to
establish that no tax or a reduced amount of tax was due.

     IMPORTANT: THE LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT
(TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED
DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE.

<PAGE>   1

 -------------------------------------------------------------------------------

                                                               EXHIBIT (a)(3)(i)

                                    OFFER BY

                      VAN KAMPEN SENIOR FLOATING RATE FUND

                             TO PURCHASE 23,135,904
                            OF ITS COMMON SHARES AT
                        NET ASSET VALUE PER COMMON SHARE

                                                                  April 20, 2000

To Brokers, Dealers, Commercial Banks,
     Trust Companies and other Nominees:

     Pursuant to your request, we are enclosing herewith the material listed
below relating to the offer of Van Kampen Senior Floating Rate Fund (the
"Trust") to purchase up to 23,135,904 of its common shares of beneficial
interest with par value of $0.01 per share (the "Common Shares") at net asset
value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Standard time
on the Expiration Date (defined below) upon the terms and subject to the
conditions set forth in the Offer to Purchase dated April 20, 2000 and in the
related Letter of Transmittal (which together constitute the "Offer"). The Offer
and withdrawal rights will expire at 12:00 Midnight Eastern Standard time on May
19, 2000, unless extended (the "Expiration Date"). An "Early Withdrawal Charge"
will be imposed on most Common Shares accepted for payment which have been held
for less than one year. The Offer is not conditioned upon any minimum number of
Common Shares being tendered but is subject to certain conditions as set forth
in the Offer to Purchase.

     If more than 23,135,904 Common Shares are duly tendered prior to the
expiration of the Offer, the Trust presently intends to, assuming no changes in
the factors originally considered by the Board of Trustees when it determined to
make the Offer and the other conditions set forth in the Offer, but is not
obligated to, extend the Offer period, if necessary, and increase the number of
Common Shares that the Trust is offering to purchase to an amount which it
believes will be sufficient to accommodate the excess Common Shares tendered as
well as any Common Shares tendered during the extended Offer period or purchase
23,135,904 Common Shares (or such greater number of Common Shares sought) on a
pro rata basis.

     No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Common Shares pursuant to the Offer. The Trust will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to those of your
clients who have requested such materials. The Trust will pay all transfer taxes
on its purchase of shares, subject to Instruction 5 of the Letter of
Transmittal. However, backup tax withholding at a 31% rate may be required
unless an exemption is proved or unless the required tax identification
information is or has previously been provided. See Section 15 of the Offer to
Purchase and Instructions 8 and 9 to the Letter of Transmittal.

     For your information and for forwarding to those of your clients who have
requested them, we are enclosing the following documents:

          (1) Offer to Purchase dated April 20, 2000;

          (2) Letter of Transmittal to be used by holders of Common Shares to
     tender such shares to the Depositary directly or through their broker,
     dealer or other nominee who is not the registered owner;

          (3) Guidelines for Certification of Taxpayer Identification Number;

          (4) Letter to Clients which may be sent to your clients for whose
     account you hold Common Shares registered in your name (or in the name of
     your nominee, with space provided for obtaining such clients' instructions
     with regard to the Offer); and

          (5) Return envelope addressed to the Depositary.

PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT
EASTERN STANDARD TIME ON MAY 19, 2000, UNLESS THE OFFER IS EXTENDED. TO ENSURE
PROCESSING OF YOUR OR YOUR CLIENT'S REQUEST, A LETTER OF TRANSMITTAL OR A
MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON
SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON
OR BEFORE THE EXPIRATION DATE (MAY 19, 2000).

                                                                 09 SFR009-04/00
                                                                      BDR
<PAGE>   2

     The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Common Shares residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction.

     Additional copies of the enclosed material may be obtained from Van Kampen
Funds Inc. at the address and telephone number set forth in the Offer to
Purchase. Any questions you have with respect to the Offer should be directed to
Van Kampen Funds Inc. at (800) 421-5666.

                                         Very truly yours,

                                         VAN KAMPEN SENIOR FLOATING RATE FUND
- --------------------------------------------------------------------------------
     NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE TRUST OR THE DEPOSITARY OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY MATERIAL ON THEIR BEHALF WITH
RESPECT TO THE OFFER, OTHER THAN THE MATERIAL ENCLOSED HEREWITH AND THE
STATEMENTS SPECIFICALLY SET FORTH IN SUCH MATERIAL.

- --------------------------------------------------------------------------------

<PAGE>   1

 -------------------------------------------------------------------------------

                                                              EXHIBIT (a)(3)(ii)

                                    OFFER BY

                      VAN KAMPEN SENIOR FLOATING RATE FUND

                             TO PURCHASE 23,135,904
                            OF ITS COMMON SHARES AT
                        NET ASSET VALUE PER COMMON SHARE

To Our Clients:

     Enclosed for your consideration are the Offer to Purchase, dated April 20,
2000, of Van Kampen Senior Floating Rate Fund (the "Trust") and related Letter
of Transmittal pursuant to which the Trust is offering to purchase up to
23,135,904 of its common shares of beneficial interest with par value of $0.01
per share (the "Common Shares") at the net asset value per Common Share ("NAV")
determined as of 5:00 P.M. Eastern Standard time on the Expiration Date (defined
below) upon the terms and subject to the conditions set forth in the Offer to
Purchase and the Letter of Transmittal (which together constitute the "Offer").
An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for
payment which have been held for less than one year.

     The Offer to Purchase and the Letter of Transmittal are being forwarded to
you as the beneficial owner of Common Shares held by us for your account but not
registered in your name. A tender of such shares can be made only by us as the
holder of record and only pursuant to your instructions. WE ARE SENDING YOU THE
LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO TENDER
COMMON SHARES WE HOLD FOR YOUR ACCOUNT.

     Your attention is called to the following:

          (1) The tender price is the NAV per Common Share determined as of 5:00
     P.M. Eastern Standard time on the Expiration Date. An "Early Withdrawal
     Charge" will be imposed on most Common Shares accepted for payment which
     have been held for less than one year.

          (2) The Offer is not conditioned upon any minimum number of Common
     Shares being tendered, but is subject to certain conditions set forth in
     the Offer to Purchase.

          (3) The Offer and withdrawal rights expire at 12:00 Midnight Eastern
     Standard time on May 19, 2000, unless extended (the "Expiration Date").

          (4) The Offer is for 23,135,904 Common Shares.

          (5) Tendering shareholders will not be obligated to pay brokerage
     commissions or, subject to Instruction 5 of the Letter of Transmittal,
     transfer taxes on the purchase of Common Shares by the Trust pursuant to
     the Offer. However, a broker, dealer or selling group member may charge a
     fee for processing the transaction on your behalf.

          (6) If more than 23,135,904 Common Shares are duly tendered prior to
     the expiration of the Offer, the Trust presently intends to, assuming no
     changes in the factors originally considered by the Board of Trustees when
     it determined to make the Offer and the other conditions set forth in the
     Offer, but is under no obligation to, extend the Offer period, if
     necessary, and increase the number of Common Shares that the Trust is
     offering to purchase to an amount which it believes will be sufficient to
     accommodate the excess Common Shares tendered as well as any Common Shares
     tendered during the extended Offer period or purchase 23,135,904 Common
     Shares (or such greater number of Common Shares sought) on a pro rata
     basis.

     If you wish to have us tender any or all of your Common Shares, please so
instruct us by completing, executing and returning to us the attached
instruction form. An envelope to return your instructions to us is enclosed. If
you authorize us to tender your Common Shares, all such Common Shares will be
tendered
                                                                 09 SFR007-04/00
<PAGE>   2

unless you specify otherwise on the attached instruction form. WE MUST RECEIVE
YOUR INSTRUCTIONS, IF ANY, SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE (MAY
19, 2000) TO PROVIDE US WITH TIME TO PROCESS SUCH INSTRUCTIONS AND FORWARD THEM
TO THE DEPOSITARY SO THAT THE DEPOSITARY WILL RECEIVE THEM ON OR PRIOR TO SUCH
EXPIRATION DATE. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT
EASTERN STANDARD TIME ON MAY 19, 2000, UNLESS THE OFFER IS EXTENDED.

     The Trust is not making the Offer to, nor will it accept tenders from or on
behalf of, owners of Common Shares in any jurisdiction in which the Offer or its
acceptance would violate the securities, Blue Sky or other laws of such
jurisdiction. In any jurisdiction the securities or Blue Sky laws of which
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on the Trust's behalf by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE>   3

 -------------------------------------------------------------------------------

                                  INSTRUCTIONS
                            WITH RESPECT TO OFFER BY
                      VAN KAMPEN SENIOR FLOATING RATE FUND
                             TO PURCHASE 23,135,904
                            OF ITS COMMON SHARES AT
                        NET ASSET VALUE PER COMMON SHARE

     THIS FORM IS NOT TO BE USED TO TENDER COMMON SHARES DIRECTLY TO THE
DEPOSITARY. IT SHOULD BE SENT TO YOUR BROKER ONLY IF YOUR BROKER IS THE HOLDER
OF RECORD OF YOUR COMMON SHARES AND WILL BE EFFECTING THE TENDER ON YOUR BEHALF.
IT SHOULD BE SENT TO SUCH BROKER SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE
(MAY 19, 2000) TO PROVIDE THE BROKER WITH TIME TO PROCESS THESE INSTRUCTIONS AND
FORWARD THEM TO THE DEPOSITARY SO THAT THE DEPOSITARY WILL RECEIVE THEM ON OR
PRIOR TO THE EXPIRATION DATE (MAY 19, 2000).

     The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated April 20, 2000, and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by Van
Kampen Senior Floating Rate Fund (the "Trust") to purchase 23,135,904 common
shares of beneficial interest with par value of $0.01 per share (the "Common
Shares") at the net asset value per Common Share determined as of 5:00 P.M.
Eastern Standard time on the Expiration Date on the terms and subject to the
conditions of the Offer. The undersigned acknowledges that an "Early Withdrawal
Charge" will be imposed on most Common Shares accepted for payment which have
been held for less than one year.

     The undersigned hereby instructs you to tender to the Trust the number of
Common Shares indicated below (or, if no number is indicated below, all Common
Shares) which are held by you for the account of the undersigned, upon the terms
and subject to the conditions of the Offer.

- --------------------------------------------------------------------------------

                         Aggregate number of Common Shares to be tendered
                                  by you for us (fill in number below):
                                            ______ Common Shares

- --------------------------------------------------------------------------------
Unless otherwise indicated above, it will be assumed that all of the Common
Shares held for the account of the undersigned are to be tendered.

                                  SIGNATURE(S)

     ----------------------------------------------------------------------

     ......................................................................

     ......................................................................
                      (SIGNATURES(S) OF BENEFICIAL OWNERS)

     ......................................................................
                                (ACCOUNT NUMBER)

     ......................................................................
                   (PLEASE PRINT NAME(S) AND ADDRESSES HERE)

     ......................................................................
                        (AREA CODE AND TELEPHONE NUMBER)

     ......................................................................
                 (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)

     ----------------------------------------------------------------------

     Date: April 20, 2000

 -------------------------------------------------------------------------------

- -                                                          09 SFR008-04/00
ARROW
- -
ARROW

<PAGE>   1

                                                             EXHIBIT (a)(3)(iii)

                            [VAN KAMPEN LETTERHEAD]

April 20, 2000

RE: VAN KAMPEN SENIOR FLOATING RATE FUND
     Commencement of Tender Offer

To Our Dealer Friends:

     As you may be aware, it is the policy of the Board of Trustees of Van
Kampen Senior Floating Rate Fund (the "Trust") to consider on a quarterly basis
whether to make a tender offer for common shares of the Trust. We are pleased to
announce that the Board has authorized the Trust's ninth quarterly tender offer
commencing today, April 20, 2000, for the purpose of providing liquidity to its
shareholders. The commencement of the tender offer was announced in the Wall
Street Journal today.

     The Trust is offering to purchase up to 23,135,904 of its common shares at
a price equal to the net asset value per common share of the Trust determined as
of 5:00 P.M. Eastern Standard time on the expiration date of the offer. The
offer is scheduled to terminate as of 12:00 Midnight Eastern Standard time on
May 19, 2000, the expiration date of the offer (unless extended). An "Early
Withdrawal Charge" will be imposed on most common shares accepted for payment
that have been held for less than one year.

     Terms and conditions of the tender offer are contained in the Trust's Offer
to Purchase dated April 20, 2000, and the related Letter of Transmittal, copies
of which are available to you upon request.

     Should you have any questions regarding the tender offer, please contact
Van Kampen's Investor Services Department at 1-800-421-5666.

Sincerely,

VAN KAMPEN FUNDS INC.

                                                                 09 SFR003-04/00

<PAGE>   1

                                                              EXHIBIT (a)(3)(IV)

ANNOUNCING . . .

                      VAN KAMPEN SENIOR FLOATING RATE FUND
                          COMMENCEMENT OF TENDER OFFER

     It is the policy of the Board of Trustees of the Van Kampen Senior Floating
Rate Fund to consider on a quarterly basis whether to make a Tender Offer for
common shares of the Trust. We are pleased to announce that the Board has
authorized the Trust's ninth quarterly Tender Offer commencing on April 20, 2000
for the purpose of providing liquidity to its shareholders. The commencement of
the Tender Offer is announced in today's Wall Street Journal. Shareholders of
the Trust may elect to have the cash proceeds from the Tender Offer invested in
Class C Shares of eligible open-end investment companies advised by either Van
Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and
distributed by Van Kampen Funds Inc., subject to certain limitations. Please
note that the Class C Shares acquired pursuant to this election are subject to a
contingent deferred sales charge schedule equal to the Early Withdrawal Charge
schedule of the Trust.

     The Trust is offering to purchase up to 23,135,904 of its common shares at
a price equal to the net asset value per common share of the Trust as of 5:00
P.M., Eastern Standard Time on May 19, 2000, the expiration date of the Tender
Offer (unless extended). The Tender Offer and the withdrawal rights expire at
12:00 Midnight Eastern Standard time on May 19, 2000, unless the Tender Offer is
extended. An "Early Withdrawal Charge" will be imposed on most common shares
accepted for payment that have been held for less than one year.

     Terms and conditions of the tender offer are contained in the Trust's Offer
to Purchase dated April 20, 2000, and the related Letter of Transmittal. Copies
are available to you upon request by calling Van Kampen's Investor Services
Department at (800) 421-5666.

     Shareholders may tender by completing and returning the Letter of
Transmittal by May 19, 2000. Alternatively, Selling Firms may tender account
positions with a wire order redemption via NSCC Fund/SERV or by calling Van
Kampen's Brokerage Operations Support Services at (800) 421-3863, on February
18, 2000 (trade date of the Tender Offer).

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
                       FUND NAME                          NUMBER      SYMBOL        CUSIP        TENDER START
- -------------------------------------------------------------------------------------------------------------
<S> <C>                                                   <C>         <C>         <C>            <C>
    VK Senior Floating Rate Fund                           259        VKSFR       920960101        4/20/00
- -------------------------------------------------------------------------------------------------------------
</TABLE>

          PLEASE DIRECT YOUR TENDER QUESTIONS TO THE FOLLOWING AREAS:

 MAIN OFFICE OPERATIONS: BROKERAGE OPERATIONS SUPPORT SERVICES (BOSS) AT (800)
                                   421-3863.

  REGISTERED REPRESENTATIVES: INVESTOR SERVICES DEPARTMENT AT (800) 421-5666.

     This material is prepared for internal or broker/dealer use only. It may
not be reproduced or shown to members of the public or used in written form as
sales literature. Such use would be in violation of the NASD code of conduct.
This material is subject to change, please consult the prospectus.

<PAGE>   1

                                                                  EXHIBIT (a)(4)

Dear Shareholder:

     As you requested, we are enclosing a copy of the Van Kampen Senior Floating
Rate Fund ("Trust") Offer to Purchase 23,135,904 of its issued and outstanding
common shares of beneficial interest ("Common Shares") and the related Letter of
Transmittal (which together constitute the "Offer"). The Offer is at the net
asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Standard
time on the Expiration Date of the Offer. An "Early Withdrawal Charge" will be
imposed on most Common Shares accepted for payment that have been held for less
than one year. Please read carefully the enclosed documents.

     If, after reviewing the information set forth in the Offer, you wish to
tender Common Shares for purchase by the Trust, please either follow the
instructions contained in the Offer to Purchase and Letter of Transmittal or, if
your Common Shares are held of record in the name of a broker, dealer or other
nominee, contact such broker, dealer or nominee to effect the tender for you.

     Neither the Trust nor its Board of Trustees is making any recommendation to
any holder of Common Shares as to whether to tender Common Shares. Each
shareholder is urged to consult his or her broker or tax adviser before deciding
whether to tender any Common Shares.

     The Trust's NAV per Common Share from April 13, 1998 through April 13, 2000
ranged from a high of $10.12 to a low of $9.76. On April 13, 2000 the NAV was
$9.77 per Common Share. You can obtain current NAV quotations from Van Kampen
Funds Inc. by calling (800) 341-2911 between the hours of 7:00 A.M. and 7:00
P.M. Central Standard time, Monday through Friday, except holidays. NAV quotes
also may be obtained through the ICI Pricing Service which will be released each
Friday evening and published by the Dow Jones Capital Markets Wire Service on
each Friday; published in the New York Times on each Saturday; published in the
Chicago Tribune on each Sunday; and published weekly in Barron's magazine. The
Trust offers and sells its Common Shares to the public on a continuous basis.
The Trust is not aware of any secondary market trading for the Common Shares.

     Should you have any questions on the enclosed material, please call Van
Kampen Funds Inc. at (800) 341-2911 during ordinary business hours. We
appreciate your continued interest in Van Kampen Senior Floating Rate Fund.

                                        Sincerely,

                                        VAN KAMPEN SENIOR FLOATING RATE FUND

- --------------------------------------------------------------------------------

TO ENSURE PROCESSING OF YOUR REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY
SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE
EXPIRATION DATE (MAY 19, 2000).

- --------------------------------------------------------------------------------
                                                                09 SFR-010-04/00
                                                                      S/0

<PAGE>   1

                                                                  EXHIBIT (a)(5)
NEWS RELEASE
FOR IMMEDIATE RELEASE

FOR MORE INFORMATION CONTACT:

<TABLE>
<S>                    <C>         <C>
James J. Boyne         or          Eileen Davis
800/225-2222                       800/225-2222
Ext. 6327                          Ext. 6886
</TABLE>

                      VAN KAMPEN SENIOR FLOATING RATE FUND
                     BEGINS TENDER OFFER FOR COMMON SHARES

     CHICAGO (April 20, 2000) -- Van Kampen Senior Floating Rate Fund,
distributed by Van Kampen Funds Inc., a subsidiary of Van Kampen Investments
Inc. ("Van Kampen"), announced today that it has commenced a tender offer for
23,135,904 of its outstanding common shares of beneficial interest.

     The offer is not conditioned on any minimum number of common shares that
must be tendered. The offer is subject to the terms and conditions set forth in
the Offer to Purchase and the Letter of Transmittal. The common shares are being
tendered for at a price equal to the net asset value per common share determined
as of 5:00 p.m., Eastern Standard time, on May 19, 2000, the expiration date,
unless extended. The offer and withdrawal rights will expire, as of 12:00
Midnight, Eastern Standard time, on May 19, 2000, unless extended. An early
withdrawal charge will be imposed on most common shares accepted for payment
that have been held for less than one year.

     As indicated in the Trust's current prospectus, the Board of Trustees
currently intends, each quarter, to consider authorizing the Trust to make
tender offers for its common shares in order to attempt to provide liquidity to
its investors.

     The Van Kampen Senior Floating Rate Fund tender offer is being made only by
the Offer to Purchase dated April 20, 2000 and the related Letter of
Transmittal. Questions and requests for assistance, for current net asset value
quotes, or for copies of the Offer to Purchase, Letter of Transmittal, and any
other tender offer documents may be directed to Van Kampen by calling
1-800-341-2911.

     Van Kampen is a diversified asset management company with more than two
million retail investor accounts, extensive capabilities for managing
institutional portfolios, and more than $90 billion under management or
supervision as of December 31, 1999. Van Kampen has more than 50 open-end and 39
closed-end funds and more than 2,700 unit investment trusts that are
professionally distributed by leading financial advisors nationwide. Van Kampen
is an indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co.

                                     # # #

<PAGE>   1
_______________________________________________________________________________

                                                                     EXHIBIT (b)

              SECOND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT

                           Dated as of June 14, 1999

                                     among

                       VAN KAMPEN PRIME RATE INCOME TRUST
                                      and
                     VAN KAMPEN SENIOR FLOATING RATE FUND,
                                 as Borrowers,

                    THE FINANCIAL INSTITUTIONS PARTY HERETO

                                      and

                         BANK OF AMERICA NATIONAL TRUST
                       AND SAVINGS ASSOCIATION, as Agent,

                 further amending and restating that certain

                                CREDIT AGREEMENT
                           Dated as of April 17, 1997

                                     among

                VAN KAMPEN PRIME RATE INCOME TRUST, as Borrower,

                    THE FINANCIAL INSTITUTIONS PARTY THERETO
                                      and

                         BANK OF AMERICA NATIONAL TRUST
                       AND SAVINGS ASSOCIATION, as Agent,

                        BANK OF AMERICA SECURITIES LLC,
                  as Sole Lead Arranger and Sole Book Manager

_______________________________________________________________________________


<PAGE>   2
                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----
||                                 ARTICLE I

                         DEFINITIONS AND INTERPRETATION

1.1.  Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
1.2.  Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
1.3.  Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

                                   ARTICLE II

                                  THE CREDITS

2.1.  Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . .   3
2.2.  Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
2.3.  Procedure for Borrowing. . . . . . . . . . . . . . . . . . . . . . . .   4
2.4.  Conversion and Continuation Elections. . . . . . . . . . . . . . . . .   5
2.5.  Voluntary Termination or Reduction of Commitments. . . . . . . . . . .   6
2.6.  Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
2.7.  Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
2.8.  Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
2.9.  Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
2.10. Computation of Fees and Interest . . . . . . . . . . . . . . . . . . .   8
2.11. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
2.12. Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . .  10
2.13. Sharing of Payments, etc.. . . . . . . . . . . . . . . . . . . . . . .  10
2.14. Non-Allocated Payments . . . . . . . . . . . . . . . . . . . . . . . .  11

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

3.1.  Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
3.2.  Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
3.3.  Increased Costs and Reduction of Return. . . . . . . . . . . . . . . .  13
3.4.  Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
3.5.  Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . .  15
3.6.  Certificates of Banks. . . . . . . . . . . . . . . . . . . . . . . . .  15
3.7.  Substitution of Banks. . . . . . . . . . . . . . . . . . . . . . . . .  15
3.8.  Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

                                   ARTICLE IV

                     CONDITIONS TO AMENDMENTS AND BORROWING

4.1.  Conditions to Amendment and Restatement. . . . . . . . . . . . . . . .  16
4.2.  All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
4.3.  Consequences of Effectiveness, etc.. . . . . . . . . . . . . . . . . .  18
4.4.  Amounts Outstanding Under the Original Credit Agreement Deemed
        to Be Loans Under This Agreement . . . . . . . . . . . . . . . . . .  18

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

5.1.  Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
5.2.  Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
5.3.  No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19


                                       i


<PAGE>   3
                                                                            Page
                                                                            ----
5.4.  Validity and Binding Effect . . . . . . . . . . . . . . . . . . . . .   19
5.5.  No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
5.6.  Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .   20
5.7.  Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
5.8.  Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
5.9.  Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
5.10. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
5.11. Compliance and Government Approvals . . . . . . . . . . . . . . . . .   21
5.12. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . .   21
5.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
5.14. Subsidiaries; Investments . . . . . . . . . . . . . . . . . . . . . .   21
5.15. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
5.16. Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . .   21
5.17. Regulations T, U and X. . . . . . . . . . . . . . . . . . . . . . . .   22
5.18. Status of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
5.19. Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
5.20. Affiliated Person . . . . . . . . . . . . . . . . . . . . . . . . . .   22
5.21. Computer Systems. . . . . . . . . . . . . . . . . . . . . . . . . . .   22

                                   ARTICLE VI

                                   COVENANTS

6.1.  Financial Statements and Other Reports. . . . . . . . . . . . . . . .   22
6.2.  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23
6.3.  Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   24
6.4.  Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . . .   25
6.5.  Books, Records and Access . . . . . . . . . . . . . . . . . . . . . .   25
6.6.  Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
6.7.  Investment Policies and Restrictions. . . . . . . . . . . . . . . . .   25
6.8.  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
6.9.  Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
6.10. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
6.11. Merger, Purchase and Sale . . . . . . . . . . . . . . . . . . . . . .   26
6.12. Asset Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . .   27
6.13. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
6.14. Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
6.15. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . .   27
6.16. Transactions with Related Parties . . . . . . . . . . . . . . . . . .   28
6.17. Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . .   28
6.18. Changes to Organization Documents, etc. . . . . . . . . . . . . . . .   28
6.19. Proceeds of Loans . . . . . . . . . . . . . . . . . . . . . . . . . .   28

                                       ii
<PAGE>   4
                                  ARTICLE VII

                               EVENTS OF DEFAULT

                                                                            Page
                                                                            ----
7.1.  Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . .   28
7.2.  Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   30

                                  ARTICLE VIII

                                   THE AGENT

8.1.  Appointment and Authorization. . . . . . . . . . . . . . . . . . . . .  31
8.2.  Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . .  31
8.3.  Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . .  31
8.4.  Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . .  32
8.5.  Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . .  32
8.6.  Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
8.7.  Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . .  33
8.8.  Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . .  33
8.9.  Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
8.10. Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

9.1.  Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . .  36
9.2.  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
9.3.  No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . .  37
9.4.  Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .  38
9.5.  Borrower Indemnification . . . . . . . . . . . . . . . . . . . . . . .  38
9.6.  Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . .  40
9.7.  Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . .  40
9.8.  Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
9.9.  Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
9.10. Notification of Addresses, Lending Offices, etc. . . . . . . . . . . .  42
9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
9.12. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
9.13. Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
9.14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
9.15. No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . .  43
9.16. Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . .  43
9.17. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . .  43
9.18. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
9.19. Affiliated Person. . . . . . . . . . . . . . . . . . . . . . . . . . .  44
9.20. Continuing Effectiveness, etc. . . . . . . . . . . . . . . . . . . . .  44
9.21. Facsimile Execution. . . . . . . . . . . . . . . . . . . . . . . . . .  44

                                      iii

<PAGE>   5



SCHEDULE I        Definitions
SCHEDULE II       Commitments and Pro Rata Shares
SCHEDULE III      Offshore and Domestic Lending Offices, Addresses for Notices
EXHIBIT 2.2       Promissory Note
EXHIBIT 2.3       Form of Loan Request
EXHIBIT 2.4       Notice of Conversion/Continuation
EXHIBIT 2.14      Allocation Notice
EXHIBIT 4.1(c)-1  Form of Opinion of Counsel to the Borrower
EXHIBIT 4.1(c)-2  Form of Opinion of Counsel to the Agent
EXHIBIT 5.7-1     Schedule of Litigation
EXHIBIT 5.7-2     Schedule of Contingent Liabilities
EXHIBIT 6.1       Form of Borrowing Base Certificate
||

                                       iv

<PAGE>   6
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT


     THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
June 14, 1999 by the signatories hereto and amends and restates that certain
Credit Agreement, dated as of April 17, 1997 (as heretofore amended by that
certain First Amended and Restated Credit Agreement, dated as of April 16, 1998,
and that certain letter agreement, dated April 15, 1999, the "Existing Credit
Agreement"), by and among VAN KAMPEN PRIME RATE INCOME TRUST, the various banks
(as defined in Section 2(a)(5) of the Act) party to thereto (collectively, the
"Banks"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
as agent (in such capacity, the "Agent") for the Banks.

                              W I T N E S S E T H:

     WHEREAS, Van Kampen Prime Rate Income Trust, the Banks and Bank of America
National Trust and Savings Association, as agent for the Banks, are parties to
the Existing Credit Agreement, which provided for the Banks to extend Loans to
Van Kampen Prime Rate Income Trust from time to time;

     WHEREAS, by means of a letter agreement dated April 15, 1999, each of the
Banks with the exception of Commerzbank Aktiengesellschaft, New York Branch,
amended the Agreement by changing the scheduled Commitment Termination Date from
April 15, 1999 to June 14, 1999;

     WHEREAS, because Commerzbank Aktiengesellschaft, New York Branch, did not
subscribe to the aforesaid letter agreement, it ceased being a Bank party to the
Agreement and the Commitment Amount was accordingly reduced to $440,000,000; and

     WHEREAS, Norwest Bank Minnesota, National Association has elected not to
continue as a Bank hereunder; and

     WHEREAS, Van Kampen Prime Rate Income Trust and the Banks signatory hereto
desire to amend and restate the Existing Credit Agreement, among other things,
to increase the Commitment Amount to $500,000,000, to reallocate certain of the
Commitments as provided herein, to extend the scheduled Commitment Termination
Date, to add as a borrower party to the Agreement Van Kampen Senior Floating
Rate Fund (the "New Borrower"), to add Commerzbank Aktiengesellschaft, New York
Branch, as a Bank hereunder and to amend and restate the Existing Credit
Agreement in certain other respects, all as more fully hereinafter set forth
(the "Refinancing");

     NOW, THEREFORE, the parties hereto agree that the Existing Credit Agreement
shall be amended and restated, as of the Refinancing Date, upon satisfaction of
the conditions set forth herein, to state in its entirety as follows:


<PAGE>   7
                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.1.      DEFINED TERMS.  Unless otherwise defined herein, terms defined in
Schedule I have the same respective meanings when used in this Agreement.

     1.2.      INTERPRETATION.  In this Agreement, unless otherwise specified
herein:

               (a)  the singular number includes the plural number and vice
     versa;

               (b)   reference to any Person includes such Person's successors
     and assigns but, if specified herein, only if such successors and assigns
     are not prohibited by this Agreement, and reference to a Person in a
     particular capacity excludes such Person in any other capacity or
     individually;

               (c)   reference to any gender includes each other gender;

               (d)   reference to any agreement (including this Agreement),
     document or instrument means such agreement, document or instrument as
     amended, restated, supplemented or otherwise modified and in effect from
     time to time in accordance with the terms thereof and, if specified herein,
     the terms hereof and the other Credit Documents and reference to any
     promissory note includes any promissory note which is an extension or
     renewal thereof or a substitute or replacement therefor;

               (e)   reference to any applicable law means such applicable law
     as amended, modified, codified, replaced or reenacted, in whole or in part,
     and in effect from time to time, including rules and regulations
     promulgated thereunder, and reference to any section or other provision of
     any applicable law means that provision of such applicable law from time to
     time in effect and constituting the substantive amendment, modification,
     codification, replacement or reenactment of such section or other
     provision;

               (f)   reference to any Article, Section, Annex, Schedule or
     Exhibit means such Article or Section hereof or Annex, Schedule or Exhibit
     hereto;

               (g)   "hereunder", "hereof", "hereto" and words of similar import
     shall be deemed references to this Agreement as a whole and not to any
     particular Article, Section or other provision hereof;

               (h)   "including" (and with the correlative meaning "include")
     means including without limiting the generality of any description
     preceding such term;

               (i)   "or" is not exclusive; and


                                       2



<PAGE>   8
               (j)   relative to the determination of any period of time, "from"
     means "from and including" and "to" and "through" mean "to but excluding".

     1.3. ACCOUNTING TERMS.  In this Agreement, unless expressly otherwise
provided, accounting terms shall be construed and interpreted, and accounting
determinations and computations shall be made, in accordance with GAAP in effect
from time to time.

                                   ARTICLE II

                                  THE CREDITS

     2.1. AMOUNTS AND TERMS OF COMMITMENTS.  Each Bank severally agrees, on the
terms and conditions set forth herein, to make Loans to the Borrowers from time
to time on any Business Day during the period from the Refinancing Date to the
Commitment Termination Date equal to its Pro Rata Share of the aggregate amount
of the Borrowing requested by a Borrower to be made on such day.  The Commitment
of each Bank and the outstanding principal amount of Loans made by each Bank
hereunder shall not exceed at any time the aggregate amount set forth on
Schedule II (such amount as the same may be reduced under Section 2.5 or as a
result of one or more assignments as permitted herein pursuant to Section 3.7
and Section 9.7, the Bank's "Commitment"); provided, however, that, after giving
effect to any Borrowing, the aggregate principal amount of all outstanding Loans
shall not at any time exceed the Commitment Amount; and provided that the
aggregate principal amount of all Loans outstanding from time to time to a
Borrower shall not exceed the Borrowing Base for the relevant Borrower. Within
the limits of each Bank's Commitment, and subject to the other terms and
conditions hereof, a Borrower may borrow under this Section 2.1, repay under the
terms hereof and reborrow under this Section 2.1.

     2.2. NOTES.  The Loans made by each Bank under its Commitment to a Borrower
shall be evidenced by a Note in the form of Exhibit 2.2. Each such Bank shall
record on the schedules annexed to its Note the date, amount and maturity of
each Loan made by it and the amount of each payment of principal made by the
relevant Borrower with respect thereto.  Each such Bank is irrevocably
authorized by each Borrower to so record such information on such schedules to
its Note, and each Bank's record shall be rebuttable presumptive evidence;
provided, however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the relevant Borrower hereunder or under any such Note to
such Bank.


                                       3


<PAGE>   9
     2.3.  PROCEDURE FOR BORROWING.  (a)  Each Borrowing shall be made upon a
Borrower's irrevocable written notice or telephonic notice confirmed in writing
within 24 hours delivered to the Agent in the form of a loan request ("Loan
Request") substantially in the form of Exhibit 2.3 hereto (which notice must be
received on a Business Day by the Agent prior to 9:00 a.m. (San Francisco time))
(i) three Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans, and (ii) on the Borrowing Date for which a Loan is
requested, in the case of Federal Funds Rate Loans, specifying:

                    (A)  the amount of the Borrowing, which shall be in an
          aggregate minimum amount of $1,000,000 or any multiple of $1,000,000
          in excess thereof;

                    (B)  the requested Borrowing Date, which shall be a Business
          Day;

                    (C)  the Type of Loans comprising the Borrowing; and

                    (D)  the duration of the Interest Period applicable to such
          Loans included in such notice.  If the Loan Request fails to specify
          the duration of the Interest Period for any Borrowing comprised of
          Offshore Rate Loans, such Interest Period shall be two weeks.

               In the event that more than one Loan Request is delivered on any
     Business Day, the Agent shall, for purposes of ensuring that the aggregate
     of the then-outstanding Loans and the Loans which are the subject of the
     Loan Requests will not exceed the Commitment Amount, process the Loan
     Requests in the order of receipt.

               (b)  The Agent will promptly notify each Bank of its receipt of
     any Loan Request and of the amount of such Bank's Pro Rata Share of that
     Borrowing.

               (c)  Each Bank will make the amount of its Pro Rata Share of each
     Borrowing available to the Agent for the account of the Borrower at the
     Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing
     Date requested by a Borrower in funds immediately available to the Agent
     for deposit to the account which the Agent shall from time to time specify
     by notice to the Banks.  The proceeds of all such Loans will then be made
     available promptly to the relevant Borrower by the Agent in accordance with
     written instructions provided to the Agent by the Borrower in like funds as
     received by the Agent.  No Bank's obligation to make any Loan shall be
     affected by any other Bank's failure to make any Loan.

               (d)  After giving effect to any Borrowing, there may not be more
     than three (3) different Interest Periods in effect with respect to each
     Borrower.

                                       4
<PAGE>   10
     2.4  CONVERSION AND CONTINUATION ELECTIONS.  (a)  Borrower may as to its
Loans, upon irrevocable written notice or telephonic notice confirmed in writing
within 24 hours to the Agent in accordance with Section 2.4(b):

               (i)  elect, as of any Business Day, in the case of Federal
     Funds Rate Loans, or as of the last day of the applicable Interest Period,
     in the case of any other Type of Loans, to convert any such Loans (or any
     part thereof in an amount that is not less than $1,000,000 or an integral
     multiple of $1,000,000 in excess thereof) into Loans of any other Type; or

               (ii)  elect, as of the last day of the applicable Interest
     Period, to continue any Loans having Interest Periods expiring on such day
     (or any part thereof in an amount that is not less than $1,000,000 or an
     integral multiple of $1,000,000 in excess thereof);

provided that, if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced by payment, prepayment or conversion of part
thereof to be less than $1,000,000, such Offshore Rate Loans shall automatically
convert into Federal Funds Rate Loans, and on and after such date, the right
of the Borrower to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.

     Notwithstanding anything to the contrary, no Loan shall be outstanding for
a period of more than sixty (60) days, and there shall be no more than three
Interest Periods in respect of an Offshore Rate Loan with respect to each
Borrower.

               (b)  The relevant Borrower shall deliver a
     Conversion/Continuation Notice as to its Loans to be received by the Agent
     not later than 9:00 a.m. (San Francisco time) at least (i) three Business
     Days in advance of the Conversion/Continuation Date, if the Loans are to be
     converted into or continued as Offshore Rate Loans, and (ii) on the
     Conversion/Continuation Date, if the Loans are to be continued or converted
     into Federal Funds Rate Loans, specifying:

                    (A)  the proposed Conversion/Continuation Date;

                    (B)  the aggregate amount of Loans to be converted or
          continued;

                    (C)  the Type of Loans resulting from the proposed
          conversion or continuation; and

                    (D)  other than in the case of conversions into Federal
          Funds Rate Loans, the duration of the requested Interest Period.

               (c)  The Agent will promptly notify each Bank of its receipt of a
     Conversion/Continuation Notice.  All conversions and continuations shall be
     made ratably according to the respective outstanding principal amounts of
     the Loans with respect to which the notice was given held by each Bank.

                                       5
<PAGE>   11
               (d)  Unless the Majority Banks otherwise agree, during the
     existence of a Default with respect to a Borrower, such Borrower may not
     elect to have a Loan converted into or continued as an Offshore Rate Loan.

     2.5.  VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS.  The Borrowers
may, upon not less than five Business Days' prior written or telephonic notice
to the Agent, terminate the Commitments, or permanently reduce the Commitments
by an aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in
excess thereof; unless, after giving effect thereto and to any prepayments of
Loans made on the effective date thereof, the then-outstanding principal amount
of the Loans would exceed the amount of the Commitment Amount then in effect.
Once reduced in accordance with this Section, the Commitment Amount may not be
increased.  Any reduction of the Commitment Amount shall be applied to each Bank
according to its Pro Rata Share.  All accrued commitment fees to but not
including the effective date of any termination of Commitments shall be paid on
the effective date of such termination.  All accrued commitment fees to but not
including the effective date of any reduction of Commitments shall be paid on
the last Business Day of the then-current calendar quarter.

     2.6.  PREPAYMENTS.  (a) If at any time the outstanding balance of a
Borrower's Indebtedness shall exceed the then-current Borrowing Base of such
Borrower and at such time as there are Loans outstanding to such Borrower, such
Borrower shall immediately prepay the outstanding principal amount of its Loans
in an amount equal to such excess, together with interest accrued thereon and
amounts required under Section 3.4.

               (b)  Subject to Section 3.4, a Borrower may, at any time or from
     time to time, upon not less than three Business Days' irrevocable written
     or telephonic notice to the Agent, ratably prepay its Loans, in whole or in
     part, in minimum amounts of $1,000,000 or any multiple of $1,000,000 in
     excess thereof.  Such notice of prepayment shall specify the date and
     amount of such prepayment and the Type(s) of Loans to be prepaid.  If such
     notice is given, the relevant Borrower shall make such prepayment to the
     Agent, and the payment amount specified in such notice shall be due and
     payable on the date specified therein, together with, in the case of the
     prepayment of Offshore Rate Loans, accrued interest to each such date on
     the amount prepaid and any amounts required pursuant to Section 3.4.

               (c)  The Agent will promptly notify each Bank of its receipt of
     any such notice and of such Bank's Pro Rata Share of such prepayment.

               (d)  Each prepayment of any Loans pursuant to this Section shall
     be without premium or penalty, except as may be required by Section 3.4.
     No voluntary prepayment of principal of any Loans shall cause a reduction
     in the Commitment Amount.

                                       6


<PAGE>   12
     2.7.  REPAYMENT.  Each Borrower shall repay to the Agent for the benefit of
the Banks on the Commitment Termination Date the aggregate principal amount of
its Loans outstanding on such date.

     2.8.  INTEREST.  (a)  Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Federal Funds Rate or the Offshore Rate, as the case may be (and
subject to a Borrower's right to convert to another Type of Loans under Section
2.4), plus the Applicable Margin.

               (b)  Interest on each Loan shall be paid by the relevant Borrower
     on its Loans in arrears on each Interest Payment Date.  Interest shall also
     be paid by the relevant Borrower on its Loans on the date of any prepayment
     of Offshore Rate Loans under Section 2.6 for the portion of such Loans so
     prepaid and upon payment (including prepayment) in full thereof, and during
     the existence of any Event of Default, interest from the Borrower subject
     to such Event of Default shall be paid by such Borrower on demand of the
     Agent at the request or with the consent of the Majority Banks.

               Notwithstanding subsection (a) of this Section, if any amount of
     principal of or interest on any Loan, or any other amount payable hereunder
     or under any other Credit Document, is not paid in full when due by the
     relevant Borrower on its Loans (whether at stated maturity or by
     acceleration, demand or otherwise), the relevant Borrower agrees, to the
     extent permitted by law, to pay interest on such unpaid principal or other
     amount from the date such amount becomes due until the date such amount is
     paid in full, and after as well as before any entry of judgment thereon,
     payable on demand at a fluctuating rate per annum equal to the Base Rate
     plus 2%.

               (c)  Anything herein to the contrary notwithstanding, the
     obligations of each Borrower to any Bank hereunder shall be subject to the
     limitation that payments of interest shall not be required for any period
     for which interest is computed hereunder, to the extent (but only to the
     extent) that contracting for or receiving such payment by such Bank would
     be contrary to the provisions of any law applicable to such Bank limiting
     the highest rate of interest that may be lawfully contracted for, charged
     or received by such Bank, and in such event the relevant Borrower shall pay
     such Bank interest at the highest rate permitted by applicable law.

     2.9.  FEES.  (a)  Arrangement, Agency Fees.  The Borrowers shall pay on a
several, and not on a joint, basis an arrangement fee to the Arranger for the
Arranger's own account, and shall pay agency fees to the Agent for the Agent's
own account, as required by the letter agreement ("Arrangement Fee Letter")
among the Borrowers, the Arranger and the Agent dated June 7, 1999.  Van Kampen
Prime Rate Income Trust shall be responsible for its pro rata portion of such
fees and Van Kampen Senior Floating Rate Fund shall be responsible for its pro
rata portion of such fees based upon the relative net asset value of each
Borrower on any date of determination thereof.

                                       7
<PAGE>   13
               (b)  COMMITMENT FEES.  The Borrowers shall pay on a several, and
     not on a joint, basis to the Agent for the account of each Bank a
     commitment fee on the daily unused portion of such Bank's Commitment,
     computed on a quarterly basis in arrears on the last Business Day of each
     calendar quarter based upon the daily utilization for that quarter as
     calculated by the Agent, equal to 0.09% per annum.  Van Kampen Prime Rate
     Income Trust shall be responsible for its pro rata portion of the
     commitment fee and Van Kampen Senior Floating Rate Fund shall be
     responsible for its pro rata portion of the commitment fee based upon the
     relative net asset value of each Borrower on any date of determination
     thereof. Such commitment fee shall accrue from the date of this second
     amended and restated Agreement to the Commitment Termination Date and shall
     be due and payable quarterly in arrears on the last Business Day of each
     March, June, September and December commencing on June 14, 1999 through the
     Commitment Termination Date, with the final payment to be made on the
     Commitment Termination Date.  All accrued commitment fees to but not
     including the effective date of any termination of Commitments shall be
     paid on the effective date of such termination.  All accrued commitment
     fees to but not including the effective date of any reduction of
     Commitments shall be paid on the last Business Day of the then-current
     calendar quarter, with such quarterly payment being calculated on the basis
     of the period from such reduction date to such quarterly payment date.  The
     commitment fees provided in this subsection shall accrue at all times after
     the above-mentioned commencement date, including at any time during which
     one or more conditions in Article IV are not met.

     2.10.  COMPUTATION OF FEES AND INTEREST.  (a)  All computations of interest
on the basis of the Base Rate shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed.  All other computations of
fees and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more interest being paid than if computed on the basis
of a 365- or 366-day year).  Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.

               (b)  Each determination of an interest rate by the Agent shall be
     conclusive and binding on the Borrower and the Banks in the absence of
     manifest error.  The Agent will, at the request of a Borrower or any Bank,
     deliver to such Borrower or Bank, as the case may be, a statement showing
     the quotations used by the Agent in determining any interest rate and the
     resulting interest rate.

                                       8
<PAGE>   14
     2.11.  PAYMENTS.  (a)  All payments to be made by a Borrower shall be made
without set-off, recoupment or counterclaim, subject to Section 3.1.  Except as
otherwise expressly provided herein, all such payments shall be made to the
Agent for the account of the Banks at the Agent's Payment Office and shall be
made in Dollars and in immediately available funds no later than 11:00 a.m. (San
Francisco time) on the date specified herein.  The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received.  Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day, and any
applicable interest or fee shall continue to accrue.

               (b)  Subject to the provisions set forth in the definition of
     "Interest Period" herein, whenever any payment is due on a day other than a
     Business Day, such payment shall be made on the following Business Day, and
     such extension of time shall in such case be included in the computation of
     interest or fees, as the case may be.

               (c)  Unless the Agent receives notice from a Borrower prior to
     the date on which any payment is due to the Banks that such Borrower will
     not make such payment in full as and when required, the Agent may assume
     that such Borrower has made such payment in full to the Agent on such date
     in immediately available funds, and the Agent may (but shall not be so
     required), in reliance upon such assumption, distribute to each Bank on
     such due date an amount equal to the amount then due such Bank.  If and to
     the extent a Borrower has not made such payment in full to the Agent, each
     Bank shall repay to the Agent on demand such amount distributed to such
     Bank, together with interest thereon at the Federal Funds Rate for each day
     from the date such amount is distributed to such Bank until the date
     repaid.

                                       9
<PAGE>   15
     2.12.  PAYMENTS BY THE BANKS TO THE AGENT.  (a)  Unless the Agent receives
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of a Borrower the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the relevant Borrower on such date a
corresponding amount.  If and to the extent any Bank shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the relevant Borrower such amount,
that Bank shall on the Business Day following such Borrowing Date make such
amount available to the Agent, together with interest at the Federal Funds Rate
for each day during such period.  A notice of the Agent submitted to any Bank
with respect to amounts owing under this subsection (a) shall be conclusive,
absent manifest error.  If such amount is so made available, such payment to the
Agent shall constitute such Bank's Loan on the date of Borrowing for all
purposes of this Agreement.  If such amount is not made available to the Agent
on the Business Day following the Borrowing Date, the Agent will notify the
relevant Borrower of such failure to fund, and upon demand by the Agent, such
Borrower shall pay such amount to the Agent for the Agent's account, together
with interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.

               (b)  The failure of any Bank to make any Loan on any Borrowing
     Date shall not relieve any other Bank of any obligation hereunder to make a
     Loan on such Borrowing Date, but no Bank shall be responsible for the
     failure of any other Bank to make the Loan to be made by such other Bank on
     any Borrowing Date.

     2.13.  SHARING OF PAYMENTS, ETC.  If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to the purchasing Bank to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.  The
relevant Borrower agrees that any Bank so purchasing a participation from
another Bank may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off with respect to such
participation) as fully as if such Bank were the direct creditor of such
Borrower in the amount of such


                                       10


<PAGE>   16
participation.  The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Banks following any such purchases or
repayments.

     2.14.  NON-ALLOCATED PAYMENTS  Notwithstanding any other provision of this
Agreement, the parties agree that (i) the obligations of each Borrower hereunder
are, and at all times shall continue to be, several and not joint, (ii) the
assets and liabilities of each Borrower are separate and distinct from the
assets and liabilities of the other Borrower and (iii) a Borrower shall not be
liable or charged for any debt, obligation, liability, fee or expense arising
under this Agreement or the Notes of the other Borrower.  The Borrowers shall
(i) as provided in Section 4.1(h), (ii) to the extent feasible, at least five
(5) Business Days in advance of a date on which a payment in respect of a debt,
obligation, liability, fee or expense arising hereunder (other than commitment
fees,  principal of or interest on a Loan, expenses allocable specifically to
one Borrower hereunder, indemnities allocable to one Borrower in accordance with
the terms and conditions hereof or Taxes or Other Taxes allocated to a
particular Borrower and arrangement and agency fees) shall be due and payable
and (iii) upon request of the Agent, cause to be provided to the Agent an
Allocation Notice; provided, however, should the Borrowers fail to deliver to
the Agent an Allocation Notice with respect to such amounts within five Business
Days following a request for the same by the Agent, the Borrowers shall be
liable therefor to the Agent and/or the Banks on a pro rata basis in the
proportion of the respective net asset value of each Borrower on any date of
determination thereof.

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

     3.1.  TAXES.  Any and all payments by a Borrower to each Bank or the Agent
under this Agreement and any other Credit Document shall be made free and clear
of, and without deduction or withholding for, any Taxes with respect to such
Borrower's payments.  In addition, the relevant Borrower shall pay all of its
Other Taxes which have been reasonably allocated to it.

               (b)  The relevant Borrower agrees to indemnify and hold harmless
     each Bank and the Agent for the full amount of its Taxes or its Other Taxes
     in connection with a payment by it (including any of its Taxes or its Other
     Taxes imposed by any jurisdiction on amounts payable by it under this
     Section) paid by the Bank or the Agent and any liability (including
     penalties, interest, additions to tax and expenses other than penalties,
     additions to tax, interest and expenses arising solely as a result of the
     willful misconduct or gross negligence of such Bank or Agent) arising
     therefrom or with respect thereto, whether or not such Taxes or Other Taxes
     were correctly or legally asserted. Payment under this indemnification
     shall be made within 30 days after the date the Bank or the Agent makes
     written demand therefor to the relevant Borrower including with such demand
     an identification of the Taxes or Other Taxes (and amounts thereof) with
     respect to which such demand for indemnification is being sought.


                                       11

<PAGE>   17
               (c)  If the relevant Borrower shall be required by law to deduct
     or withhold any of its Taxes or Other Taxes from or in respect of any sum
     payable hereunder to any Bank or the Agent, then:

                    (i)  the sum payable shall be increased as necessary so that
          after making all required deductions and withholdings (including
          deductions and withholdings applicable to additional sums payable
          under this Section), such Bank or the Agent, as the case may be,
          receives an amount equal to the sum it would have received from such
          Borrower had no such deductions or withholdings been made;

                    (ii)  such Borrower shall make such deductions and
          withholdings;

                    (iii)  such Borrower shall pay the full amount deducted or
          withheld to the relevant taxing authority or other authority in
          accordance with applicable law; and

                    (iv)  such Borrower shall also pay to the Agent for the
          account of such Bank, at the time interest is paid, all additional
          amounts which the respective Bank specifies as necessary to preserve
          the after-tax yield the Bank would have received if such Taxes or
          Other Taxes had not been imposed.

               (d)  Within 30 days after the date of any payment by the relevant
     Borrower of its Taxes or Other Taxes, such Borrower shall furnish the Agent
     the original or a certified copy of a receipt evidencing payment thereof or
     other evidence of payment satisfactory to the Agent.

               (e)  If the relevant Borrower is required to pay additional
     amounts to any Bank or the Agent pursuant to subsections (b) or (c) of this
     Section, then such Bank shall use reasonable efforts (consistent with legal
     and regulatory restrictions) to change the jurisdiction of its Lending
     Office so as to eliminate any such additional payment by such Borrower
     which may thereafter accrue, if such change in the judgment of such Bank is
     not otherwise disadvantageous to such Bank.  A Borrower shall have no
     obligation to pay any amounts or increase any amounts payable to any Bank
     pursuant to this Section 3.1 which are owing on account of such Bank's
     failure to comply with its obligations under Section 8.10.

               (f)  Within 30 days after the written request of a Borrower, each
     Bank or Agent shall execute and deliver to such Borrower such certificates
     or forms as are reasonably requested by such Borrower in such request,
     which can be furnished consistent with the facts and which are necessary to
     assist such Borrower in applying for refunds of its Taxes or its Other
     Taxes paid or indemnified by such Borrower hereunder. If a Bank or Agent
     receives a refund of any Taxes or Other Taxes with respect to which a
     Borrower has made a payment of additional amounts, such Bank or Agent shall
     pay over such refund to such Borrower within 30 days of receipt in an
     amount not in excess of the payments made by such Borrower with respect
     thereto.

                                       12
<PAGE>   18
     3.2.  ILLEGALITY.  (a)  If any Bank reasonably determines that the
introduction of any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of Law, has made
it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office to
make Offshore Rate Loans, then, on notice thereof by the Bank to the Borrowers
through the Agent, any obligation of that Bank to make Offshore Rate Loans shall
be suspended until the Bank gives notice, and the Bank agrees promptly to give
such notice, to the Agent and the Borrowers when the circumstances giving rise
to such determination no longer exist.

               (b)  If a Bank reasonably determines that it is unlawful to
     maintain any Offshore Rate Loan, each Borrower shall, upon its receipt of
     notice of such fact and demand from such Bank (with a copy to the Agent),
     prepay in full its respective Offshore Rate Loans of that Bank then
     outstanding, together with interest accrued thereon and amounts required
     under Section 3.4, either on the last day of the Interest Period thereof,
     if the Bank may lawfully continue to maintain such Offshore Rate Loans to
     such day, or immediately, if the Bank may not lawfully continue to maintain
     such Offshore Rate Loan, as provided in a notice from the Bank to each
     respective Borrower.  If a Borrower is required to so prepay any of its
     Offshore Rate Loan, then concurrently with such prepayment, the Borrower
     may borrow from the affected Bank, in the amount of such repayment, a
     Federal Funds Rate Loan.

               (c)  If the obligation of any Bank to make or maintain Offshore
     Rate Loans has been so terminated or suspended, a Borrower may elect, by
     giving notice to the Bank through the Agent, that all of its Loans which
     would otherwise be made by the Bank as Offshore Rate Loans shall be instead
     Federal Funds Rate Loans.

               (d)  Before giving any notice to the Agent under this Section,
     the affected Bank shall designate a different Lending Office with respect
     to its Offshore Rate Loans if such designation will avoid the need for
     giving such notice or making such demand and will not, in the judgment of
     the Bank, be illegal or otherwise materially disadvantageous to the Bank.

     3.3.  INCREASED COSTS AND REDUCTION OF RETURN.  If any Bank reasonably
determines that, due to the introduction of or any change in or in the
interpretation of any law or regulation or the compliance by that Bank with any
guideline or request made subsequent to the date of this Agreement from any
central bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Bank (not included in the
calculation of the Eurodollar Reserve Percentage) of agreeing to make or making,
funding or maintaining any Offshore Rate Loans to a Borrower, then such Borrower
shall be liable for, and shall from time to time within 30 days after demand
(with a copy of such demand to be sent to the Agent) pay to the Agent, for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs with respect to such Borrower.


                                       13
<PAGE>   19


               (b)  If any Bank shall have reasonably determined that (i) the
     introduction of any Capital Adequacy Regulation, (ii) any change in any
     Capital Adequacy Regulation, (iii) any change in the interpretation or
     administration of any Capital Adequacy Regulation by any central bank or
     other Governmental Authority charged with the interpretation or
     administration thereof, or (iv) compliance by such Bank (or its Lending
     Office) or any corporation controlling such Bank with any guideline or
     request made subsequent to the date hereof with respect to any Capital
     Adequacy Regulation affects or would affect the amount of capital required
     or expected to be maintained by such Bank or any corporation controlling
     such Bank and (taking into consideration such Bank's or such corporation's
     policies with respect to capital adequacy and such Bank's desired return on
     capital) and such Bank determines that, as a result of any of the
     foregoing, the amount of such capital is increased as a consequence of its
     Commitment, Loans, credits or other obligations under this Agreement, then,
     within 30 days after demand therefor accompanied by the certificate
     contemplated by Section 3.6 of such Bank to each affected Borrower through
     the Agent, the relevant Borrower shall pay to the Bank, from time to time
     as specified by the Bank, additional amounts sufficient to compensate the
     Bank for any reduced return on such capital reasonably allocated to the
     relevant Borrower as a result of such increase.

     3.4.  FUNDING LOSSES.  The relevant Borrower will reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may reasonably
sustain or incur as a consequence of:

               (a)  the failure of such Borrower to make on a timely basis any
     payment of principal of any Offshore Rate Loan;

               (b)  the failure of such Borrower to borrow, continue or convert
     a Loan after such Borrower has given (or is deemed to have given) a Loan
     Request or a Conversion/Continuation Notice;

               (c)  the failure of such Borrower to make any prepayment in
     accordance with any notice delivered under Section 2.6; or

               (d)  the prepayment or other payment (including after
     acceleration thereof) of any of such Borrower's Offshore Rate Loans on a
     day that is not the last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained.  For purposes of
calculating amounts payable by a Borrower to the Banks under this Section and
under Section 3.3(b), each of such Borrower's Offshore Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the IBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded.

                                       14

<PAGE>   20
     3.5   INABILITY TO DETERMINE RATES.  If the Agent determines that for any
reason adequate and reasonable means do not exist for determining a relevant
Borrower's Offshore Rate for any requested Interest Period with respect to a
proposed Offshore Rate Loan or that the Offshore Rate applicable pursuant to
Section 2.8(a) for any requested Interest Period with respect to a proposed
Offshore Rate Loan does not adequately and fairly reflect the cost to any Bank
of funding such Loan, the Agent will promptly so notify the relevant Borrower
and each Bank.  Thereafter, the obligation of the Banks to make or maintain such
Offshore Rate Loans hereunder shall be suspended until the Agent gives notice
(and, if appropriate, the Agent shall give such notice) to the relevant Borrower
that adequate and reasonable means do exist for determining such Offshore Rate
or such Offshore Rate does adequately and fairly reflect the costs to the Banks
of funding such Loans.  Upon receipt of such notice, such Borrower may revoke
any Loan Request or Conversion/Continuation Notice then submitted by it.  If
such Borrower does not revoke such Notice, the Banks shall make, convert or
continue such Loans at the end of the applicable Interest Period, as proposed by
such Borrower, in the amount specified in the applicable notice submitted by
such Borrower, but such Loans shall be made, converted or continued as Federal
Funds Rate Loans instead of Offshore Rate Loans until the Agent revokes such
notice.

     3.6.  CERTIFICATES OF BANKS.  Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the relevant Borrower (with
a copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder, and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.

     3.7.  SUBSTITUTION OF BANKS.  Upon the receipt by a Borrower from any Bank
(an "Affected Bank") of a claim for compensation against such Borrower under
Section 3.1 or Section 3.3 or any circumstances exist with respect to such Bank
described in Section 3.2, such Borrower may:  (i) request the Affected Bank to
use its best efforts to obtain a replacement bank or financial institution
satisfactory to such Borrower to acquire and assume all or a ratable part of all
of such Affected Bank's Loans and Commitment (a "Replacement Bank"); (ii)
request one or more of the other Banks to acquire and assume all or part of such
Affected Bank's Loans and Commitment (it being understood that no such other
Bank shall in any way be required to effect any such acquisition and
assumption); or (iii) designate a Replacement Bank.  Any such designation of a
Replacement Bank under clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld) and
payment in full of all amounts due and owing hereunder to the Replacement Bank.
Each Bank which is an Affected Bank agrees to execute the necessary
documentation to assign its interest to a Replacement Bank upon five (5) days'
written notice from such Borrower after a Replacement Bank is identified.

     3.8.  SURVIVAL.  The agreements and obligations of the respective Borrowers
in Sections 3.1, 3.3 and 3.4 shall survive the payment of all other Obligations.

                                       15


<PAGE>   21
                                   ARTICLE IV

                     CONDITIONS TO AMENDMENTS AND BORROWING

     4.1.  CONDITIONS TO AMENDMENT AND RESTATEMENT.  This amended and restated
Agreement shall take effect from the first day that the Agent shall have
received counterparts hereof signed by the Borrowers, the Agent and the Banks,
and each of the conditions set forth in this Section 4.1 has been waived by the
Agent and each Bank or met.

               (a)  The Agent shall have received from each Borrower a
     certificate, dated the Refinancing Date, of its Secretary or Assistant
     Secretary as to

                    (i)  resolutions of its board of trustees then in full force
          and effect authorizing the execution, delivery and performance of this
          amended and restated Agreement, the Notes and each other Credit
          Document to be executed by it and the Borrower's Declaration of Trust
          as amended or amended and restated to the date hereof and By-Laws;

                    (ii)  the incumbency and signatures of those of its officers
          or agents authorized to act with respect to this amended and restated
          Agreement, the Notes and each other Credit Document executed by it;

                    (iii)  such Borrower's valid existence as evidenced by a
          certificate issued by the Secretary of State of the Commonwealth of
          Massachusetts and appended to the relevant certificate of its
          Secretary or Assistant Secretary; and

                    (iv)  the fact that the agreements delivered by such
          Borrower pursuant to Section 4.1(e) constitute all such agreements
          between the Borrower and the Adviser as of such date;

upon which certificate the Agent and each Bank may conclusively rely as to the
matters described in clauses (i) and (ii) until they shall have received a
further certificate from such Borrower canceling or amending such prior
certificate.

                                       16


<PAGE>   22
               (b)  The Agent shall have received (i) for the account of each
     Bank, a Note of the New Borrower duly executed and delivered by the New
     Borrower and made payable to the order of such Bank in the amount of such
     Bank's Commitment and (ii) for the account of Bank of America National
     Trust and Savings Association, Commerzbank Aktiengesellschaft, New York
     Branch, and Harris Trust and Savings Bank a Note from each Borrower duly
     executed and delivered by such Borrower and made payable to the order of
     such Bank in the amount of such Bank's Commitment.

               (c)  The Agent shall have received (1) an opinion, dated the
     Refinancing Date and addressed to the Agent and all Banks, from Skadden,
     Arps, Slate, Meagher & Flom (Illinois), counsel to each Borrower,
     substantially in the form of Exhibit 4.1(c)-1 and (2) an opinion, dated the
     Refinancing Date and addressed to the Agent and all Banks, from Mayer,
     Brown & Platt, counsel to the Agent, substantially in the form of Exhibit
     4.1(c)-2.

               (d)  The Agent shall have received evidence of payment of all
     accrued and unpaid fees, costs and expenses to the extent then due and
     payable on the Refinancing Date, together with Attorney Costs of the Agent
     to the extent invoiced prior to or on the Refinancing Date, plus such
     additional amounts of Attorney Costs as shall constitute the Agent's
     reasonable estimate of Attorney Costs incurred or to be incurred by it
     through the closing proceedings (provided that such estimate shall not
     thereafter preclude final settling of accounts between the Borrowers and
     the Agent), including any such costs, fees and expenses then due and
     payable arising under or referenced in Section 2.9(a) and those then due
     and payable pursuant to Section 9.4.

               (e)  The Agent shall have received copies of each investment
     advisory agreement between each Borrower and the Adviser, together with all
     sub-advisory agreements, if any, in effect as of the Refinancing Date.

               (f)  The Agent shall have received a Borrowing Base Certificate
     for the New Borrower completed as of a date that is no more than three
     Business Days prior to the Refinancing Date.

               (g)  The Agent shall have received copies of the most recent
     prospectus and statement of additional information for the New Borrower in
     effect as of the Refinancing Date.

               (h)  The Agent shall have received from the Borrowers an
     Allocation Notice.

     4.2.  ALL BORROWINGS.  The obligation of each Bank to fund any Loan on the
occasion of any Borrowing (including the initial Borrowing) by a Borrower shall
be subject to the satisfaction of each of the conditions precedent set forth in
this Section 4.2.

               (a)  No Default shall have occurred and be continuing with
     respect to the Borrower on such date.

                                       17

<PAGE>   23


               (b)  The representations and warranties of the relevant Borrower
     contained in Article V (except to the extent such representations and
     warranties relate solely to an earlier date, in which case they shall be
     true and correct as of such earlier date) shall be true and correct in all
     material respects on and as of the date of such Borrowing, both immediately
     before and after giving effect to such Borrowing, as if then made.

               (c)  In the case of a Borrowing, the Agent shall have received a
     Loan Request for such Borrowing.  Each of the delivery of a Loan Request
     and the acceptance by the relevant Borrower of the proceeds of such
     Borrowing shall constitute a representation and warranty by the relevant
     Borrower that on the date of such Borrowing (both immediately before and
     after giving effect to such Borrowing and the application of the proceeds
     thereof), the statements made in Sections 4.2(a), (b), (d) and (e) are true
     and correct with respect to such Borrower.

               (d)  Both before and after the Loan in question, such Borrower's
     Asset Coverage Ratio shall be at least 8 to 1.

               (e)  There shall not have been outstanding to such Borrower as of
     the close of business (San Francisco time) on the day preceding the
     proposed Borrowing Date for the requested Loan a Loan that had been
     outstanding for more than sixty (60) days.

               Any instrument, agreement or other document to be received by the
     Agent pursuant to this Article IV, and any other condition precedent
     required to be met or satisfied under this Article IV, shall be in form and
     substance reasonably satisfactory to the Agent and each Bank and in
     sufficient copies for each Bank.

     4.3.  CONSEQUENCES OF EFFECTIVENESS, ETC.  On the Refinancing Date the
Existing Credit Agreement shall be automatically amended and restated to read as
set forth herein.  On and after the Refinancing Date the rights and obligations
of the parties hereto shall be governed by this amended and restated Agreement;
provided that rights and obligations of the parties hereto with respect to the
period prior to the Refinancing Date shall continue to be governed by the
provisions of the Existing Credit Agreement. On the Refinancing Date, the Pro
Rata Share of each Bank shall immediately become the percentage set forth
opposite the name of such Bank on Schedule II.  With effect from and including
the Refinancing Date, each Person listed on the signature pages hereof that is
not a party to the Existing Credit Agreement shall become a party to this
Agreement and, as of such date Norwest Bank Minnesota, National Association
shall cease to be a Bank party to this Agreement.

     4.4.  AMOUNTS OUTSTANDING UNDER THE ORIGINAL CREDIT AGREEMENT DEEMED TO BE
LOANS UNDER THIS AGREEMENT.  The principal amounts of Loans owing by Van Kampen
Prime Rate Income Trust under the Existing Credit Agreement as at the
Refinancing Date to each Bank that is a party thereto (as reallocated pursuant
to this Agreement) shall be deemed to be Loans made by that Bank hereunder.

                                       18
<PAGE>   24
                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     In order to induce the Banks and the Agent to enter into this Agreement and
to make Loans hereunder, each Borrower represents and warrants unto the Agent
and each Bank with respect to itself as set forth in this Article V.  The
representations and warranties contained in this Article V shall be deemed to be
repeated by a Borrower each time that such Borrower requests that a Loan be made
as provided in Article IV.

     5.1.  EXISTENCE.  The Borrower is a Massachusetts business trust duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts.  The Borrower is a duly registered,
non-diversified, closed-end investment company under the Act and has registered
the sale of its common shares of beneficial interest under the Securities Act of
1933, as amended, pursuant to one or more registration statements, including any
related prospectus, that is or are currently effective. The Borrower is in good
standing and is duly qualified to do business in each state where, because of
the nature of its activities or properties, such qualification is required,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business or operations of the Borrower.

     5.2.  AUTHORIZATION.  The Borrower is duly authorized to execute and
deliver this Agreement and the Notes and, so long as this Agreement shall remain
in effect, the Borrower will continue to be duly authorized to borrow monies
hereunder and to perform its obligations under this Agreement and the Notes.

     5.3.  NO CONFLICTS.  The execution, delivery and performance by the
Borrower of this Agreement and the Notes do not and, so long as this Agreement
shall remain in effect with respect to them, will not (i) conflict with any
provision of law, (ii) conflict with the Trust Agreement or its by-laws, (iii)
conflict with any material agreement or instrument binding upon it, (iv)
conflict with the Borrower's most recent prospectus or its most recent statement
of additional information, (v) conflict with any court or administrative order
or decree applicable to it or (vi) require or result in the creation or
imposition of any Lien on any of its assets.

     5.4.  VALIDITY AND BINDING EFFECT.  This Agreement is, and the Notes when
duly executed and delivered will be, the legal, valid and binding obligation of
the Borrower, enforceable against it in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, fraudulent conveyance, fraudulent transfer, moratorium or other
similar laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies.

                                       19

<PAGE>   25

     5.5.  NO DEFAULT.  The Borrower is not in default under any agreement or
instrument to which it is a party or by which any of its respective properties
or assets is bound or affected, other than defaults that could not reasonably be
expected to result in a Material Adverse Change with respect to such Borrower.
To the best of its knowledge, no Default with respect to it has occurred and is
continuing.

     5.6.  FINANCIAL STATEMENTS.  The Borrower's most recent audited Statement
of Assets and Liabilities and its most recent semi-annual asset statement,
copies of which have been or will be furnished to the Banks, have been prepared
in conformity with GAAP applied on a basis consistent with that of the preceding
Fiscal Year or period and present fairly its financial condition as at such
dates and the results of its operations for the periods then ended, subject (in
the case of the interim financial statement) to year-end audit adjustments.
Since the date of its most recent Statement of Assets and Liabilities and such
semi-annual asset statement, there has been no Material Adverse Change with
respect to such Borrower.

     5.7.  LITIGATION.  No claims, litigation, arbitration proceedings or
governmental proceedings that could reasonably be expected to result in a
Material Adverse Change with respect to such Borrower are pending or, to the
best of its knowledge, threatened against or affecting such Borrower, except
those referred to in Exhibit 5.7-1.  Other than any liability incident to such
claims, litigation or proceedings or provided for or disclosed in the financial
statements referred to in Section 5.6 or listed on Exhibit 5.7-2, to the best of
its knowledge, it has no contingent liabilities which are material to it other
than those incurred in the ordinary course of business.

     5.8.  LIENS.  None of the Borrower's property, revenues or assets is
subject to any Lien, except (i) Liens in favor of the Banks, if any, (ii) Liens
for current Taxes not delinquent or Taxes being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained, (iii) Liens as are
necessary in connection with a secured letter of credit opened by or for it in
connection with its trustees' and officers' errors and omissions liability
insurance policy, (iv) Liens in connection with the payment of initial and
variation margin in connection with authorized futures and options transactions
and collateral arrangements with respect to options, futures contracts, options
on futures contracts, when-issued or delayed-delivery securities or other
authorized investments, (v) Liens arising under any custodian agreement to which
it is a party, (vi) other Liens on assets with a value no greater than
$2,000,000 and (vii) Liens in connection with reverse repurchase transactions.
Less than 25% of the value (as determined by any reasonable method) of the
assets of the Borrower, not including shares of the Borrower itself, consists of
"margin stock" as defined in FRB Regulation U.

     5.9.  PARTNERSHIPS.  The Borrower is not a general partner or joint
venturer in any partnership or joint venture.

                                       20

<PAGE>   26
     5.10.  PURPOSE.  The proceeds of the Loans will be used by it for
short-term liquidity and other temporary emergency purposes, which purposes are
permitted under the Act and by its prospectus and statement of additional
information.  Neither the making of any Loan nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of FRB Regulation T, U or X.
It acknowledges that Loans made to it may be deemed by the FRB to be "purpose
loans" under Regulation U because of its status as an investment company (or the
functional equivalent thereof).

     5.11.  COMPLIANCE AND GOVERNMENT APPROVALS.  The Borrower is in compliance
with all statutes and governmental rules and regulations applicable to it,
including, without limitation, the Act, other than incidents of non-compliance
that could not reasonably be expected to result in a Material Adverse Change
with respect to such Borrower.  No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
or other person is required for the due execution, delivery or performance by
the Borrower of this Agreement, the Notes or any of the other Credit Documents
and the Borrowings, other than those that have been obtained or made.

     5.12.  PENSION AND WELFARE PLANS.  The Borrower has not established or
maintained, nor is it liable under, any Plan.

     5.13.  TAXES.  The Borrower has filed all tax returns that are required to
have been filed and has paid, or made adequate provisions for the payment of,
all of its Taxes that are due and payable, except such Taxes, if any, as are
being contested in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be required by GAAP have
been maintained.  The Borrower is not aware of any proposed assessment against
it for such additional Taxes (or any basis for any such assessment) which might
be material in amount to it.  The Borrower has substantially complied with all
requirements of the Code applicable to regulated investment companies so as to
be relieved of federal income tax on net investment income and net capital gains
distributed to its shareholders.

     5.14.  SUBSIDIARIES; INVESTMENTS.  The Borrower has no Subsidiaries or
equity investments or any interest in any other Person other than portfolio
securities (including investment company securities) which may have been
acquired in the ordinary course of business.

     5.15.  FULL DISCLOSURE.  No document or instrument furnished by the
Borrower to the Banks in connection herewith contains any untrue statement of
any material fact as of the date when made or omits to state any material fact
necessary to make the statements herein or therein taken as a whole not
misleading as of the date when made in light of the circumstances in which the
same were made.

     5.16.  INVESTMENT POLICIES.  The Borrower's assets are being invested
substantially in accordance with the investment policies and restrictions set
forth in its

                                       21

<PAGE>   27
most recent prospectus and its most recent statement of additional
information other than any de minimis violation of such policies arising in the
ordinary course of business which the Borrower is in the process of correcting.

     5.17.  REGULATIONS T, U AND X.  The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock.

     5.18.  STATUS OF LOANS.  The Borrower's obligation in connection with the
repayment of any Loans made to it hereunder shall at all times rank at least
pari passu in priority of payment with all of its other present and future
unsecured and unsubordinated Indebtedness.

     5.19.  PROSPECTUS.  The asset coverage restrictions on the Borrower in its
prospectus are not more restrictive than the provisions of Section 6.12 hereof.

     5.20.  AFFILIATED PERSON.  To the best of the knowledge of the Borrower as
of the date hereof, it is not an "Affiliated Person" or an "Affiliated Person"
of such an "Affiliated Person", as defined in the Act, of any Bank party to the
Agreement as of the date hereof.

     5.21.  COMPUTER SYSTEMS.  The Borrower has developed and implemented a
comprehensive, detailed program to address on a timely basis the "Year 2000
Problem" (that is, the risk that computer applications used by the Borrower may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999) and reasonably
anticipates that it will on a timely basis successfully resolve the Year 2000
Problem for all material computer applications used by it.  The Borrower
believes, based upon inquiry made, that each supplier and vendor of the Borrower
that is of material importance to the financial well-being of the Borrower will
also successfully resolve on a timely basis the Year 2000 Problem for all of its
material computer applications.

                                   ARTICLE VI

                                   COVENANTS

     From the date of this Agreement (or, in the case of the New Borrower, the
date of the second amendment and restatement of this Agreement) and thereafter
until the expiration or termination of the Commitments and until all Obligations
other than those expressly stated to survive expiration or termination of this
Agreement have been paid or performed in full, each Borrower, as to itself,
shall perform the obligations made applicable to it in this Article VI.

     6.1.  FINANCIAL STATEMENTS AND OTHER REPORTS.  Each Borrower shall deliver
to the Agent, with sufficient copies for each Bank:

                                       22




<PAGE>   28
               (a)  As soon as available and in any event within 70 days after
     each of its Fiscal Years commencing with the Fiscal Year ending July 31,
     1997, a copy of its annual audited Statement of Assets and Liabilities,
     including a statement of investments, prepared in conformity with GAAP and
     certified by KPMG LLP or such other independent certified public accountant
     who, in the commercially reasonable judgment of the Majority Banks, shall
     be satisfactory to the Majority Banks, together with a certificate from
     such accountant (i) acknowledging to the Banks such accountant's
     understanding that the Banks are relying on such Statement of Assets and
     Liabilities, (ii) containing a computation of, and showing compliance with,
     the financial ratio contained in Section 6.12 and (iii) to the effect that,
     in making the examination necessary for the signing of such Statement of
     Assets and Liabilities, such accountant has not become aware of any Default
     that has occurred and is continuing, or if such accountant has become aware
     of any such event, describing it and the steps, if any, being taken to cure
     it;

               (b)  Within 70 days after the end of the first six months of its
     Fiscal Year, a copy of its published semi-annual asset statement, prepared
     in conformity with GAAP;

               (c)  Within 15 days after the end of each calendar quarter, (i) a
     certificate substantially in the form of Exhibit 6.1 ("Borrowing Base
     Certificate") setting forth its (A) borrowing base (as calculated in the
     manner contemplated by the form of Borrowing Base Certificate) ("Borrowing
     Base") and (B) Asset Coverage Ratio as of the last day of such calendar
     quarter and (ii) a certificate signed by an Authorized Officer certifying
     that, to the best of such Person's knowledge, no Default has occurred and
     is continuing or, if an Event of Default has occurred and is continuing,
     the steps being taken to remedy the same;

               (d)  (i) Within 15 days following the filing thereof, any
     preliminary proxy materials filed with the Securities and Exchange
     Commission and (ii) within 15 days after the same become available, copies
     of its current prospectus and statement of additional information (marked
     to show changes from the prospectus and statement of additional information
     most recently delivered to the Banks), except that if its investment
     policies are changed materially (including any change in its ability to
     borrow hereunder), copies of a revised prospectus (or a prospectus
     supplement) and statement of additional information (marked to show changes
     from the prospectus (or prospectus supplement) and statement of additional
     information most recently delivered to the Banks) reflecting any such
     changes shall be provided to the Agent within 15 days after the same become
     available; and

               (e)  Promptly from time to time such other reports or information
     as any of the Banks may reasonably request.

     6.2.  NOTICES.  The Borrower shall notify the Agent in writing of any of
the following immediately upon learning of the occurrence thereof, describing
the same and, if applicable, stating the steps being taken by the Person(s)
affected with respect thereto:

               (a)  the occurrence of a Default;

                                       23



<PAGE>   29
               (b)  the institution of any litigation, arbitration proceeding or
     governmental proceeding which is likely to result in a Material Adverse
     Change with respect to such Borrower;

               (c)  the entry of any judgment or decree against it if the
     aggregate amount of all judgments and decrees then outstanding against it
     exceeds the lesser of 5% of its Net Asset Value or $5,000,000 after
     deducting (i) the amount with respect to which it is insured and with
     respect to which the insurer has assumed responsibility in writing and
     (ii) the amount for which it is otherwise indemnified if the terms of such
     indemnification and the Person providing such indemnification are
     satisfactory to the Majority Banks;

               (d)  the occurrence of a change of its name (whether of its legal
     name or a "d/b/a" designation).  The Borrower shall promptly execute and
     deliver to each Bank a new Note for execution in its new name, together
     with such other documents in connection therewith as the Banks shall
     reasonably request; and

               (e)  the scheduling of consideration by the board of trustees of
     the Borrower of a change in the Borrower's Adviser (except as contemplated
     hereby), distributor, administrator, custodian (unless such custodian is a
     Bank) or independent accountant, or the appointment of any sub-adviser or
     any Person acting in a similar capacity to an Adviser (except as
     contemplated hereby); provided that a mailing to shareholders with respect
     to any of the foregoing shall not be deemed to be sufficient notice
     hereunder.

     Notwithstanding anything to the contrary in the foregoing, in the case of
the matters described in subparagraph (e), the notice contemplated by this
Section 6.2 shall be given not later than 30 days prior to the time (i) the
board of trustees of the Borrower is to consider approval of such change or
appointment or otherwise determines to recommend such change or appointment (if
necessary) to the Borrower's shareholders for their approval and (ii) of any
change of the Borrower's custodian; provided, however, if in the case of the
matters contemplated by subparagraph (e) the Borrower could not in good faith
have provided the specified advance notice, such notice shall be given by the
Borrower immediately following the earliest feasible time the notice could have
been provided.

     6.3.  EXISTENCE.  The Borrower, except as specified in Section 6.11(a),
shall maintain and preserve its existence as a registered investment company,
and maintain and preserve all rights, privileges, licenses, copyrights,
trademarks, trade names, franchises and other authority to the extent material
and necessary for the conduct of its business in the ordinary course as
conducted from time to time, unless the Borrower has no Loans outstanding and
the Borrower has irrevocably notified the Agent (which shall thereupon promptly
notify the Banks) that it shall not request any Loans hereunder.

                                       24
<PAGE>   30
     6.4.  NATURE OF BUSINESS.  The Borrower shall continue in, and limit its
operations to, the business of a closed-end management investment company,
within the meaning of the Act, and maintain in full force and effect at all
times all governmental licenses, registrations, permits and approvals necessary
for the continued conduct of its business, including, without limitation, its
registration with the Securities and Exchange Commission under the Act as a
closed-end investment company, except where the failure to so maintain such
licenses, registrations, permits and approvals would not result in a Material
Adverse Change with respect to such Borrower.

     6.5.  BOOKS, RECORDS AND ACCESS.  The Borrower shall maintain complete and
accurate books and records in which full and correct entries in conformity with
GAAP shall be made of all transactions in relation to its business and
activities; upon reasonable notice, the Borrower shall at the expense of the
Banks prior to Default or at the expense of the Borrower after Default permit
access by the Banks to its books and records during normal business hours and
permit the Banks to make copies of such books and records; provided, that the
Banks agree that Borrower shall not be required to provide the Banks with access
to such of its books and records that are subject to confidentiality agreements
which prohibit such access or which are proprietary in nature.

     6.6.  INSURANCE.  The Borrower shall maintain in full force and effect
insurance to such extent and against such liabilities as is commonly maintained
by companies similarly situated, including but not limited to (i) such fidelity
bond coverage as shall be required by Rule 17g-1 promulgated under the Act or
any similar or successor provision and (ii) errors and omissions, director and
officer liability and other insurance against such risks and in such amounts
(and with such co-insurance and deductibles) as is usually carried by other
companies of comparable size and financial strength engaged in the same or
similar businesses and similarly situated and will, upon the reasonable request
of the Agent, furnish to the Banks a certificate of an Authorized Officer
setting forth the nature and extent of all insurance maintained by the Borrower
in accordance with this Section.

     6.7.  INVESTMENT POLICIES AND RESTRICTIONS.  (a)  The Borrower, without
prior written notice to the Agent of at least 30 days, shall not rescind, amend
or modify any investment policy described as "fundamental" in any prospectus or
any registration statement(s) that may be on file with the Securities and
Exchange Commission with respect thereto (collectively herein, a "proposed
change").  If, in the reasonable judgment of the Majority Banks, such proposed
change will result in a change in the Banks' analysis of the creditworthiness of
the Borrower, the Agent shall notify the Borrower of such decision; thereafter,
if such proposed change is implemented, the Banks may terminate their
Commitments to lend to the Borrower, and all Loans outstanding to the Borrower
shall become immediately due and payable.

               (b)  The Borrower's investment in any assets shall be made in
     accordance with its investment policies and restrictions set forth in its
     most recent prospectus and statement of additional information other than
     any investment which shall constitute a de

                                       25
<PAGE>   31
minimis violation of such policies arising in the ordinary course of business
which the Borrower is in the process of correcting.

     6.8.  TAXES.  The Borrower shall pay when due all of its Taxes, unless and
only to the extent that such Taxes are being contested in good faith and by
appropriate proceedings and it shall have set aside on its books such reserves
or other appropriate provisions therefor as may be required by GAAP.  The
Borrower shall at all times comply with all requirements of the Code applicable
to regulated investment companies, to such effect as not to be subject to
federal income taxes on net investment income and net capital gains distributed
to its shareholders.

     6.9.  COMPLIANCE.  The Borrower shall comply in all material respects with
all statutes and governmental rules and regulations applicable to it, including,
without limitation, the Act.

     6.10.  PENSION PLANS.  The Borrower shall not enter into, or incur any
liability relating to, any Plan.

     6.11.  MERGER, PURCHASE AND SALE.  The Borrower shall not:

               (a)  be a party to any merger or consolidation; provided,
     however, that the Borrower may merge or consolidate with any other Person
     in accordance with 17 C.F.R. "Section" 270.17a-8 if (i) such merger or
     consolidation complies in all material respects with the requirements of 17
     C.F.R. "Section" 270.17a-8 and all rules promulgated in connection
     therewith, (ii) the surviving entity assumes all of the obligations to the
     Banks of the Borrower prior to such merger or consolidation and (iii) in
     the good faith judgment of the Majority Banks, the financial condition and
     investment policies and restrictions of the surviving entity are not
     fundamentally different from those of the Borrower prior to such merger or
     consolidation, unless the Majority Banks otherwise consent;

               (b)  except as permitted by Section 6.11(a) and except for sales
     or other dispositions of assets in the ordinary course of its business or
     to meet shareholder redemption requests, sell, transfer, convey, lease or
     otherwise dispose of all or any substantial part of its assets; provided,
     however, that the Borrower may sell substantially all of its assets to
     another Person in accordance with 17 C.F.R. "Section" 270.17a-8 if (i) such
     sale complies in all material respects with the requirements of 17 C.F.R.
     "Section" 270.17a-8 and all rules promulgated in connection therewith, (ii)
     the purchasing entity assumes all obligations to the Banks of the Borrower
     prior to such sale and (iii) in the good faith judgment of the Majority
     Banks, the financial condition and investment policies and restrictions of
     the purchasing entity are not fundamentally different from those of the
     Borrower prior to the asset sale; or

               (c)  except as permitted by Section 6.11(a), purchase or
     otherwise acquire all or substantially all the assets of any Person without
     the review and consent thereto of the Majority Banks, which consent shall
     not be unreasonably withheld.

                                       26
<PAGE>   32


     For purposes of this Section 6.11 only, a sale, transfer, conveyance, lease
or other disposition of assets shall be deemed to be a "substantial part" of the
assets of the Borrower only if the value of such assets, when added to the value
of all other assets sold, transferred, conveyed, leased or otherwise disposed of
by the Borrower (other than in the normal course of business or in a manner
otherwise consistent with the Borrower's investment policies and other than
payments or transfers made to satisfy quarterly tenders of shares of the
Borrower) during the same Fiscal Year, exceeds 15% of the Borrower's Total
Assets determined as of the end of the immediately preceding Fiscal Year.

     6.12.  ASSET COVERAGE RATIO.  The Borrower shall not at any time permit its
Asset Coverage Ratio to be less than 8 to 1 or such other more restrictive ratio
as may be set forth in any prospectus with respect to the Borrower.

     6.13.  LIENS.   The Borrower shall not create or permit to exist any Lien
with respect to any property, revenues or assets now owned or hereafter acquired
by it, except (i) Liens in favor of the Banks, if any, (ii) Liens for current
Taxes not delinquent or Taxes being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as may
be required by GAAP are being maintained, (iii) Liens as are necessary in
connection with a secured letter of credit opened by or on behalf of the
Borrower in connection with the Borrower's trustees' errors and omissions
liability insurance policy, (iv) Liens incurred in the ordinary course of
business in connection with authorized futures and options transactions and
collateral arrangements with respect to options, futures contracts, options on
futures contracts, when-issued or delayed-delivery securities or other
authorized investments, (v) Liens arising under any custodian agreement to which
the Borrower is a party, (vi) Liens in connection with reverse repurchase
agreements and (vii) other Liens on assets with a value no greater than
$2,000,000; provided, however, the value of any of its assets subject to a Lien
shall be excluded from calculation of its Borrowing Base.  The Borrower shall
not permit "margin stock" as defined in FRB Regulation U (not including shares
of the Borrower itself) to constitute 25% or more of the value (as determined by
any reasonable method) of the assets of the Borrower.

     6.14.  GUARANTIES.  The Borrower shall not become or be a guarantor or
surety of, or otherwise become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services or as an account party
under any letter of credit issued in favor of a third party, or otherwise) with
respect to, any undertaking of any other Person, except for the endorsement, in
the ordinary course of collection, of instruments payable to it or its order.

     6.15.  OTHER AGREEMENTS.  The Borrower shall not enter into any agreement
containing any provision that would be violated or breached by performance of
its obligations hereunder or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith.

                                       27
<PAGE>   33

     6.16.  TRANSACTIONS WITH RELATED PARTIES.  The Borrower shall not enter
into or be a party to any transaction or arrangement, including, without
limitation, the purchase, sale, loan, lease or exchange of property or the
rendering of any service, with any Related Party, except in the ordinary course
of and pursuant to the reasonable requirements of its business and upon fair and
reasonable terms no less favorable to it than would be obtainable in a
comparable arm's-length transaction with a Person not a Related Party; provided
that any such transaction must be made in substantial compliance with Section 17
of the Act or an exemption therefrom.

     6.17.  OTHER INDEBTEDNESS.  The Borrower shall not incur or permit to exist
any Indebtedness, other than (i) the Loans; (ii) unsecured Indebtedness that is
subordinated in right of payment upon liquidation of the Borrower to the payment
of the Loans; (iii) Indebtedness incurred in connection with Liens permitted by
Section 6.13; (iv) reverse repurchase transactions in an amount not exceeding
that permitted by the Borrower's investment policies and restrictions; and (v)
other Indebtedness approved in writing by the Majority Banks.

     6.18.  CHANGES TO ORGANIZATION DOCUMENTS, ETC.  The Borrower shall not make
or permit to be made any material changes to its Organization Documents without
the prior written consent of the Majority Banks.

     6.19.  PROCEEDS OF LOANS.  The Borrower shall utilize the proceeds of each
Loan made to it to provide temporary liquidity funding allowed under the Act.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

     7.1.  EVENTS OF DEFAULT.  Each of the following shall constitute an Event
of Default with respect to each Borrower under this Agreement (it being
understood that an Event of Default with respect to one Borrower shall not
constitute an Event of Default with respect to the other Borrower):

               (a)  Default in payment by the Borrower (i) when and as required
     to be paid herein of any amount of principal of any Loan or (ii) within
     five days after the same becomes due of any interest, fee or any other
     amount payable hereunder or under any other Credit Document.

               (b)  Default by the Borrower in the payment when due, whether by
     acceleration or otherwise (subject to any applicable grace period), of any
     Indebtedness of, or guaranteed by, the Borrower in excess of $5,000,000
     (other than the Indebtedness evidenced by the Notes).

               (c)  Any event or condition shall occur that results in the
     acceleration of the maturity of any Indebtedness of, or guaranteed by, the
     Borrower in excess of

                                       28


<PAGE>   34
$5,000,000 or enables the holder or holders of such other Indebtedness or any
trustee or agent for such holders (any required notice of default having been
given and any applicable grace period having expired) to accelerate the maturity
of such other Indebtedness.

               (d)  The Borrower (i) becomes insolvent, or generally fails to
     pay, or admits in writing its inability to pay, its debts as they become
     due, subject to applicable grace periods, if any, whether at stated
     maturity or otherwise; (ii) voluntarily ceases to conduct its business in
     the ordinary course; (iii) commences any Insolvency Proceeding with respect
     to itself; or (iv) takes any action to effectuate or authorize any of the
     foregoing.

               (e)  (i)  Any involuntary Insolvency Proceeding is commenced or
     filed against the Borrower, or any writ, judgment, warrant of attachment,
     execution or similar process is issued or levied against a substantial part
     of its assets, and any such proceeding or petition shall not be dismissed,
     or such writ, judgment, warrant of attachment, execution or similar process
     shall not be released, vacated or fully bonded, within 60 days after
     commencement, filing or levy; (ii) the Borrower admits the material
     allegations of a petition against it in any Insolvency Proceeding, or an
     order for relief (or similar order under non-U.S. law) is ordered in any
     Insolvency Proceeding; or (iii) it acquiesces in the appointment of a
     receiver, trustee, custodian, liquidator, mortgagee in possession (or agent
     therefor) or other similar Person for itself or a substantial part of its
     property or business.

               (f)  The Borrower shall default in the performance of its
     agreement under Section 6.4, 6.11 or 6.12.

               (g)  The Borrower shall default in the performance of its other
     agreements herein set forth (and not constituting an Event of Default under
     any of the other subsections of this Section 7.1), and such default shall
     continue for 30 days (or five Business Days in the case of the agreement
     contained in the last sentence of the definition of "Total Assets") after
     notice thereof to the Borrower from the Agent.

               (h)  Any representation or warranty made by the Borrower herein,
     or in any schedule, statement, report, notice, certificate or other writing
     furnished by it on or as of the date as of which the facts set forth
     therein are stated or certified, is untrue or misleading in any material
     respect when made or deemed made or any certification made or deemed made
     by it to the Banks is untrue or misleading in any material respect on or as
     of the date made or deemed made.

               (i)  There shall be entered against the Borrower one or more
     judgments or decrees which, when taken together, will exceed $5,000,000 at
     any one time outstanding, excluding those judgments or decrees (i) that
     shall have been stayed or discharged within 30 calendar days from the entry
     thereof and (ii) those judgments and decrees for and to the extent which
     the Borrower is insured and with respect to which the insurer has assumed
     responsibility in writing or for and to the extent which the Borrower is
     otherwise

                                       29
<PAGE>   35
indemnified if the terms of such indemnification and the Person providing such
indemnification are satisfactory to the Majority Banks.

               (j)  The Borrower shall no longer be in compliance in all
     material respects with all material provisions of the Act after giving
     effect to all notice, cure and contest periods thereunder.

               (k)  The Borrower shall violate or take any action that would
     result in a violation of any of its investment restrictions or fundamental
     investment policies as from time to time in effect, except for violations
     or the taking of such actions that could not reasonably be expected to
     result in a Material Adverse Change with respect to such Borrower.

               (l)  There occurs a Change in Control of the Borrower's Adviser.

               (m)  The Borrower shall have failed to maintain Van Kampen
     Investment Advisory Corp. or one of its Affiliates as Adviser to it and the
     Majority Banks shall not have consented to such failure.

               (n)  The Borrower shall have changed its distributor, custodian,
     accountant or administrator and the Majority Banks shall not have provided
     their prior written consent to such change; provided, however, that the
     Majority Banks shall not withhold such consent unless, based upon their
     reasonable judgment, the Majority Banks in good faith conclude that such
     change would result in a change in the creditworthiness of the Borrower.

     7.2.  REMEDIES.  If any Event of Default described in Section 7.1 shall
have occurred and be continuing, the Agent, upon the direction of the Majority
Banks, shall declare the Commitments to be terminated with respect to the
relevant Borrower and such Borrower's obligations under its Notes to be due and
payable, whereupon such Commitments shall immediately terminate with respect to
such Borrower and such Borrower's Notes shall become immediately due and
payable, all without advance notice of any kind (except that if an event
described in Section 7.1(d) or Section 7.1(e) occurs, the Commitments shall
immediately terminate with respect to such Borrower and the obligations under
the Notes with respect to such Borrower shall become immediately due and payable
without declaration or advance notice of any kind).  The Agent shall promptly
advise the relevant Borrower of any such declaration, but failure to do so shall
not impair the effect of such declaration.  If an Event of Default shall have
occurred, the Agent may exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks against the relevant Borrower under
the Credit Documents or applicable law.

                                       30
<PAGE>   36
                                  ARTICLE VIII

                                   THE AGENT

     8.1.  APPOINTMENT AND AUTHORIZATION.  Each Bank hereby irrevocably (subject
to Section 8.9) appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other
Credit Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Credit
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Credit Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Credit Document or
otherwise exist against the Agent.

     8.2.  DELEGATION OF DUTIES.  The Agent may execute any of its duties under
this Agreement or any other Credit Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

     8.3.  LIABILITY OF AGENT.  None of the Agent-Related Persons shall (i) be
liable to any of the Banks for any action taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Credit Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct) or (ii) be responsible in any manner to any of the Banks for
any recital, statement, representation or warranty made by either Borrower or
any officer or agent thereof contained in this Agreement or in any other Credit
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or any other Credit Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Credit
Document, or for any failure of a Borrower or any other party to any Credit
Document to perform its obligations hereunder or thereunder.  No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in or
conditions of this Agreement or any other Credit Document or to inspect the
properties, books or records of a Borrower.

                                       31
<PAGE>   37
     8.4.  RELIANCE BY AGENT.  The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to a
Borrower), independent accountants and other experts selected by the Agent.  The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Credit Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate, and if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Credit Document in accordance with a request or consent of the
Majority Banks and such request, and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.

     8.5.  NOTICE OF DEFAULT.  The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default, except with respect to defaults in
the payment of principal, interest and fees required to be paid to the Agent for
the account of the Banks, unless the Agent shall have received written notice
from a Bank or a Borrower referring to this Agreement, describing such Default
and stating that such notice is a "notice of default".  The Agent will notify
the Banks of its receipt of any such notice. The Agent shall take such action
with respect to such Default as may be requested by the Majority Banks in
accordance with Article VII; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable or in the best interest of the Banks.

     8.6.  CREDIT DECISION.  Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrowers, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank.  Each Bank represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrowers hereunder.  Each Bank also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Credit Documents and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers.  Except for notices, reports and

                                       32

<PAGE>   38
other documents expressly herein required to be furnished to the Banks by
the Agent, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrowers which may come into the possession of any of the Agent-Related
Persons.

     8.7.  INDEMNIFICATION OF AGENT.  Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct.  Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Credit Document or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrowers.  The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.

     8.8.  AGENT IN INDIVIDUAL CAPACITY.  BofA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrowers and their
Affiliates as though BofA were not the Agent hereunder and without notice to or
consent of the Banks.  The Banks acknowledge that, pursuant to such activities,
BofA or its Affiliates may receive information regarding the Borrowers or their
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrowers) and acknowledge that the Agent shall be
under no obligation to provide such information to them.  With respect to its
Loans, BofA shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" include BofA in its individual capacity.

     8.9.  SUCCESSOR AGENT.  The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days' notice to the Banks and the
Borrowers.  If the Agent resigns under this Agreement, the Majority Banks shall
appoint from among the Banks a successor agent for the Banks, which successor
agent shall be subject to approval by the Borrowers.  If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Borrowers, a successor
agent from among the Banks.  Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such

                                       33


<PAGE>   39
 successor agent, and the retiring Agent's appointment, powers and duties as
Agent shall be terminated.  After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article VIII and Sections 9.4 and 9.5 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.  If no successor agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective, and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Majority Banks appoint a successor
agent as provided for above.

     8.10.  WITHHOLDING TAX.  (a)  On or prior to the date of execution and
delivery of this Agreement in the case of each initial Bank, and on or prior to
the date of the assignment pursuant to which it becomes a party to this
Agreement in the case of an assignee Bank, and from time to time thereafter if
requested by the Agent or either Borrower, any Bank that is a "foreign
corporation, partnership or trust" within the meaning of the Code agrees with
and in favor of the Agent and the Borrowers to deliver to the Agent and the
Borrowers IRS Form 1001 and IRS Form W-8, two copies of IRS Form 4224, as
appropriate, or any successor form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding tax.

     A Bank providing IRS Forms 1001 and W-8 shall also provide to the Agent and
Borrowers properly completed IRS Forms 1001 and W-8 in each third succeeding
calendar year during which interest may be paid under this Agreement.   A Bank
providing IRS Form 4224 shall also provide to the Agent and Borrowers two
properly completed IRS Forms 4224 before the payment of interest is due in each
succeeding taxable year of such Bank during which interest may be paid under
this Agreement.

     Such Bank agrees to promptly notify the Agent and the Borrowers of any
change in circumstances that would modify or render invalid any claimed
exemption or reduction.  If the IRS form provided by a Bank at the time such
Bank first becomes a party to this Agreement indicates a United States
withholding tax in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes and Other Taxes unless and until such Bank
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
and Other Taxes for the period governed by such form; provided, however, that,
if at the date of an assignment pursuant to which an assignee becomes a party to
this Agreement, the Bank assignor was entitled to payments under Section 3.1 in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include United States
withholding tax, if any, applicable with respect to the Bank assignee on such
date.  For any period with respect to which a Bank that is a "foreign
corporation, partnership or trust" within the meaning of the Code has failed to
provide the Agent and Borrowers with the appropriate IRS forms described above
(other than if such failure is due to a change in law occurring subsequent to
the date on which a Bank, or an assignee thereof, becomes a party to this
Agreement), such Bank shall not be

                                       34
<PAGE>   40
entitled to indemnification under Section 3.1 with respect to withholding
taxes imposed by the United States; provided, however, that should a Bank become
subject to withholding taxes because of its failure to deliver a form required
hereunder, the Borrowers shall take such steps as the Bank shall reasonably
request to assist the Bank to recover such Taxes.

               (b)  If any Bank claims exemption from or reduction of
     withholding tax under a United States tax treaty by providing IRS Form 1001
     and such Bank sells, assigns, grants a participation in or otherwise
     transfers all or part of the Obligations of a Borrower to such Bank, such
     Bank agrees to notify the Agent and such Borrower of the percentage amount
     in which it is no longer the beneficial owner of Obligations of such
     Borrower to such Bank.  To the extent of such percentage amount, the Agent
     and the relevant Borrower will treat such Bank's IRS Form 1001 as no longer
     valid.

               (c)  If any Bank claiming exemption from United States
     withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
     grants a participation in or otherwise transfers all or part of the
     Obligations of a Borrower to such Bank, such Bank agrees to undertake sole
     responsibility for complying with the withholding tax requirements imposed
     by Sections 1441 and 1442 of the Code.

               (d)  If the IRS or any other Governmental Authority of the United
     States or other jurisdiction asserts a claim that the Agent or a Borrower
     did not properly withhold tax from amounts paid to or for the account of
     any Bank (because the appropriate form was not delivered, was not properly
     executed, or because such Bank failed to notify the Agent or the relevant
     Borrower of a change in circumstances which rendered the exemption from, or
     reduction of, withholding tax ineffective, or for any other reason), such
     Bank shall indemnify the Agent and the relevant Borrower fully for all
     amounts paid, directly or indirectly, by the Agent or the Borrower as tax
     or otherwise, including penalties and interest, and including any taxes
     imposed by any jurisdiction on the amounts payable to the Agent or the
     Borrower under this Section, together with all costs and expenses
     (including Attorney Costs).  The obligation of the Banks under this
     subsection shall survive the payment of all Obligations and the resignation
     or replacement of the Agent.

                                       35
<PAGE>   41
                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

     9.1  AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision
of this Agreement or any other Credit Document, and no consent with respect
to any departure by the Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Banks (or by the Agent at the
written request of the Majority Banks) and the Borrowers and acknowledged by
the Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment or consent shall, unless in writing and
signed by all the Banks and the Borrowers and acknowledged by the Agent, do any
of the following:

          (a)  increase or extend the Commitments of any Bank (or reinstate
     any Commitment(s) terminated pursuant to Section 7.1);

          (b)  postpone or delay any date fixed by this Agreement or any
     other Credit Document for any payment of principal, interest, fees or other
     amounts due to the Banks (or any of them) hereunder or under any other
     Credit Document;

          (c)  reduce the principal of, or the rate of interest specified
     herein on, any Loan, or (subject to clause (ii) below) any fees or other
     amounts payable hereunder or under any other Credit Document;

          (d)  change the percentage of the Commitments or of the aggregate
     unpaid principal amount of the Loans which is required for the Banks or any
     of them to take any action hereunder; or

          (e)  amend this Section, Section 2.13, Section 6.12, the definition
     of "Asset Coverage Ratio" (or any defined term as it is used in such
     definition) or any provision herein providing for consent or other action
     by all Banks;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Credit Document and (ii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto.

                                       36
<PAGE>   42
     9.2.  NOTICES.  (a)  All notices, requests and other communications shall
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by a Borrower by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule III and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed by certified
mail return receipt requested postage prepaid, faxed or delivered to the address
or facsimile number specified for notices on Schedule III, or, as directed to
the Borrowers or the Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as directed to any other
party, at such other address as shall be designated by such party in a written
notice to the Borrower and the Agent.

          (b)  All such notices, requests and communications shall, when
     transmitted by overnight delivery or faxed, be effective when delivered for
     overnight (next-day) delivery or transmitted in legible form by facsimile
     machine, respectively, or if mailed, upon the third Business Day after the
     date deposited into the U.S. mail by certified mail return receipt
     requested, or if delivered, upon delivery; provided that notices pursuant
     to Article II or VIII shall not be effective until actually received by the
     Agent.

          (c)  Any agreement of the Agent and the Banks herein to receive
     certain notices by telephone or facsimile is solely for the convenience and
     at the request of the Borrowers.  The Agent and the Banks shall be entitled
     to rely on the authority of any Person purporting to be a Person authorized
     by a Borrower to give such notice, and the Agent and the Banks shall not
     have any liability to such Borrower or other Person on account of any
     action taken or not taken by the Agent or the Banks in reliance upon such
     telephonic or facsimile notice.  The obligation of a Borrower to repay the
     Loans shall not be affected in any way or to any extent by any failure by
     the Agent and the Banks to receive written confirmation of any telephonic
     or facsimile notice or the receipt by the Agent and the Banks of a
     confirmation which is at variance with the terms understood by the Agent
     and the Banks to be contained in the telephonic or facsimile notice.

     9.3.  NO WAIVER; CUMULATIVE REMEDIES.  No failure to exercise and no delay
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

                                       37
<PAGE>   43
     9.4.  COSTS AND EXPENSES.  The relevant Borrower shall:

          (a)     whether or not the transactions contemplated hereby are
     consummated, pay or reimburse BofA (so long as it is the Agent, or if BofA
     is not the Agent, the Bank acting as successor Agent) (including in its
     capacity as Agent) within five Business Days after demand (i) each Borrower
     shall pay its pro rata portion of reasonable costs and expenses (based upon
     its respective net asset value as of the date of determination of any
     payment) in connection with the preparation, delivery, administration and
     execution of this Amended and Restated Credit Agreement, any Credit
     Document and any other documents prepared in connection herewith or
     therewith, and the consummation of the transactions contemplated hereby and
     thereby, including reasonable Attorney Costs incurred by BofA (so long as
     it is the Agent, or if BofA is not the Agent, the Bank acting as successor
     Agent) (including in its capacity as Agent) with respect thereto; and (ii)
     the Borrower responsible for a required amendment, supplement, waiver or
     modification (in each case whether or not consummated) of this Agreement,
     any Credit Document and any other document prepared in connection herewith
     or therewith shall pay all reasonable costs and expenses in connection
     therewith; provided, however, notwithstanding anything to the contrary in
     the foregoing, the responsibility of the relevant Borrower to reimburse
     BofA (so long as it is the Agent, or if BofA is not the Agent, the Bank
     acting as successor Agent) for Attorney Costs in connection with the
     development, preparation, delivery and execution of this amended and
     restated Agreement and such other documents and the consummation of such
     transactions shall be limited to the reasonable fees and disbursements of
     outside counsel to BofA (so long as it is the Agent, or if BofA is not the
     Agent, the Bank acting as successor Agent); and

          (b)     the Borrower responsible for a breach or violation of this
     Agreement or any Credit Document shall pay or reimburse the Agent, the
     Arranger and each Bank within five Business Days after demand for all costs
     and expenses (including Attorney Costs) incurred by them in connection with
     the enforcement, attempted enforcement or preservation of any rights or
     remedies under this Agreement or any other Credit Document during the
     existence of an Event of Default or after acceleration of the Loans
     (including in connection with any "workout" or restructuring regarding the
     Loans and including in any Insolvency Proceeding or appellate proceeding).

     9.5.  BORROWER INDEMNIFICATION.  (a)  Whether or not the transactions
contemplated hereby are consummated, Van Kampen Prime Rate Income Trust shall
indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person"), harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including reasonable Attorney Costs)
of any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans and the termination, resignation or replacement
of the Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or

                                       38
<PAGE>   44
     any Credit Document as a result of the activities of Van Kampen Prime
     Rate Income Trust, or the transactions contemplated hereby, or any action
     taken or omitted by any such Person under or in connection with any of the
     foregoing, including with respect to any investigation, litigation or
     proceeding (including any Insolvency Proceeding or appellate proceeding)
     related to or arising out of this Agreement or the Loans to Van Kampen
     Prime Rate Income Trust or the use of the proceeds thereof, whether or not
     any Indemnified Person is a party thereto (all the foregoing, collectively,
     the "Indemnified Liabilities"); provided that Van Kampen Prime Rate Income
     Trust shall not have an obligation hereunder to any Indemnified Person with
     respect to Indemnified Liabilities resulting from the gross negligence or
     willful misconduct of such Indemnified Person.  The agreements in this
     Section shall survive payment of all other Obligations.

          (b)  Whether or not the transactions contemplated hereby are
     consummated, Van Kampen Senior Floating Rate Fund shall indemnify and hold
     the Agent-Related Persons, and each Bank and each of its respective
     officers, directors, employees, counsel, agents and attorneys-in-fact
     (each, an "Indemnified Person"), harmless from and against any and all
     liabilities, obligations, losses, damages, penalties, actions, judgments,
     suits, costs, charges, expenses and disbursements (including reasonable
     Attorney Costs) of any kind or nature whatsoever which may at any time
     (including at any time following repayment of the Loans and the
     termination, resignation or replacement of the Agent or replacement of any
     Bank) be imposed on, incurred by or asserted against any such Person in any
     way relating to or arising out of this Agreement or any Credit Document as
     a result of the activities of Van Kampen Senior Floating Rate Fund, or the
     transactions contemplated hereby, or any action taken or omitted by any
     such Person under or in connection with any of the foregoing, including
     with respect to any investigation, litigation or proceeding (including any
     Insolvency Proceeding or appellate proceeding) related to or arising out of
     this Agreement or the Loans to Van Kampen Senior Floating Rate Fund or the
     use of the proceeds thereof, whether or not any Indemnified Person is a
     party thereto (all the foregoing, collectively, the "Indemnified
     Liabilities"); provided that Van Kampen Senior Floating Rate Fund shall not
     have an obligation hereunder to any Indemnified Person with respect to
     Indemnified Liabilities resulting from the gross negligence or willful
     misconduct of such Indemnified Person. The agreements in this Section shall
     survive payment of all other Obligations.

          (c)  Promptly after receipt by an Indemnified Person under subsections
     (a) or (b) above of notice of the commencement of any action, such
     Indemnified Person shall, if a claim in respect thereof is to be made
     against the respective Borrower under such subsection, notify such Borrower
     in writing of the commencement thereof, but the omission so to notify such
     Borrower shall not relieve it from any liability which it may have to any
     Indemnified Person otherwise than under such subsection.  In case any such
     action shall be brought against any Indemnified Person and it shall notify
     the respective Borrower of the commencement thereof, the relevant Borrower
     or Borrowers, as applicable, shall be entitled to participate therein and,
     to assume the defense thereof, with counsel reasonably satisfactory to such
     Indemnified Person (who shall not, except with the consent of the
     Indemnified Person, be counsel to the relevant Borrower or Borrowers),

                                       39
<PAGE>   45
     and after notice from the relevant Borrower or Borrowers to such
     Indemnified Person of its election so to assume the defense thereof;
     provided that in no event shall any settlement or compromise of any such
     claims, actions or demands be made without the consent of the Indemnified
     Person, the consent of which shall not be unreasonably withheld; and
     provided, further, that the relevant Borrower or Borrowers shall not be
     required to reimburse the expenses of more than one counsel in any
     jurisdiction unless the Indemnified Parties shall determine in their sole
     discretion that their interests may differ.

          (d)  The agreements in this Section 9.5 shall survive payment of all
     other Obligations.  The obligations under 9.5(a) and 9.5(b) hereof shall be
     without duplication.

     9.6.  PAYMENTS SET ASIDE.  (a) To the extent that a Borrower makes a
payment to the Agent or the Banks, or the Agent or the Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred and
(b) each Bank severally agrees to pay to the Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Agent.

     9.7.  SUCCESSORS AND ASSIGNS.  (a)  The provisions of this Agreement shall
be binding upon and shall inure to the benefit of the Borrowers, the Agent and
the Banks and their respective successors and assigns, except that a Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of the Banks; provided that the Banks hereby
agree that (i) they each consent to any transfer or assignment made to another
Person pursuant to Section 6.11(b) so long as all of the conditions in the
proviso in Section 6.11(b) are met; (ii) the Banks further agree that any
transfer or assignment made pursuant to Section 6.11(b) shall not itself be
deemed to be a rescission, amendment or modification of any "fundamental"
investment policy under Section 6.7(a) or a violation of Section 6.7(b); and
(iii) the Banks agree to release the relevant original Borrower from all
liability hereunder.

          (b)  The Loans are being made by the Banks in the ordinary course of
     their business and not with a view toward distribution, it being understood
     that each Bank may sell participations and assignments in its Commitments
     and the Loans as provided herein. Any Bank may at any time assign, subject
     to the relevant Borrower's consent, which consent shall not be unreasonably
     withheld, to one or more financial institutions (each of which shall have a
     net worth of at least $500,000,000 (or the equivalent thereof in another
     currency)) not an affiliate (as defined in the Act) of or an affiliate (as
     defined in the Act) of such an affiliate of either of the Borrowers or Van
     Kampen Investment Advisory Corp. (each an "Assignee") all, or a
     proportionate part of all, of its rights under this Agreement and the
     relevant Borrower's Notes in a minimum amount of $25,000,000; provided that
     the relevant Borrower may continue to deal solely and directly with the
     Bank in

                                       40
<PAGE>   46
connection with any interest assigned until such Borrower receives written
notice of assignment, the address of the assignee and such Borrower consents.
Any Bank may at any time grant to one or more financial institutions (each of
which shall have a net worth of at least $500,000,000 (or the equivalent thereof
in another currency))  not an affiliate (as defined in the Act) of either of the
Borrowers or Van Kampen Investment Advisory Corp. (each a "Participant")
participating interests in its Commitments or any or all of its Loans.  In the
event of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the relevant Borrower, such Bank shall remain
responsible for the performance of its obligations hereunder, and such Borrower
shall continue to deal solely and directly with such Bank in connection with the
Bank's rights and obligations under this Agreement.  Any agreement pursuant to
which such Bank may grant such a participating interest shall provide that the
Bank shall retain the sole right and responsibility to enforce the obligations
of the relevant Borrower hereunder, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement (i)
which increases or decreases the Commitments of the Bank, (ii) reduces the
principal of or rate of interest on any Loan or fees hereunder or (iii)
postpones the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder without the consent of the Participant.  The relevant
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article III hereof with
respect to its participating interest subject to clause (d) below and subject to
compliance with Section 8.10 by the participant as if it were a Bank.

          (c)  Any Bank may at any time assign all or any portion of its rights
     under this Agreement and the Notes to a Federal Reserve Bank.  No such
     assignment shall release such Bank from its obligations hereunder.

          (d)  No Assignee, Participant or other transferee of a Bank's rights
     shall be entitled to receive any greater payment under Section 3.1 and
     Section 3.3 hereof than such Bank would have been entitled to receive with
     respect to the rights transferred, unless such transfer is made with the
     relevant Borrower's prior written consent or at a time when the
     circumstances giving rise to such greater payment did not exist.

     9.8.  CONFIDENTIALITY.  Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all written information identified as
"confidential" or "secret" by any Borrower and provided to it by or on behalf of
such Borrower, or by the Agent on a Borrower's behalf, under this Agreement or
any other Credit Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Credit Documents, except to the extent such information
(i) was or becomes generally available to the public other than as a result of
disclosure by the Bank or (ii) was or becomes available on a non-confidential
basis from a source other than a Borrower; provided that such source is not
bound by a confidentiality agreement with a Borrower known to the Bank;
provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other legal process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with
any

                                       41
<PAGE>   47
litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Credit Document;
(F) to persons (including Affiliates) that perform credit administration and
review processes for such Bank and to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential;
provided that such Person agrees in writing to keep such information
confidential to the same extent as required by the Banks hereunder; (H) as to
any Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which a Borrower is party or
is deemed party with such Bank or such Affiliate; and (I) to its Affiliates;
provided that each Bank shall require its Affiliates to agree to comply with the
provisions of Section 9.9; and provided further that in the case of clauses (B),
(C) and (D), such Bank shall use reasonable efforts to notify the relevant
Borrower promptly of any requests to disclose such information so that the
Borrower may seek a protective order or other appropriate remedy.

     9.9.  SET-OFF.  (a)  In addition to any rights and remedies of the Banks
provided by law, but subject to Section 9.9(b), if, as to a Borrower, an Event
of Default exists and is continuing or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
such Borrower (any such notice being waived by such Borrower to the fullest
extent permitted by law), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of such Borrower against any and all Obligations of such Borrower owing to such
Bank, now or hereafter existing, irrespective of whether or not the Agent or
such Bank shall have made demand under this Agreement or any Credit Document and
although such Obligations may be contingent or unmatured provided that any such
appropriation and application shall be subject to the provisions of Section
2.13.  Each Bank agrees promptly to notify the relevant Borrower and the Agent
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

          (b)  Notwithstanding the foregoing, in no event shall any Bank have
     any right to set off or otherwise apply any deposits of any kind at any
     time held by any such Bank to the extent that such Bank holds such deposits
     as a Borrower's custodian or agent. Without limiting the foregoing, in no
     event shall State Street Bank and Trust Company set off or otherwise apply
     any deposits of any kind at any time held by State Street Bank and Trust
     Company pursuant to any Custodian Contract between a Borrower and State
     Street Bank and Trust Company as in effect on the date hereof and as the
     same may be amended, restated, supplemented or otherwise modified from time
     to time.

     9.10.  NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC.  Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.

     9.11.  COUNTERPARTS.  This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

     9.12.  SURVIVAL.  The respective obligations of the Borrowers under
Sections 2.9, 3.1, 3.3, 3.4 and Sections 9.4 and 9.5, and the obligations of the
Banks under

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<PAGE>   48
Sections 8.7 and 9.8, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments.  The respective representations and warranties made by the
Borrowers in this Agreement and in each other Credit Document shall survive the
execution and delivery of this Agreement and each such other Credit Document.

     9.13.  DISCLAIMER.  None of the shareholders, trustees, officers, employees
and other agents of a Borrower shall be personally bound by or liable for any
indebtedness, liability or obligation hereunder or under the Notes, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim hereunder.

     9.14.  SEVERABILITY.  The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

     9.15.  NO THIRD PARTIES BENEFITED.  This Agreement is made and entered into
for the sole protection and legal benefit of the Borrowers, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Credit Documents.

     9.16.  GOVERNING LAW AND JURISDICTION.  THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

          (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
     ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT AGAINST EACH BORROWER IN THE
     COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN
     DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
     BORROWER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
     EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH BORROWER IRREVOCABLY WAIVES
     ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
     THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
     THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
     THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH BORROWER WAIVES
     PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
     MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.

     9.17.  WAIVER OF JURY TRIAL.  EACH BORROWER, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF

                                       43

<PAGE>   49
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE.  EACH BORROWER, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER CREDIT DOCUMENTS.

     9.18  ENTIRE AGREEMENT.  This Agreement, together with the other Credit
Documents, embodies the entire agreement and understanding among the Borrowers,
the Banks and the Agent and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.

     9.19  AFFILIATED PERSON.  Each Bank represents that it is not an"Affiliated
Person" or an "Affiliated Person" of such an "Affiliated Person", as defined in
the Act, of a Borrower.

     9.20  CONTINUING EFFECTIVENESS, ETC.  After the Refinancing Date, all
references in the Credit Documents or other similar documents to "Credit
Agreement" or words of like import shall refer to this Agreement.  The
execution, delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
the Banks under any of the other Credit Documents, nor constitute a waiver of
any provision of the Credit Documents.

     9.21  FACSIMILE EXECUTION.  One or more executed counterparts of this
Agreement or any document or instrument related hereto may be delivered by
facsimile, with the intention that such counterparts have the same effect as an
original executed counterpart hereof or thereof.  Any party hereto delivering an
executed counterpart of this Agreement or any related document or instrument by
facsimile shall promptly provide an original of such executed counterpart to the
Agent.

                                       44
<PAGE>   50


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                             VAN KAMPEN PRIME RATE INCOME TRUST



                             By:     /s/ John L. Sullivan
                                     -------------------------------------

                             Title:  Chief Financial Officer & Treasurer
                                     -------------------------------------

                                      S-1

<PAGE>   51



                              VAN KAMPEN SENIOR FLOATING RATE FUND






                              By:     /s/ John L. Sullivan
                                     -------------------------------------

                              Title:  Chief Financial Officer & Treasurer
                                     -------------------------------------
































































                                      S-2

<PAGE>   52
                             BANK OF AMERICA NATIONAL TRUST AND
                             SAVINGS ASSOCIATION, as Agent



                              By:     /s/ John G. Hayes
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------






                             BANK OF AMERICA NATIONAL TRUST AND
                             SAVINGS ASSOCIATION



                              By:     /s/ John G. Hayes
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                                      S-3
<PAGE>   53
                             THE BANK OF NEW YORK



                              By:     /s/ Scott H. Buitekant
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                                      S-4

<PAGE>   54
                             BAYERISCHE HYPO-UND VEREINSBANK AG,
                             New York Branch


                             By:     /s/ David A. Lefkovits
                                     -------------------------------------

                             Title:  Managing Director
                                     -------------------------------------


                             By:     /s/ Michael F. Davis
                                     -------------------------------------

                             Title:  Associate Director
                                     -------------------------------------

                                      S-5


<PAGE>   55



                              FLEET NATIONAL BANK



                              By:     /s/ Antonio F. Barbieri
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------

                                      S-6



<PAGE>   56



                              STATE STREET BANK AND TRUST COMPANY


                              By:     /s/ Edward Siegel
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------


                                      S-7


<PAGE>   57




                              CITIBANK, N.A.


                              By:     /s/ Pierre Guigui
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                                      S-8


<PAGE>   58



                              COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH



                              By:     /s/ William M. Earley
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                              By:     /s/ Michael P. McCarthy
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                                      S-9


<PAGE>   59



                              CREDIT LYONNAIS NEW YORK BRANCH



                              By:     /s/ Sebastian Rocco
                                     -------------------------------------

                              Title:  Senior Vice President
                                     -------------------------------------



                                      S-10



<PAGE>   60


                              HARRIS TRUST AND SAVINGS BANK



                              By:     /s/ Robert G. Bomben
                                     -------------------------------------

                              Title:  Vice President
                                     -------------------------------------



                                      I-1


<PAGE>   61

                                   SCHEDULE I


                                  Definitions


     "Act" means the Investment Company Act of 1940.

     "Adviser" means Van Kampen Investment Advisory Corp., a Delaware
corporation or any of its Affiliates as investment adviser, sub-adviser or
administrator to the Borrower, or any other successor or assign thereto
consented to by the Majority Banks.

     "AFFECTED BANK" is defined in Section 3.7.

     "AFFILIATE" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract or
otherwise.

     "AGENT" is defined in the preamble and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section 8.9.

     "AGENT-RELATED PERSONS" means BofA and any successor agent arising under
Section 8.9, together with their respective Affiliates (including, in the case
of BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

     "AGENT'S PAYMENT OFFICE" means the address for payments set forth on
Schedule III in relation to the Agent or such other address as the Agent may
from time to time specify.

     "AGREEMENT" means this Credit Agreement, as amended, restated, modified
and/or supplemented from time to time.

     "ALLOCATION NOTICE" means a notice, substantially in the form of Exhibit
2.14, furnished to the Agent by or on behalf of each Borrower, setting forth, as
of the date of such notice, the manner of allocation of liability for amounts
that shall become due and payable by the Borrowers under the Credit Documents
(other than commitment fees, principal and interest in respect of Loans,
expenses allocable specifically to one Borrower hereunder, indemnities allocable
to one Borrower in accordance with the terms and conditions hereof or Taxes or
Other Taxes allocated to a particular Borrower and arrangement and agency fees).


                                      I-1
<PAGE>   62
     "APPLICABLE MARGIN" means,

          (i)     with respect to Federal Funds Rate Loans, 0.45%; provided,
     however, that, during the period from December 17, 1999 through January 14,
     2000, the Applicable Margin shall be 0.575%; and

          (ii)     with respect to Offshore Rate Loans, 0.45%; provided,
     however, that, during the period from December 17, 1999 through January 14,
     2000, the Applicable Margin shall be 0.575%.

     "ARRANGEMENT FEE" is defined in Section 2.9.

     "ARRANGER" means Banc of America Securities LLC, as sole lead arranger and
sole book manager.

     "ASSET COVERAGE RATIO" means, with respect to a Borrower, the ratio which
the Net Asset Value of the Borrower, less the value of assets subject to Liens,
bears to the aggregate amount of Indebtedness of the Borrower.

     "ASSIGNEE" is defined in Section 9.7(b).

     "ATTORNEY COSTS" means and includes any and all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all reasonable disbursements of internal counsel.

     "AUTHORIZED OFFICER" means, relative to the Borrower, those of its officers
or agents whose signatures and incumbency shall have been certified to the Agent
and the Banks pursuant to Section 4.1(a).

     "BANKS" is defined in the preamble.

     "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978.

     "BASE RATE" means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by BofA in San Francisco, California, as
its "reference rate."  The "reference rate" is a rate set by BofA based upon
various factors, including BofA's costs and desired return, general economic
conditions and other factors and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate.  Any change
in the reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.

     "BOFA" is defined in the preamble.

                                      I-2
<PAGE>   63
     "BORROWER" means each of Van Kampen Prime Rate Income Trust, Van Kampen
Senior Floating Rate Fund and the successors and assigns permitted pursuant to
Section 9.7(a).

     "BORROWING" means a borrowing hereunder consisting of Loans of the same
Type made to a Borrower on the same day by the Banks under Article II and, other
than in the case of Federal Funds Rate Loans, having the same Interest Period.

     "BORROWING BASE" has the meaning set forth in Section 6.1(c).

     "BORROWING BASE CERTIFICATE" means a Borrowing Base Certificate as defined
in Section 6.1(c) and substantially in the form of Exhibit 6.1 attached hereto.

     "BORROWING DATE" means any date on which a Borrowing occurs under
Section 2.3.

     "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks in Chicago, New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.

     "CAPITAL ADEQUACY REGULATION" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

     "CAPITALIZED LEASE" means any lease which is or should be capitalized on
the balance sheet of the lessee in accordance with GAAP.

     "CHANGE IN CONTROL" means with respect to any Person any transaction or
series of transactions where (i) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as
in effect on the date hereof) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, as in effect on the date hereof), directly or
indirectly, of securities of such Person (the "Target") representing 20% or more
of the combined voting power of the Target's then- outstanding securities; (ii)
at any time less than a majority of the members of the Target's board of
directors shall be persons who were either nominated for election or were
elected by such board of directors; (iii) the Target's stockholders approve a
merger or consolidation of the Target with any other Person, other than a merger
or consolidation that would result in the voting securities of the Target
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 75% of the combined voting power of the voting
securities of the Target or such surviving entity outstanding immediately after
such merger or consolidation; or (iv) the Target's stockholders approve a plan
of complete liquidation of

                                      I-3
<PAGE>   64
the Target or an agreement for the sale or disposition of all or
substantially all of the Target's assets.

     "CLOSING DATE" means April 17, 1997.

     "CODE" means the Internal Revenue Code of 1986.

     "COMMITMENT" MEANS, relative to any Bank, such Bank's obligation to make
Loans pursuant to Section 2.1.

     "COMMITMENT AMOUNT" means, on any date, $500,000,000, as such amount may be
reduced from time to time pursuant to Section 2.5.

     "COMMITMENT TERMINATION DATE" means the earliest to occur of:

          (a)  June 13, 2000;

          (b)  the date on which the Commitments terminate in accordance with
     the provisions of this Agreement; and

          (c)  the date on which any Event of Default described in Section
     7.1(e) or Section 7.1(f) occurs.

     Upon the occurrence of any event described in clause (b) or (c) above, the
Commitments shall terminate automatically and without further action.

     "CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of a Borrower,
substantially in the form of Exhibit 2.4.

     "CREDIT DOCUMENTS" means this Agreement, any Notes, the Fee Letter and all
other documents delivered to the Agent or any Bank in connection herewith.

     "DEFAULT" means any Event of Default or any condition, occurrence or event
which, with notice or lapse of time or both, would, unless cured or waived,
constitute an Event of Default.

     "DOLLAR" and the symbol "$" mean the lawful money of the United States.

     "ERISA" means the Employee Retirement Income Security Act of 1974.

     "EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the definition
of "Offshore Rate".

     "EVENT OF DEFAULT" means any of the events described in Section 7.1.

                                      I-4

<PAGE>   65
     "EXCHANGE ACT" has the meaning specified in the definition of "Change in
Control".

     "FEDERAL FUNDS RATE" means, for any day, the rate as quoted by the Federal
Reserve Bank of New York and confirmed in the weekly statistical release
designated as H.15(519), or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor "H.15(519)") on the
preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such preceding
Business Day, the rate for such day will be the arithmetic mean as determined by
the Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by the
Agent.

     "FEDERAL FUNDS RATE LOAN" means a Loan that bears interest based on the
Federal Funds Rate.

     "FEE LETTER" means the letter agreement referred to in Section 2.9.

     "FISCAL QUARTER" means any quarter of a Fiscal Year.

     "FISCAL YEAR" means any period of twelve consecutive calendar months ending
on the last day of such twelve-month period; references to a Fiscal Year with a
number corresponding to any calendar year (e.g., the "1995 Fiscal Year") refer
to the Fiscal Year ending on July 31 during such calendar year.

     "FRB" means the Board of Governors of the Federal Reserve System and any
Governmental Authority succeeding to any of its principal functions.

     "GAAP" means United States generally accepted accounting principles.

     "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing which exercise a similar
function.

     "INDEBTEDNESS" of any Person means, without duplication, (i) any obligation
of such Person for borrowed money, including, without limitation (a) any
obligation of such Person evidenced by bonds, debentures, notes or other similar
debt instruments and (b) any obligation for borrowed money which is non-recourse
to the credit of such Person but which is secured by a Lien on any asset of such
Person, (ii) any obligation of such Person on account of advances, (iii) any
obligation of such Person for the deferred purchase price of any property or
services, except Trade Accounts Payable, (iv) any obligation of such Person as
lessee under a Capitalized Lease, (v) all net obligations with respect to Swap
Contracts and (vi) any Indebtedness of another Person secured by a Lien on any
asset of

                                      I-5
<PAGE>   66
such first Person, whether or not such Indebtedness is assumed by such first
Person.  For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.

     "INDEMNIFIED LIABILITIES" is defined in Section 9.5.

     "INDEMNIFIED PERSONS" is defined in Section 9.5.

     "INSOLVENCY PROCEEDING" means, with respect to any Person, (a) any case,
action or proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors, undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.

     "INTEREST PAYMENT DATE" means, as to any Loan other than a Federal Funds
Rate Loan, the last day of each Interest Period applicable to such Loan and, as
to any Federal Funds Rate Loan, the last Business Day of each calendar quarter.

     "INTEREST PERIOD" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan
and ending on the date one day to 60 days thereafter as selected by a Borrower
in its Loan Request or Conversion/Continuation Notice,

     provided that:

          (i)  if any Interest Period would otherwise end on a day that is not a
     Business Day, that Interest Period shall be extended to the following
     Business Day unless, in the case of an Offshore Rate Loan, the result of
     such extension would be to carry such Interest Period into another calendar
     month, in which event such Interest Period shall end on the preceding
     Business Day; and

          (ii)  no Interest Period for any Loan shall extend beyond the
     Commitment Termination Date.

     "IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.

     "LENDING OFFICE" means, as to any Bank, the office or offices of such Bank
specified as its "Lending Office" or "Domestic Lending Office" or "Offshore
Lending Office", as the case may be, on Schedule III hereto or in the case of an
Assignee Bank, in the Bank Assignment Agreement or such other office or offices
as such Bank may from time to time notify to a Borrower and the Agent.

                                      I-6

<PAGE>   67
     "LIEN" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, segregated asset
arrangement established in connection with reverse repurchase transactions,
encumbrance, lien (statutory or other), or preferential arrangement of any kind
or nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing lease
having substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which such
lien relates as debtor, under the Uniform Commercial Code or any comparable law)
and any contingent or other agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating lease.

     "LOAN" means an extension of credit by a Bank to a Borrower under Article
II and may be a Federal Funds Rate Loan or an Offshore Rate Loan (each, a "Type"
of Loan).

     "LOAN REQUEST" means a request for a Loan given by a Borrower to the Agent,
substantially in the form of Exhibit 2.3.

     "MAJORITY BANKS" means, at any time, at least two Banks (which are not
Affiliates of each other) then holding at least 51% of the then aggregate unpaid
principal amount of the Loans or, if no such principal amount is then
outstanding, at least two Banks then having at least 51% of the Commitments.

     "MATERIAL ADVERSE CHANGE" means with respect to a relevant Borrower any
change that is material and adverse to (x) the condition (financial or
otherwise) or business of such Borrower, provided any change occurring after the
most recent Borrowing Date resulting from a decrease in the Net Asset Value of
such Borrower shall not be deemed a Material Adverse Change as long as such
Borrower's Net Asset Value has not decreased by more than 25% per share since
the Borrowing Date or (y) the ability of such Borrower to duly and punctually
pay and perform all or any of its Obligations.

     "NET ASSET VALUE" means, at any date, Total Assets less Total Liabilities.

     "NOTE" means the promissory note of a Borrower, substantially in the form
set forth as Exhibit 2.2.

     "OBLIGATIONS" means all obligations (monetary or otherwise) of a Borrower
to the Banks and the Agent under the Credit Documents and the Fee Letter,
including (a) all obligations to make payments to the Banks of, and in respect
of the principal amount of and interest on, any Loan and (b) all obligations of
a Borrower to the Banks and the Agent in respect of fees, costs, expenses and
indemnification under Sections 9.4 and 9.5.

     "OFFSHORE RATE" means, for any Interest Period, with respect to Offshore
Rate Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/100th of 1%) determined by the Agent as follows:

                                      I-7



<PAGE>   68


                                              IBOR
              Offshore Rate = ------------------------------------
                              1.00 - Eurodollar Reserve Percentage

     Where

          "EURODOLLAR RESERVE PERCENTAGE" means, for any day for any Interest
     Period, the maximum reserve percentage (expressed as a decimal, rounded
     upward to the next 1/100th of 1%) in effect on such day (whether or not
     applicable to any Bank) under regulations issued from time to time by the
     FRB for determining the maximum reserve requirement (including any
     emergency, supplemental or other marginal reserve requirement) with respect
     to Eurocurrency funding (currently referred to as "Eurocurrency
     liabilities"); and

          "IBOR" means the rate of interest per annum determined by the Agent as
     the rate at which Dollar deposits in the approximate amount of BofA's
     Offshore Rate Loan for such Interest Period would be offered by BofA's
     Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be
     designated for such purpose by BofA), to major banks in the offshore Dollar
     interbank market at their request at approximately 9:00 a.m. (San Francisco
     time) one Business Day prior to the commencement of such Interest Period.

     The Offshore Rate shall be adjusted automatically as to all Offshore Rate
Loans then outstanding as of the effective date of any change in the Eurodollar
Reserve Percentage.

     "OFFSHORE RATE LOAN" means a Loan that bears interest based on the Offshore
Rate.

     "ORGANIZATION DOCUMENTS" means, for a Borrower, the Trust Agreement, the
bylaws, any certificate of determination or instrument relating to the rights of
preferred shareholders of the Borrower and all applicable resolutions of the
board of trustees (or any committee thereof) of the Borrower.

     "ORIGINAL AGREEMENT" is defined in the first recital to this amended and
restated Agreement.

     "OTHER TAXES" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies that arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Credit Documents.

     "PARTICIPANT" is defined in Section 9.7(b).

     "PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.

                                      I-8
<PAGE>   69


     "PLAN" means any "pension plan" or "welfare benefit plan" as such terms are
defined in ERISA.

     "PROPOSED CHANGE" is defined in Section 6.7.

     "PRO RATA SHARE" means, as to any Bank (a) at any time there are no Loans
outstanding, the percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks, as set forth on SCHEDULE II, as such amount
may be adjusted from time to time as a result of an assignment made by such Bank
pursuant to SECTION 9.7, and (b) at any other time, the percentage equivalent at
such time of such Bank's Loans divided by the combined Loans of all the Banks.

     "REFINANCING" is defined in the second recital to this Agreement.

     "REFINANCING DATE" means June 14, 1999.

     "REGULATION U" means the FRB's Regulation U.

     "RELATED PARTY" means, with respect to a Borrower and for purposes of
Section 6.16 only, any Person (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, the Borrower, (ii) which beneficially owns or holds 5% or more of the
equity interest of the Borrower or (iii) 5% or more of the equity interest of
which is beneficially owned or held by the Borrower.  The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

     "REPLACEMENT BANK" is defined in SECTION 3.7.

     "REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

     "SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than 50% of the outstanding capital stock,
membership interests or other equity interests having ordinary voting power to
elect a majority of the board of directors (or other similar body) of such
entity (irrespective of whether at the time capital stock, membership interests
or other equity interests, of any other class or classes of such entity shall or
might have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.

     "SWAP CONTRACTS" means swap agreements (as such term is defined in Section
101 of the Bankruptcy Code) and any other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates
or commodity prices.

                                      I-9
<PAGE>   70


     "TARGET" has the meaning specified in the definition of "Change in
Control".

     "TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, franchise taxes and such
taxes (including income taxes) as are imposed on or measured by each Bank's net
income by the jurisdiction (or any political subdivision thereof) under the laws
of which such Bank or the Agent, as the case may be, is organized or maintains a
lending office.

     "TOTAL ASSETS" means, with respect to a Borrower as of any date, the
aggregate amount of all items that would be set forth as assets on a balance
sheet of the Borrower on such date prepared in accordance with GAAP in effect on
such date.  The assets of a Borrower shall be valued in accordance with the Act,
the rules and regulations under the Act and the valuation procedures set forth
in its most recent statement of additional information.  Upon the written
request of the Agent, a Borrower shall promptly furnish all such information as
the Agent shall reasonably request relating to the value of any portfolio
security or other asset of the Borrower or the assignment of values thereto by
the Borrower or any other Person.

     "TOTAL LIABILITIES" means, with respect to a Borrower as of any date, the
aggregate amount of all items that would be set forth as liabilities on a
balance sheet of the Borrower on such date prepared in accordance with GAAP in
effect on such date.

     "TRADE ACCOUNTS PAYABLE" of any Person means trade accounts payable of such
Person with a maturity of not greater than 90 days incurred in the ordinary
course of such Person's business.

     "TRUST AGREEMENT" means, with respect to each Borrower, such Borrower's
Agreement and Declaration of Trust, as the same may be amended, modified,
supplemented or restated from time to time.

     "TYPE" has the meaning specified in the definition of "Loan".

     "UNITED STATES" or "U.S." means the United States of America, its 50 States
and the District of Columbia.

                                      I-10

<PAGE>   1
                                                                  Exhibit (d)(1)
                         INVESTMENT ADVISORY AGREEMENT

THIS INVESTMENT ADVISORY AGREEMENT, dated as of December 19, 1997 (the
"Agreement"), by and between VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE
FUND, a Massachusetts business trust (the "Trust"), and VAN KAMPEN AMERICAN
CAPITAL INVESTMENT ADVISORY CORP. (the "ADVISER"), a Delaware corporation.


  1.  (a) RETENTION OF ADVISER BY FUND.  Subject to the terms and conditions
set forth herein, the Fund hereby employs the Adviser to act as the investment
adviser for and to manage the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objectives and policies and
limitations, and to administer its affairs to the extent requested by, and
subject to the review and supervision of, the Board of Trustees of the Fund for
the period and upon the terms herein set  forth. The investment of funds shall
be subject to all applicable restrictions of applicable law and of the
Declaration of Trust and By-Laws of the Trust, and resolutions of the Board of
Trustees of the Fund as may from time to time be in force and delivered or made
available to the Adviser.

  (b) ADVISER'S ACCEPTANCE OF EMPLOYMENT.  The Adviser accepts such employment
and agrees during such period to render such services, to supply investment
research and portfolio management (including without limitation the selection
of securities for the Fund to purchase, hold or sell and the selection of
brokers through whom the Fund's portfolio transactions are executed, in
accordance with the policies adopted by the Fund and its Board of Trustees), to
administer the business affairs of the Fund, to furnish offices and necessary
facilities and equipment to the Fund, to provide administrative services for
the Fund, to render periodic reports to the Board of Trustees of the Fund, and
to permit any of its officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions.

  (c) ESSENTIAL PERSONNEL.  Commencing on the effective date of this Agreement
until May 31, 1998, the Adviser and the Fund agree that the retention of (i)
the chief executive officer, president, chief financial officer and secretary
of the Adviser and (ii) each director, officer and employee of the Adviser or
any of its Affiliates (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) who serves as an officer of the Fund (each person
referred to in (i) or (ii) hereinafter being referred to as an "Essential
Person"), in his or her current capacities, is in the best interest of the Fund
and the Fund's shareholders.  In connection with the Adviser's acceptance of
employment hereunder, the Adviser hereby agrees and covenants for itself and on
behalf of its Affiliates that neither the Adviser nor any of its Affiliates
shall make any material or significant personnel changes or replace or seek to
replace any Essential Person or cause to be replaced any Essential Person, in
each case without first informing the Board of Trustees of the Fund in a timely
manner.  In Addition, neither the Adviser nor any Affiliate of the Adviser
shall change or seek to change or cause to be changed, in any material respect,
the duties and responsibilities of any Essential Person, in each case without
first informing the Board of Trustees of the Fund in a timely manner.

  (d)  INDEPENDENT CONTRACTOR.  The Adviser shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed as agent of the Fund.

  (e)  NON-EXCLUSIVE AGREEMENT.  The services of the Adviser to the Fund under
this Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
<PAGE>   2

  2.  (a)  FEE.  For the services and facilities described in Section 1, the
Fund will accrue daily and pay to the Adviser at the end of each calendar month
an investment management fee computed based on a fee rate (expressed as a
percentage per annum) applied to the average daily net assets of the Fund as
follows:

<TABLE>
<CAPTION>
                                             Fee Percent
                                             Per Annum of
          Average Daily                      Average Daily
          Net Assets (millions)              Net Assets
          ---------------------              --------------
          <S>                                <C>
          First $4.0 billion                 0.950 of 1.00%
          Next $3.5 billion                  0.900 of 1.00%
          Next $2.5 billion                  0.875 of 1.00%
          Over $10.0 billion                 0.850 of 1.00%
</TABLE>

  (b) DETERMINATION OF NET ASSET VALUE.   The net asset value of the Fund
shall be calculated as of the close of the New York Stock Exchange on the last
day the Exchange is open for trading or such other time or times as the
trustees may determine in accordance with the provisions of applicable law and
the Declaration of Trust and By-Laws of the Trust, and resolutions of the Board
of Trustees of the Fund as from time to time in force.  For the purpose of the
foregoing computations, on each such day when net asset value is not
calculated, the net asset value of a share of beneficial interest of the Fund
shall be deemed to be the net asset value of such share as of the close of
business of the last day on which such calculation was made.

  (c) PRORATION.  For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Adviser's fee on the basis of the number of days that the Agreement is in
effect during such month and year, respectively.

   3. EXPENSES.  In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for the safekeeping
of the Fund's securities or other property, for keeping its books  of account,
for any other changes of the custodian and for calculating the net asset value
of the Fund as provided above.  The adviser shall not be required to pay, and
the Fund shall assume and pay, the charges and expenses of its operations,
including compensation of the trustees (other than those who are interested
persons of the Adviser and other than those who are interested persons of the
distributor of the Fund but not of the Adviser, if the distributor has agreed
to pay such compensation), charges and expenses of independent accountants, of
legal counsel and of any transfer or dividend disbursing agent, costs of
acquiring and disposing of portfolio securities, cost of listing shares on the
New York Stock Exchange or other exchange, interest (if any) on obligations
incurred by the Fund, costs of shares certificates, membership dues in the
Investment Company Institute or any similar organization, costs of reports and
notices to shareholders, cost of registering shares of the Fund under the
federal securities laws, miscellaneous expenses and all taxes and fees to
federal, state or other governmental agencies on account of the registration of
securities issued by the Fund, filing of corporate documents or otherwise.  The
Fund shall not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Adviser
without first obtaining the written approval of the Adviser.  The Adviser shall
arrange, if desired by the Fund, for officers or employees of the Adviser to
serve, without compensation from the Fund, as trustees, officers or agents of
the Fund if duly elected or appointed to such positions and subject to their
individual consent and to any limitations imposed by the law.

   4. INTERESTED PERSONS.  Subject to applicable statutes and regulations, it
is understood that trustees, officers, shareholders and agents of the Fund are
or may be interested in the Adviser as directors, officers, shareholders,
agents or otherwise and that the directors, officers, shareholders and agents
of the Adviser may be interested in the Fund as trustees, officers,
shareholders, agents or otherwise.
<PAGE>   3
  5.  LIABILITY.  The Adviser shall not be liable for any error of judgment or
of law, or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the performance of
its obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.

  6.  (a)  TERM.  This Agreement shall become effective on the date hereof and
shall remain in full force until December 19, 1999 unless sooner terminated as
hereinafter provided.  This Agreement shall continue in force from year to year
thereafter, but only for so long as such continuance is specifically approved
as least annually, in the manner required by the 1940 Act.

      (b)  TERMINATION.  This Agreement shall automatically terminate in the
event of its assignment.  This Agreement may be terminated at any time without
the payment of any penalty by the Fund or by the Adviser on sixty (60) days
written notice to the other party.  The Fund may effect termination by action
of the Board of Trustees or by vote of a majority of the outstanding shares of
stock of the Fund, accompanied by appropriate notice.  This Agreement may be
terminated at any time without the payment of any penalty and without advance
notice by the Board of Trustees or by vote of a majority of the outstanding
shares of the Fund in the event that it shall have been established by a court
of competent jurisdiction that the Adviser or any officer or director of the
Adviser has taken any action which results in a breach of the covenants of the
Adviser set forth herein.

      (c)  PAYMENT UPON TERMINATION.  Termination of this Agreement shall not
affect the right of the Adviser to receive payment on any unpaid balance of the
compensation described in Section 2 earned prior to such termination.

  7.  SEVERABILITY.  If any provision of this Agreement shall be held or
made invalid by a court decision, statue, rule or otherwise, the remainder
shall not thereby be affected.

  8.  NOTICES.  Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.

  9.  DISCLAIMER.  The Adviser acknowledges and agrees that, as provided by
Section 5.5 of the Declaration of Trust of the Trust, the shareholders,
trustees, officers, employees and other agents of the Trust and the Fund shall
not personally be bound by or liable hereunder, nor shall resort be had to
their private property for the satisfaction of any obligation or claim
hereunder.

  10. GOVERNING LAW.  All questions concerning the validity, meaning and
effect of this Agreement shall be determined in accordance with the laws
(without giving effect to the conflict-of-law principles thereof) of the State
of Delaware applicable to contracts made and to be performed in that state.

  11. NAME.  In connection with its employment hereunder, the Adviser hereby
agrees and covenants not to change its name without the prior consent of the
Board of Trustees of the Fund.

<PAGE>   4
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.


<TABLE>
     <S>                                     <C>
     VAN KAMPEN AMERICAN CAPITAL             VAN KAMPEN AMERICAN CAPITAL
     INVESTMENT ADVISORY CORP.               SENIOR FLOATING RATE FUND
</TABLE>



<TABLE>
     <S>                                      <C>
     By: /s/ Dennis J. McDonnell              By: /s/ Ronald A, Nyberg
        ---------------------------           ---------------------------
        Name: Dennis J. McDonnell                Name: Ronald A. Nyberg
        Title:  President                        Title:  Vice President
</TABLE>

<PAGE>   1
                                                                 Exhibit (d) (2)
                            ADMINISTRATION AGREEMENT

     Agreement made as of December 19, 1997, between VAN KAMPEN AMERICAN
CAPITAL SENIOR FLOATING RATE FUND, a Massachusetts business trust (the "Fund"),
and VAN KAMPEN AMERICAN CAPITAL, INC., a Delaware corporation (the
"Administrator").

     WHEREAS, the Fund intends to operate as a closed-end management investment
company, and is so registered under the Investment Company act of 1940, as
amended ("1940 Act"); and

     WHEREAS, the Fund wishes to retain the Administrator to provide certain
administrative services to the Fund, under the terms and conditions stated
below, and the Administrator is willing to provide such services for the
compensation set forth below;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:

     1.   APPOINTMENT.  The Fund hereby appoints the Administrator to
administer the Fund, and the Administrator accepts such appointment and agrees
that it will furnish the services set forth in paragraph 2 below.

     2.   SERVICES AND DUTIES OF THE ADMINISTRATOR.  Subject to the supervision
of the Fund's Board of Trustees (the "Board"), the Administrator will:

                    (a)  Monitor the provisions of the loan agreements and any
               agreements with respect to participations and assignments and be
               responsible for recordkeeping with respect to senior loans in
               the Fund's portfolio;

                    (b)  Prepare all reports required to be sent to Fund
               shareholders, and arrange for the printing and dissemination of
               such reports to shareholders;

                    (c)  Arrange for the dissemination to shareholders of the
               Fund's proxy materials and oversee the tabulation of proxies by
               the Fund's transfer agent;

                    (d)  Negotiate the terms and conditions under which
               custodian services will be provided to the Fund and the fees to
               be paid by the Fund to its custodian (which may or may not be an
               affiliate of the Fund's investment adviser), in connection
               therewith;

                    (e)  Negotiate the terms and conditions under which
               dividend disbursing services will be provided to the Fund, and
               the fees to be paid by the Fund in connection therewith; review
               the provision of dividend disbursing services to the Fund;

                    (f)  Determine the amounts available for distribution as
               dividends and distributions to be paid by the Fund to its
               Shareholders; prepare and arrange for the printing of dividend
               notices to Shareholders; and provide the Fund's dividend
               disbursing agent and custodian with such information as is
               required for such parties to effect the payment of dividends and
               distributions and to implement the Fund's dividend reinvestment
               plan;

                    (g)  Make such reports and recommendations to the Board as
               the Board reasonably requests or deems appropriate; and
<PAGE>   2
                    (h)  Provide shareholder services to holders or potential
                         holders of the Fund's securities including but not
                         limited to responding to shareholder requests for
                         information.

     3.   PUBLIC INQUIRIES.  The Fund and the Administrator agree that the
Administrator will not be responsible for replying to questions or requests for
information concerning the Fund from shareholders, brokers or the public.  The
Fund will inform the Administrator of the party or parties to whom any such
questions or requests should be directed, and the Administrator will refer such
questions and requests to such party or parties.

     4.   COMPLIANCE WITH THE FUND'S GOVERNING DOCUMENTS AND APPLICABLE LAW.
In all matters relating to the performance of this Agreement, the Administrator
will act in conformity with the Declaration of Trust, By-Laws and registration
statement of the Fund and with the directions of the Board and Fund executive
officers and will conform to and comply with the requirements of the 1940 Act
and all other applicable federal or state laws and regulations.

     5.   SERVICES NOT EXCLUSIVE.  The Administrator's services hereunder are
not deemed to be exclusive, and the Administrator is free to render
administrative or other services to other funds or clients so long as the
Administrator's services under this Agreement are not impaired thereby.

     6.   COMPENSATION.  For the services provided and expenses assumed by the
Administrator under this Agreement, the Fund will pay the Administrator a fee,
accrued daily and paid monthly, at the annualized rate of 0.25% of the Fund's
average weekly managed assets (which, for the purposes of determining such fee,
shall mean the average weekly value of the total assets of the Fund, minus the
sum of the accrued liabilities of the Fund other than the aggregate amount of
any borrowings undertaken by the Fund).

     7.   LIMITATION OF LIABILITY OF THE ADMINISTRATOR.  The Administrator will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or its shareholders in connection with the performance of
its duties under this Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its duties under this Agreement.

     8.   LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS OF THE FUND.
Pursuant to the provisions of Article V, Section 5.5 of the Declaration of
Trust as amended or restated as of the date hereof, this Agreement is entered
into by the Board not individually, but as trustees under such Declaration of
Trust and the obligations of the Fund hereunder are not binding upon any such
trustees or Shareholders of the Fund, but bind only the trust estate.

     9.   DURATION AND TERMINATION.  This Agreement will become effective upon
the date hereabove written and shall continue in effect thereafter until
terminated without penalty by the Administrator or the Fund upon 30 days'
written notice to the other and shall automatically terminate in the event of
its assignment as that term is defined in the 1940 Act.

     10.  AMENDMENT OF THIS AGREEMENT.   No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.

     11.  GOVERNING LAW.  This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and the 1940 Act. To the extent
that the applicable laws of the Commonwealth of Massachusetts conflict with the
applicable provisions of the 1940 Act, the latter shall control.
<PAGE>   3
     12.  MISCELLANEOUS.  The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.  If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.

     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.


<TABLE>
<S>                                  <C>
Attest:                              VAN KAMPEN AMERICAN CAPITAL
                                     SENIOR FLOATING RATE FUND


  /s/ Weston B. Wetherell            By:     /s/ Edward C.Wood, III
- ----------------------------               -------------------------------------
Weston B. Wetherell                     Edward C. Wood, III, Vice President and
Assistant Secretary                     Chief Financial Officer


Attest:                              VAN KAMPEN AMERICAN CAPITAL, INC.


  /s/ Weston B. Wetherell            By:   /s/ William R. Molinari
- ----------------------------              --------------------------------------
Weston B. Wetherell                     William R. Molinari, President
Assistant Secretary
</TABLE>

<PAGE>   1
                                                                 Exhibit (d) (3)
                               OFFERING AGREEMENT


          THIS OFFERING AGREEMENT, dated as of December 19, 1997 (the
"Agreement"), by and between VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE
FUND (the "Fund"), a Massachusetts business trust, and VAN KAMPEN AMERICAN
CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the "Principal
Underwriter").

          1. (a)  APPOINTMENT OF PRINCIPAL UNDERWRITER.  The Fund
appoints the Principal Underwriter as a principal underwriter and exclusive
distributor of shares of the Fund (the "Shares") effective as of the date upon
which the continuous public offering of the Fund's Shares, as described in the
Fund's then current Prospectus, shall commence.  The Fund reserves the right,
however, to refuse at any time or times to sell Shares hereunder for any reason
at any time or times to sell Shares hereunder for any reason deemed adequate by
the Board of Trustees of the Fund.

             (b)  BEST EFFORTS.  The Principal Underwriter shall use its best
efforts to sell through its organization and through other dealers and agents
the Shares which the Principal Underwriter has the right to purchase under
Section 2 hereof, but the Principal Underwriter does not undertake to sell any
specific number of Shares.  Without the prior approval of the Board of
Trustees, the Principal Underwriter shall not, directly or indirectly,
distribute, sell or market, through its organization or other brokers, dealers
or agents, shares of any investment companies unless the Board of Trustees of
the Fund determines that such companies do not compete, or potentially compete,
with the Fund.

            (c)  POSITIONS IN THE SHARES.  The Principal Underwriter agrees
that it will not take any long or short positions in the Shares, except for
long positions in those Shares purchased by the Principal Underwriter in
accordance with any systematic sales plan described in the then current
Prospectus of the Fund and except as permitted by Section 2 hereof, and that so
far as it can control the situation, it will prevent any of its trustees,
officers or shareholders from taking any long or short positions in the Shares,
except for legitimate investment purposes.

            (d)  ESSENTIAL PERSONNEL.  Commencing on the date of this
Agreement until May 31, 1998, the Principal Underwriter and the Fund agree that
the retention of (i) the chief executive officer, president, treasurer and
secretary of the Principal Underwriter, and (ii) each director, officer and
employee of the Principal Underwriter or any of its Affiliates (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) who serves as
an officer of the Fund (each person referred to in (i) or (ii) hereinafter
being referred to as an "Essential Person"), in his or her current capacities,
is in the best interest of the Fund and the Fund's shareholders.  In connection
with the Principal Underwriter's acceptance of employment hereunder, the
Principal Underwriter hereby agrees and covenants for itself and on behalf of
its Affiliates that neither the Principal Underwriter nor any of its Affiliates
shall replace or seek to replace any Essential Person or cause to be replaced
any Essential Person, in each case without first consulting with the Board of
Trustees of the Fund in a timely manner.  In addition, neither the Principal
Underwriter nor any Affiliate of the Principal Underwriter, shall change or
seek to change or cause to be changed, in any material respect, the duties and
responsibilities of any Essential Person, in each case without first consulting
with the Board of Trustees of the Fund in a timely manner.

          2.  SALE OF SHARES TO PRINCIPAL UNDERWRITER; EARLY WITHDRAWAL
CHARGE.  The Fund hereby grants to the Principal Underwriter the exclusive
right, except as herein otherwise provided, to purchase Shares upon the terms
herein set forth.  Such exclusive right hereby granted shall not apply to
Shares issued or transferred or sold at net asset value: (a) in connection with
the merger or consolidation of the Fund with any other investment company or
the acquisition by the Fund of all or substantially all of the assets of or the
outstanding Shares of any investment company; (b) in connection with a pro rata
distribution directly to the holders of Shares in the nature of a stock
dividend or stock split or in connection with any other recapitalization
approved by the Board of Trustees; (c) upon the exercise of purchase or
subscription rights granted to the holders of Shares on a pro rata basis; or
(d) in connection with the automatic reinvestment of dividends and
distributions from the Fund.

<PAGE>   2

          The Principal Underwriter shall have the right to buy from the Fund
the Shares needed, but not more than the Shares needed (except for reasonable
allowances for clerical errors, delays and errors of transmission and
cancellation of orders) to fill unconditional orders for Shares received by the
Principal Underwriter from dealers, agents and investors during each period
when a particular net asset value and public offering price are in effect as
provided in Section 3 hereof; and the price which the Principal Underwriter
shall pay for the Shares so purchased shall be the net asset value used in
determining the public offering price on which such orders were based.  The
Principal Underwriter shall notify the Fund at the end of each such period, or
as soon thereafter on that business day as the orders received in such period
have been compiled, of the number of Shares which the Principal Underwriter
elects to purchase hereunder.

          The Fund shall impose an early withdrawal charge, payable to the
Principal Underwriter, on most shares accepted for tender by the Fund which
have been held for less than five years, as set forth in the current Fund
Prospectus.

          3.  PUBLIC OFFERING PRICE.  The public offering price per Share
shall be determined in accordance with the then current Prospectus of the Fund.
In no event shall the public offering price exceed the net asset value per
Share.  The net asset value per Share shall be determined in the manner
provided in the Declaration of Trust and By-laws of the Fund as then amended
and in accordance with the then current Prospectus of the Fund.  The Fund will
cause immediate notice to be given to the Principal Underwriter of each change
in net asset value as soon as it is determined.  Compensation from the
Principal Underwriter to dealers purchasing Shares from the Principal
Underwriter for resale and to brokers and other eligible agents making sales to
investors shall be sent the forms of agreement between the Principal
Underwriter and such dealers or agents, respectively, as from time to time
amended, and, if such compensation from the Principal Underwriter is described
in the then current Prospectus for the Fund, shall be as so set forth.  In
connection with the Principal Underwriter's employment hereunder, the Principal
Underwriter hereby agrees to distribute the Shares through brokers, dealers and
other agents of Dean Witter Distributors, Inc. on a "proprietary basis"
substantially identical to the distribution of shares of proprietary open-end
investment companies distributed by Dean Witter Distributors, Inc.

          4.  COMPLIANCE WITH NASD RULES, ETC.  In selling Fund Shares, the
Principal Underwriter will in all respects duly comply with all state and
Federal laws relating to the sale of such securities and with all applicable
rules and regulations of all regulatory bodies, including, without limitation,
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and all applicable rules and regulations of the Securities and Exchange
Commission under the 1940 Act, and will indemnify and save the Fund harmless
from any damage or expense on account of any unlawful act by the Principal
Underwriter or its agents or employees.  The Principal Underwriter is not,
however, to be responsible for the acts of other dealers or agents except as
and to the extent that they shall be acting for the Principal Underwriter or
under its direction or authority.  None of the Principal Underwriter, any
dealer, any agent or any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus heretofore or hereafter filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act") (as any such Registration Statement and Prospectus may have
been or may be amended from time to time), covering the Shares and in any
supplemental information to any such Prospectus approved by the Fund in
connection with the offer of sale of Shares.  None of the Principal
Underwriter, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise.  All such sales shall be made by the Principal Underwriter
as principal for its own account.

<PAGE>   3

          5. EXPENSES.

             (a)  The Fund will pay or cause to be paid:

                 (i)  all expenses in connection with the registration of Shares
       under the Federal securities laws, and the Fund will exercise its best
       efforts to obtain said registration and qualification;

                 (ii)  all expenses in connection with the printing of any
       notices of shareholders' meetings, proxy and proxy statements and
       enclosures therewith, as well as any other notice or communication sent
       to shareholders in connection with any meeting of the shareholders or
       otherwise, any annual, semi-annual or other reports or communications
       sent to the shareholders, and the expense of sending prospectuses
       relating to the Shares to existing shareholders;

                 (iii)  all expenses of any Federal or state original issue tax
       or transfer tax payable upon the issuance, transfer or delivery of Shares
       from the Fund to the Principal Underwriter; and

                 (iv)  the costs of preparing and issuing any Share certificates
       which may be issued to represent Shares.

             (b)  The Principal Underwriter will pay the costs and expenses of
qualifying and maintaining qualification of the Shares for sale under the
securities laws of the various states.  The Principal Underwriter will also
permit its officers and employees to serve without compensation as trustees and
officers of the Fund if duly elected to such positions.

           6.  NO SECONDARY MARKET ACTIVITY.  It is understood that Shares of
the Fund will not be repurchased by either the Fund or the Principal
Underwriter, and that no secondary market for the Fund shares exists currently,
or is expected to develop.  While the Board of Trustees of the Fund intends to
consider tendering for all or a portion of the Fund's shares on a quarterly
basis, there is no assurance that the Fund will tender for shares at any time
or, following such a tender offer, that shares so tendered will be repurchased
by the Fund. Accordingly investment in the Fund's shares would be considered
illiquid.  ANY REPRESENTATION AS TO A TENDER OFFER BY THE FUND, OTHER THAN THAT
WHICH IS SET FORTH IN THE FUND'S THEN CURRENT PROSPECTUS, IS EXPRESSLY
PROHIBITED.

           The Principal Underwriter hereby covenants that it (i) will not make
a secondary market in any shares of the Fund, (ii) will not purchase or hold
such shares in inventory for the purpose of resale in the open market, (iii)
will not repurchase shares in the open market, and (iv) will require every bank,
broker or dealer participating in the continuous offering of the shares to make
the covenants contained in clauses (i), (ii) and (iii) of this Section 6 as a
condition precedent to their participation in such offering.

           7.  INDEMNIFICATION.  The Fund agrees to indemnify and hold harmless
the Principal Underwriter and each of its trustees and officers and each person,
if any, who controls the Principal Underwriter within the meaning of Section 15
of the 1933 Act against any loss, liability, claim, damages, or expenses
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expenses and reasonable counsel fees incurred in
connection therewith), arising by reason of any person acquiring any Shares,
based upon the grounds that the registration statement, Prospectus, shareholder
reports or other information filed or made public by the Fund (as from time to
time amended), included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make the
statements not misleading under the 1933 Act or any other statute or the common
law.  However, the Fund does not agree to indemnify the Principal Underwriter or
hold it harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund by or
on behalf of the Principal Underwriter. In no case (i) is the indemnity of the
Fund in favor of the Principal Underwriter or any person indemnified to be
deemed to protect the Principal Underwriter or any person against any liability
to the Fund or its security holders to

<PAGE>   4

which the Principal Underwriter or such person would otherwise by
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Fund to be liable
under its indemnity agreement contained in this Section with respect to any
claim made against the Principal Underwriter or any other person unless the
Principal Underwriter or such other person shall have notified the Fund in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon the Principal Underwriter or any such person (or after the
Principal Underwriter or the person shall have received notice of service on
any designated agent).  However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the Principal
Underwriter or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.  The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any such action brought to enforce any claims,
but if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Principal Underwriter or officers
or trustees or controlling person or persons or defendant or defendants in the
suit.  In the event the Fund elects to assume the defense of any suit and
retain counsel, the Principal Underwriter, officers or trustees or controlling
person or persons or defendant or defendants in the suit shall bear the fees
and expenses of any additional counsel retained by them.  If the Fund does not
elect to assume the defense of any suit, it will reimburse the Principal
Underwriter, officers or trustees or controlling person or persons or defendant
or defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.  The Fund agrees to notify the Principal Underwriter promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.

          The Principal Underwriter also covenants and agrees that it will
indemnify and hold harmless the Fund and each of its trustees and officers and
each person, if any, who controls the Fund within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon the
1933 Act or any other statute or common law, alleging any wrongful act of the
Principal Underwriter or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended), included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund by or on behalf of the Principal Underwriter.
In no case (i) is the indemnity of the Principal Underwriter in favor of the
Fund or any person indemnified to be deemed to protect the Fund or any such
person against any liability to which the Fund or such person would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Principal
Underwriter to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Principal Underwriter in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Fund or person (or after
the Fund or such person shall have received notice of service on any designated
agent).  However, failure to notify the Principal Underwriter of any claim
shall not relieve the Principal Underwriter from any liability which it may
have to the Fund or any person against whom the action is brought otherwise
than on account of its indemnity agreement contained in this paragraph.  In the
case of any notice to the Principal Underwriter, it shall be entitled to
participate, at its own expense, in the defense or, if it so elects, to assume
the defense of any suit brought to enforce the claim, but if the Principal
Underwriter elects to assume the defense the defense shall be conducted by
counsel chosen by it and satisfactory to the Fund, to its officers and trustees
and to any controlling person or persons, defendant or defendants in the suit.
In the event that the Principal Underwriter elects to assume the defense of any
suit and retain counsel, the Fund or controlling persons or defendants in the
suit shall bear the fees and expenses of any additional counsel retained by
them.  If the Principal Underwriter does not elect to assume the defense of any
suit, it will reimburse the Fund, officers and trustees or controlling



<PAGE>   5
person or persons or defendant or defendants in the suit for the reasonable fees
and expenses of any counsel retained by them.  The Principal Underwriter agrees
to notify the Fund promptly of the commencement of any litigation or proceedings
against it in connection with the issue and sale of any of the Shares.

           8.  CONTINUATION, AMENDMENT OR TERMINATION OF THE AGREEMENT.  This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect from year to year so long as such continuance
is approved at least annually (i) by the Board of Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Disinterested Trustees") cast in
person at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated without the
payment of any penalty either by vote of a majority of the Disinterested
Trustees, or by vote of a majority of the outstanding voting securities of the
Fund, on written notice to the Principal Underwriter; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement may
be terminated by the Principal Underwriter on ninety (90) days' written notice
to the Fund.  Upon termination of this Agreement, the obligations of the parties
hereunder shall cease and terminate as of the date of such termination, except
for any obligation to respond for a breach of this Agreement committed prior to
such termination and except with respect to any rights and obligations of
indemnification arising out of any action or inaction occurring prior to such
termination.

           This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have been
approved (i) by the Board of Trustees of the Fund, or by a vote of the majority
of the outstanding voting securities of the Fund and (ii) by vote of a majority
of the Disinterested Trustees cast in person at a meeting called for the purpose
of voting on such amendment.

           For purposes of this section, the terms "vote of a majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the meanings defined in the 1940 Act, as amended.

           9.  DISCLAIMER LIABILITY.  Notwithstanding anything to the contrary
contained in this Agreement, you acknowledge and agree that, as provided by
Section 5.5 of the Declaration of Trust of the Fund, the shareholders, trustees,
officers, employees and other agents of the Fund shall not personally be bound
by or liable hereunder, nor shall any resort to their personal property being
had for the satisfaction of any obligation or claim hereunder.

           10.  NOTICE.  Any notice given under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at any
office of such party or at such other address as such party shall have
designated in writing.

           11.  NAME.  In connection with its employment hereunder, the
Principal Underwriter hereby agrees and covenants not to change its name without
the prior consent of the Board of Trustees.

<PAGE>   6
           IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be executed on their behalf on the day and year first above written.


                                   VAN KAMPEN AMERICAN CAPITAL
                                   SENIOR FLOATING RATE FUND

                                   By:   /s/ Dennis J. McDonnell
                                       -----------------------------
                                   Name:  Dennis J. McDonnell
                                   Title:     President


                                   VAN KAMPEN AMERICAN CAPITAL
                                   DISTRIBUTORS INC.

                                   By:   /s/ William R. Molinari
                                       -----------------------------
                                   Name:  William R. Molinari
                                   Title:     President



<PAGE>   1
                                                                 Exhibit (d) (4)

             VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND

                                  SERVICE PLAN



     The plan set forth below (the "Service Plan") for the VAN KAMPEN AMERICAN
CAPITAL SENIOR FLOATING RATE FUND (the "Fund"), describes the material terms and
conditions under which assets of the Fund may be used to compensate the Fund's
principal underwriter, within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), brokers, dealers and other financial intermediaries
(collectively "Financial Intermediaries") for providing personal services to
shareholders and/or the maintenance of shareholder accounts with respect to each
of its Shares of beneficial interest (the "Shares"). Each Share is offered and
sold subject to a service fee and contingent deferred sales charge.

     The Fund also has entered into a distribution and services agreement (the
"Distribution and Services Agreement") with Van Kampen American Capital
Distributors, Inc. (the "Distributor"), pursuant to which the Distributor acts
as agent on behalf of the Fund in connection with the implementation of the
Service Plan and acts as the principal underwriter with respect to the Shares.
The Distributor may enter into selling agreements (the "Selling Agreements")
with brokers, dealers and other financial intermediaries ("Financial
Intermediaries") in order to implement the Distribution Agreement and this
Service Plan.

1.   The Fund hereby is authorized to pay a service fee with respect to
its Shares to any person who sells such Shares and provides personal services to
shareholders and/or maintains shareholder accounts in an annual amount not to
exceed 0.25% of the average annual net asset value of the Shares maintained in
the Fund by such person that were sold on or after the date on which this
Service Plan was first implemented.  The aggregate annual amount of all such
payments with respect to each such Share may not exceed 0.25% of the Fund's
average annual net assets attributable to the Shares sold on or after the date
on which this Service Plan was first implemented and maintained in the Fund more
than one year.

2.   Payments pursuant to this Service Plan may be paid or prepaid on
behalf of the Fund by the Distributor acting as the Fund's agent.

3.   Payments by the Fund to the Distributor pursuant to this Service Plan
shall not be made more often than monthly upon receipt by the Fund of a
separate written expense report with respect to the Shares setting forth the
expenses qualifying for such reimbursement allocated to each Share and the
purposes thereof.

4.   In the event that amounts payable hereunder do not fully reimburse the
Distributor for pre-paid service fees, such unreimbursed service fee expenses
will be carried forward and paid by the Fund hereunder in future years so long
as this Service Plan remains in effect, subject to applicable laws and
regulations.  Reimbursements for service fee related expenses payable hereunder
with respect to a particular class of Shares may not be used to subsidize
services provided with respect to any other class of Shares.

5.   The Fund shall not compensate the Distributor, and neither the Fund nor
the Distributor shall compensate any Financial Intermediary, for any service
related expenses incurred prior to the later of (a) the implementation of this
Service Plan with respect to such class of Shares or (b) the date that such
Financial Intermediary enters into a Selling Agreement with the Distributor.

6.   The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the

<PAGE>   2
type referred to in Paragraph 1 hereof.  Prior to the implementation of a
Selling Agreement, such agreement shall be approved by a majority of the Board
of Trustees of the Trust and a majority of the Disinterested Trustees (within
the meaning of the 1940 Act) by a vote cast in person at a meeting called for
the purpose of voting on such Selling Agreements.  Such Selling Agreements shall
provide that the Financial Intermediaries shall provide the Distributor with
such information as is reasonably necessary to permit the Distributor to comply
with the reporting requirements set forth in Paragraphs 3 and 8 hereof.

7.   Subject to the provisions of this Service Agreement, the Fund is hereby
authorized to pay a service fee to any person that is not an "affiliated
person" or "interested person" of the Fund or its "investment adviser" or
"principal underwriter" (as such terms are defined in the 1940 Act) who
provides any of the foregoing services for the Fund.  Such fee shall be paid
only pursuant to written agreements between the Fund and such other person the
terms of which permit payments to such person only in accordance with the
provisions of this Service Agreement and which have the approval of a majority
of the Disinterested Trustees by vote cast separately with respect to each
class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.

8.   The Fund and the Distributor shall prepare separate written reports for
each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Service Plan and the
agreements contemplated hereby, the purposes for which such payments were made
and such other information as the Board of Trustees or the Disinterested
Trustees may reasonably request from time to time, and the Board of Trustees
shall review such reports and other information.

9.   This Service Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities"  of the respective class of
Shares of the Fund.

10.  This Service Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.


11.  This Service Plan and any agreement contemplated hereby shall continue
in effect beyond the first anniversary of its adoption by the Board of Trustees
of the Fund only so long as (a) its continuation is approved at least annually
in the manner set forth in clause (a) of paragraph 10 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.

12.  This Service Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.  This Service Plan may not be amended in any material
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform requirements of the Investment Company Act of
1940, the rules and regulations thereunder, the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. or other applicable law shall
not be deemed to be material amendments.

     The Trustees of the Trust have adopted this Service Plan as trustees under
the Declaration of Trust of the Trust and the policies of the Trust adopted
hereby are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the trust estate.





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