VAN KAMPEN EQUITY TRUST II, 485BPOS, 2000-12-22

VAN KAMPEN EQUITY TRUST II
485BPOS, 2000-12-22

Previous: GREATER ATLANTIC FINANCIAL CORP, 8-K, 2000-12-22

Next: VAN KAMPEN EQUITY TRUST II, 485BPOS, EX-99.(I)(2), 2000-12-22

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 2000

REGISTRATION NOS. 333-75493
811-9279
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 4 [X]
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 5 [X]
</TABLE>

VAN KAMPEN EQUITY TRUST II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
1 PARKVIEW PLAZA, PO BOX 5555, OAKBROOK TERRACE, ILLINOIS 60181-5555
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(630) 684-6000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

A. THOMAS SMITH III
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
VAN KAMPEN INVESTMENTS INC.
1 PARKVIEW PLAZA
PO BOX 5555
OAKBROOK TERRACE, ILLINOIS 60181-5555
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------

COPIES TO:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700

Approximate Date of Proposed Public Offering: As soon as practicable following
effectiveness of this Registration Statement.

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b)

[X] on December 29, 2000 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Beneficial Interest, par value
$0.01 per share

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

VAN KAMPEN
TECHNOLOGY FUND

Van Kampen Technology Fund's investment objective is to seek capital
appreciation. The Fund's investment adviser seeks to achieve the Fund's
investment objective by investing primarily in a portfolio of common stocks of
companies considered by the Fund's investment adviser to rely extensively on
technology, science or communications in their product development or
operations.

Shares of the Fund have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any state regulator, and neither the SEC nor any
state regulator has passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

This prospectus is dated DECEMBER 29, 2000

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

PROSPECTUS

[VAN KAMPEN FUNDS LOGO]
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 4
Investment Objective, Policies and Risks........... 5
Investment Advisory Services....................... 9
Purchase of Shares................................. 11
Redemption of Shares............................... 17
Distributions from the Fund........................ 19
Shareholder Services............................... 19
Federal Income Taxation............................ 21
Financial Highlights............................... 23
</TABLE>

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus, in connection with the offer contained in this prospectus and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund, the Fund's investment adviser or the
Fund's distributor. This prospectus does not constitute an offer by the Fund or
by the Fund's distributor to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful for the Fund to make such an offer in such jurisdiction.

<PAGE> 4

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek capital appreciation.

INVESTMENT STRATEGIES

INVESTMENT RISKS

An investment in the Fund is subject to risks, and you could lose money on your
investment in the Fund. There can be no assurance that the Fund will achieve its
investment objective.

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. Investments in common
stocks generally are affected by changes in the stock markets, which fluctuate
substantially over time, sometimes suddenly and sharply. The Fund emphasizes a
growth style of investing. The market values of growth securities may be more
volatile than other types of investments. The returns on growth securities may
or may not move in tandem with the returns on other styles of investing or the
overall stock markets. During an overall stock market decline, stock prices of
smaller or unseasoned companies (in which the Fund may invest) often fluctuate
more and may fall more than the stock prices of larger, more established
companies.

TECHNOLOGY-ORIENTED COMPANIES RISK. Common stocks of companies that rely
extensively on technology, science or communications in their product
development or operations may be more volatile than the overall stock market and
may or may not move in tandem with the overall stock market. Technology, science
and communications are rapidly changing fields, and stocks of these companies,
especially of smaller or unseasoned companies, may be subject to more abrupt or
erratic market movements than the stock market in general. There are significant
competitive pressures among technology-oriented companies and the products or
operations of such companies may become obsolete quickly. In addition, these
companies may have limited product lines, markets or financial resources and the
management of such companies may be more dependent upon one or a few key people.

RISKS OF USING DERIVATIVE INSTRUMENTS. In general terms, a derivative instrument
is one whose value depends on (or is derived from) the value of an underlying
asset, interest rate or index. Options, futures and options on futures are
examples of derivative instruments. Derivative instruments involve risks
different from direct investments in underlying securities. These risks include
imperfect correlation between the value of the instruments and the underlying
assets; risks of default by the other party to certain transactions; risks that
the transactions may result in losses that partially or completely offset gains
in portfolio positions; and risks that the transactions may not be liquid.

MANAGER RISK. As with any managed fund, the Fund's investment adviser may not be
successful in selecting the best-performing securities or investment techniques,
and the Fund's performance may lag behind that of similar funds.

3
<PAGE> 5

INVESTOR PROFILE

In light of the Fund's investment objective and strategies, the Fund may be
appropriate for investors who:

- Seek capital appreciation over the long term

- Do not seek current income from their investment

- Can withstand substantial volatility in the value of their shares of the Fund

- Wish to add to their investment portfolio a fund that invests primarily in
common stocks of companies that rely extensively on technology, science or
communications in their product development or operations

An investment in the Fund is not a deposit of any bank or other insured
depository institution. An investment in the Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.

An investment in the Fund may not be appropriate for all investors. The Fund is
not intended to be a complete investment program, and investors should consider
their long-term investment goals and financial needs when making an investment
decision about the Fund. An investment in the Fund is intended to be a long-term
investment, and the Fund should not be used as a trading vehicle.

PERFORMANCE INFORMATION

The Fund commenced investment operations on July 26, 1999. When the Fund has
completed a full calendar year of investment operations, this section will
include charts that show annual total returns, highest and lowest quarterly
returns and average total returns compared to a benchmark index selected for the
Fund. This information serves as a basis for investors to evaluate the Fund's
performance and risks by looking at how the Fund's performance varies from
year-to-year and how the Fund's performance compares to a broad-based market
index that the Fund's investment adviser believes is an appropriate benchmark
for the Fund. Past performance of the Fund is not indicative of its future
performance.

FEES AND EXPENSES
OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
----------------------------------------------------------------
<S> <C> <C> <C> <C>

SHAREHOLDER FEES

(fees paid directly from your investment)
----------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of
offering price) 5.75%(1) None None
................................................................
Maximum deferred
sales charge (load)
(as a percentage of
the lesser of
original purchase
price or redemption
proceeds) None(2) 5.00%(3) 1.00%(4)
................................................................
Maximum sales charge
(load) imposed on
reinvested dividends None None None
................................................................
Redemption fee None None None
................................................................
Exchange fee None None None
................................................................
</TABLE>

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------
Management fees 0.83% 0.83% 0.83%
................................................................
Distribution and/or
service (12b-1) 0.25% 1.00%(6) 1.00%(6)
fees(5)
................................................................
Other expenses 0.39% 0.40% 0.39%
................................................................
Total annual fund
operating expenses 1.47% 2.23% 2.22%
................................................................
</TABLE>

(1) Reduced for purchases of $50,000 and over. See "Purchase of Shares -- Class
A Shares."
(2) Investments of $1 million or more are not subject to any sales charge at the
time of purchase, but a deferred sales charge of 1.00% may be imposed on
certain redemptions made within one year of the purchase. See "Purchase of
Shares -- Class A Shares."
(3) The maximum deferred sales charge is 5.00% in the first year after purchase,
declining thereafter as follows:
Year 1-5.00%
Year 2-4.00%
Year 3-3.00%
Year 4-2.50%
Year 5-1.50%
After-None
See "Purchase of Shares -- Class B Shares."
(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter. See "Purchase of Shares -- Class C Shares."
(5) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and

4
<PAGE> 6

Class C Shares are each subject to a combined annual distribution and
service fee of up to 1.00% of the average daily net assets attributable to
such class of shares. See "Purchase of Shares."
(6) Because distribution and/or service (12b-1) fees are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.

Example:

The following example is intended to help you compare the cost of investing in
the Fund with the costs of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same each year (except for the ten-year
amounts for Class B Shares which reflect the conversion of Class B Shares to
Class A Shares after eight years). Although your actual costs may be higher or
lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $716 $1,013 $1,332 $2,231
...............................................................
Class B Shares $726 $ 997 $1,345 $2,373*
...............................................................
Class C Shares $325 $ 694 $1,190 $2,554
...............................................................
</TABLE>

You would pay the following expenses if you did not redeem your shares:

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $716 $1,013 $1,332 $2,231
...............................................................
Class B Shares $226 $ 697 $1,195 $2,373*
...............................................................
Class C Shares $225 $ 694 $1,190 $2,554
...............................................................
</TABLE>

*Based on conversion to Class A Shares after eight years.

INVESTMENT OBJECTIVE,
POLICIES AND RISKS

The Fund's investment objective is to seek capital appreciation. Any income
received from the investment of portfolio securities is incidental to the Fund's
investment objective. The Fund's investment objective may be changed by the
Fund's Board of Trustees without shareholder approval, but no change is
anticipated. If the Fund's investment objective changes, the Fund will notify
shareholders and shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. There are risks inherent in all investments in securities; accordingly,
there can be no assurance that the Fund will achieve its investment objective.

The Fund's investment adviser seeks to achieve the Fund's investment objective
by investing primarily in a portfolio of common stocks of companies which rely
extensively on technology, science or communications in their product
development or operations. Under normal market conditions, the Fund will invest
at least 65% of the Fund's total assets in a portfolio of common stocks of
companies considered by the Fund's investment adviser to rely extensively on
technology, science and communications in their product development or
operations. As of the date of this prospectus, industries likely to be
represented in the Fund's portfolio include, but are not limited to, computers
and peripheral products, computer software, electronic components and systems,
e-commerce, telecommunications, media, cable and information services,
pharmaceuticals, hospital supply and medical devices, biotechnology,
environmental services, and defense and aerospace. Investments may also include
companies that should benefit from technological, scientific or communication
advances even if they are not directly involved in the research and development
of such products or services. Investments in such companies may offer greater
opportunities for capital growth but also may involve special risks. The
securities of such companies, especially those of smaller or unseasoned
companies, may be subject to more abrupt or erratic market movements because
technology, science and communications are rapidly changing fields, there are
significant competitive pressures among technology-oriented companies and the
products or operations of such companies may become obsolete quickly. The Fund
may invest in securities that have above average volatility of price movement.
Because prices of common stocks and other securities fluctuate, the value of an
investment in the Fund will vary based upon the Fund's investment performance.

The Fund's primary investment approach is to seek what the Fund's investment
adviser believes to be attractive growth opportunities on an individual company
basis. The Fund's investment adviser uses a "bottom-up" disciplined style of
investing that

5
<PAGE> 7

emphasizes the analysis of individual stocks rather than economic and market
cycles. The Fund's investment adviser relies on its research capabilities and
company/analyst meetings in reviewing companies. The Fund focuses on those
companies that exhibit rising earnings expectations and rising valuations. In
selecting securities for investment, the Fund generally seeks companies that
appear to be positioned to produce an attractive level of future earnings
through the development of new products, services or markets or as a result of
changing markets or industry conditions. The Fund's investment adviser expects
that many of the companies in which the Fund invests will, at the time of
investment, be experiencing high rates of earnings growth. The securities of
such companies may trade at higher price to earnings ratios relative to more
established companies and rates of earnings growth may be volatile.

The companies and industries in which the Fund invests will change over time
depending on the assessment of the Fund's investment adviser of each company's
reliance on technology, science or communications in its product development or
operations. Although the Fund will limit its investments to 25% of its net
assets in any single industry, a significant portion of the Fund's assets may be
invested in securities of companies within the same market sector of the economy
(for example, pharmaceuticals, hospital supply and medical devices, and
biotechnology may, at times, be similarly affected by factors related to the
health care or health care-related sectors of the economy). This may occur, for
example, when the Fund's investment adviser believes that several companies in
the same sector each offer unusually attractive growth opportunities. To the
extent that the Fund invests a significant portion of its assets in a limited
number of market sectors, the Fund will be more susceptible to economic,
political, regulatory or other factors which may influence such sectors.

The Fund may invest in securities involving special circumstances, such as
initial public offerings, companies with new management or management reliant
upon one or a few key people, special products and techniques, limited or
cyclical product lines, markets or resources or unusual developments, such as
mergers, liquidations, bankruptcies or leveraged buyouts. Investments in smaller
or unseasoned companies or companies with special circumstances often involve
much greater risks than are inherent in other types of investments because
securities of such companies may be more likely to experience unexpected
fluctuations in price. In addition, investments made in anticipation of future
events may, if delayed or never achieved, cause stock prices to fall.

The Fund may dispose of a security whenever, in the opinion of the Fund's
investment adviser, factors indicate it is desirable to do so. The Fund
generally sells securities when earnings expectations or valuations flatten or
decline. Other factors may include changes in the company's operations or
relative market performance, changes in the appreciation possibilities offered
by individual securities, a change in the market trend or other factors
affecting an individual security, a change in economic or market factors in
general or with respect to a particular industry, and other circumstances
bearing on the desirability of a given investment. In addition, if an individual
stock position appreciates to a point where it begins to account for a larger
percentage of the Fund's assets, the Fund's investment adviser may sell a
portion of the position held.

The Fund invests primarily in common stocks. Common stocks are shares of a
corporation or other entity that entitle the holder to a pro rata share of the
profits of the corporation, if any, without preference over any other class of
securities, including such entity's debt securities, preferred stock and other
senior equity securities. Common stock usually carries with it the right to vote
and frequently an exclusive right to do so.

While the Fund invests primarily in common stocks, the Fund may invest in other
equity securities including preferred stocks, convertible securities and rights
and warrants to purchase common or preferred stock. Preferred stock generally
has a preference as to dividends and liquidation over an issuer's common stock
but ranks junior to debt securities in an issuer's capital structure. Unlike
interest payments on debt securities, preferred stock dividends are payable only
if declared by the issuer's board of directors. Preferred stock also may be
subject to optional or mandatory redemption provisions.

A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock or other security of the same or a different issuer or into cash
within a particular period of time at a specified price or formula. A
convertible security generally entitles the holder to receive

6
<PAGE> 8

interest paid or accrued on debt securities or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, convertible securities generally have
characteristics similar to both debt and equity securities. The value of
convertible securities tends to decline as interest rates rise and, because of
the conversion feature, tends to vary with fluctuations in the market value of
the underlying equity securities. Convertible securities ordinarily provide a
stream of income with generally higher yields than those of common stock of the
same or similar issuers. Convertible securities generally rank senior to common
stock in a corporation's capital structure but are usually subordinated to
comparable nonconvertible securities. Convertible securities generally do not
participate directly in any dividend increases or decreases of the underlying
equity securities although the market prices of convertible securities may be
affected by any dividend changes or other changes in the underlying equity
securities.

Rights and warrants entitle the holder to buy equity securities at a specific
price for a specific period of time. Rights typically have a substantially
shorter term than do warrants. Rights and warrants may be considered more
speculative and less liquid than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
underlying securities nor do they represent any rights in the assets of the
issuing company. Rights and warrants may lack a secondary market.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 25% of its total assets in securities of foreign
issuers. Securities of foreign issuers may be denominated in U.S. dollars or in
currencies other than U.S. dollars. Investments in foreign securities present
certain risks not ordinarily associated with investments in securities of U.S.
issuers. These risks include fluctuations in foreign currency exchange rates,
political, economic or legal developments (including war or other instability,
expropriation of assets, nationalization and confiscatory taxation), the
imposition of foreign exchange limitations (including currency blockage),
withholding taxes on income or capital transactions or other restrictions,
higher transaction costs (including higher brokerage, custodial and settlement
costs and currency conversion costs) and possible difficulty in enforcing
contractual obligations or taking judicial action. Foreign securities may not be
as liquid and may be more volatile than comparable domestic securities.

In addition, there often is less publicly available information about many
foreign issuers, and issuers of foreign securities are subject to different,
often less comprehensive, auditing, accounting and financial reporting
disclosure requirements than domestic issuers. There is generally less
government regulation of stock exchanges, brokers and listed companies abroad
than in the United States, and, with respect to certain foreign countries, there
is a possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of foreign exchanges,
brokers and dealers than there is in the United States, the Fund may experience
settlement difficulties or delays not usually encountered in the United States.

Delays in making trades in foreign securities relating to volume constraints,
limitations or restrictions, clearance or settlement procedures, or otherwise
could impact returns and result in temporary periods when assets of the Fund are
not fully invested or attractive investment opportunities are foregone.

The Fund may invest in securities of issuers in developing or emerging market
countries. Investments in securities of issuers in developing or emerging market
countries are subject to greater risks than investments in securities of
developed countries since emerging market countries tend to have economic
structures that are less diverse and mature and political systems that are less
stable than developed countries.

In addition to the increased risks of investing in foreign securities, there are
often increased transaction costs associated with investing in foreign
securities including the costs incurred in connection with converting
currencies, higher foreign brokerage or dealer costs, and higher settlement
costs or custodial costs.

Many European countries have adopted or are in the process of adopting a single
European currency, commonly referred to as the "euro." The long-term
consequences of the euro conversion on foreign exchange rates, interest rates
and the value of European securities, all of which may adversely affect the
Fund, are still uncertain.

7
<PAGE> 9

USING OPTIONS, FUTURES CONTRACTS

AND RELATED OPTIONS

The Fund may, but is not required to, use various investment strategic
transactions including options, futures and options on futures, in several
different ways depending upon the status of the Fund's portfolio and the
expectations of the Fund's investment adviser concerning the securities markets.
Although the Fund's investment adviser seeks to use the practices to further the
Fund's investment objective, no assurance can be given that the use of these
practices will achieve this result.

In times of stable or rising stock prices, the Fund generally seeks to be fully
invested in equity securities. Even when the Fund is fully invested, however,
prudent management requires that at least a small portion of assets be available
as cash to honor redemption requests and for other short-term needs. The Fund
may also have cash on hand that has not yet been invested. The portion of the
Fund's assets that is invested in cash or cash equivalents does not fluctuate
with stock market prices, so that, in times of rising market prices, the Fund
may underperform the market in proportion to the amount of cash or cash
equivalents in its portfolio. By purchasing stock index futures contracts,
however, the Fund can compensate for the cash portion of its assets and may
obtain performance equivalent to investing 100% of its assets in equity
securities.

The Fund can engage in options transactions on securities (or stock index
options or options on futures) to attempt to manage the portfolio's risk in
advancing or declining markets. For example, the value of a put option generally
increases as the value of the underlying security declines below a specified
level. Value is protected against a market decline to the degree the performance
of the put correlates with the performance of the Fund's investment portfolio.
If the market remains stable or advances, the Fund can refrain from exercising
the put and its portfolio will participate in the advance, having incurred only
the premium cost for the put.

Generally, the Fund expects that options will be purchased or sold on securities
exchanges. However, the Fund is authorized to purchase and sell listed and
over-the-counter options ("OTC Options"). OTC Options are subject to certain
additional risks including default by the other party to the transaction and the
liquidity of the transactions.

The Fund may use futures in many ways. For example, if the Fund's investment
adviser forecasts a market decline, the Fund may seek to reduce its exposure to
the securities markets by increasing its cash position. By selling stock index
futures contracts instead of portfolio securities, a similar result can be
achieved to the extent that the performance of the futures contracts correlates
to the performance of the Fund's portfolio securities. Sales of futures
contracts frequently may be accomplished more rapidly and at less cost than the
actual sale of securities. Once the desired hedged position has been reached,
the Fund could then liquidate securities in a more deliberate manner.

In certain cases, the options and futures markets provide investment or risk
management opportunities that are not available from the direct investment in
underlying securities. In addition, some strategies can be performed with
greater ease and at lower cost by utilizing the options and futures markets
rather than purchasing or selling portfolio securities. However, such
transactions involve risks different from the direct investment in underlying
securities. For example, there may be imperfect correlation between the value of
the instruments and the underlying assets. In addition, the use of such
instruments includes the risks of default by the other party to certain
transactions. The Fund may incur losses in using these instruments that
partially or completely offset gains in portfolio positions. These transactions
may not be liquid and involve manager risk. In addition, such transactions may
involve commissions and other costs, which may increase the Fund's expenses and
reduce its return.

A more complete discussion of options, futures and options on futures and their
risks is contained in the Fund's Statement of Additional Information. The
Statement of Additional Information can be obtained by investors free of charge
as described on the back cover of this prospectus.

OTHER INVESTMENTS AND RISK FACTORS

For cash management purposes, the Fund may engage in repurchase agreements with
broker-dealers, banks and other financial institutions to earn a return on
temporarily available cash. Such transactions are subject to the risk of default
by the other party.

The Fund may invest up to 15% of the Fund's net assets in illiquid securities
and certain restricted securities. Such securities may be difficult or

8
<PAGE> 10

impossible to sell at the time and the price that the Fund would like. Thus, the
Fund may have to sell such securities at a lower price, sell other securities
instead to obtain cash or forego other investment opportunities.

Further information about these types of investments and other investment
practices that may be used by the Fund is contained in the Fund's Statement of
Additional Information.

The Fund may sell securities without regard to the length of time they have been
held in order to take advantage of new investment opportunities, or when the
Fund's investment adviser believes the potential for capital appreciation has
lessened, or for other reasons. The portfolio turnover rate may vary from year
to year. A high portfolio turnover rate (100% or more) increases a fund's
transaction costs (including brokerage commissions or dealer costs), which would
adversely impact a fund's performance. Higher portfolio turnover may result in
the realization of more short-term capital gains than if a fund had lower
portfolio turnover. The turnover rate will not be a limiting factor, however, if
the Fund's investment adviser considers portfolio changes appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may, on a temporary basis, hold cash or invest a
portion or all of its assets in securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, prime commercial paper,
certificates of deposit, bankers' acceptances and other obligations of domestic
banks having total assets of at least $500 million, and repurchase agreements.
Under normal market conditions, the potential for capital appreciation on these
securities will tend to be lower than the potential for capital appreciation on
other securities that may be owned by the Fund. In taking such a defensive
position, the Fund temporarily would not be pursuing and may not achieve its
investment objective.

INVESTMENT ADVISORY SERVICES

THE ADVISER. Van Kampen Asset Management Inc. is the Fund's investment adviser
(the "Adviser" or "Asset Management"). The Adviser is a wholly owned subsidiary
of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company that administers more than
three million retail investor accounts, has extensive capabilities for managing
institutional portfolios and has more than $100 billion under management or
supervision as of September 30, 2000. Van Kampen Investments has more than 50
open-end funds, more than 30 closed-end funds and more than 2,700 unit
investment trusts that are distributed by authorized dealers nationwide. Van
Kampen Funds Inc., the distributor of the Fund (the "Distributor") and the
sponsor of the funds mentioned above, is also a wholly owned subsidiary of Van
Kampen Investments. Van Kampen Investments is an indirect wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's principal office is
located at 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555.

ADVISORY AGREEMENT. The Fund retains the Adviser to manage the investment of its
assets and to place orders for the purchase and sale of its portfolio
securities. Under an investment advisory agreement between the Adviser and the
Fund (the "Advisory Agreement"), the Fund pays the Adviser a monthly fee
computed based upon an annual rate applied to the average daily net assets of
the Fund as follows:

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
-----------------------------------------------------
<S> <C> <C> <C>
First $500 million 0.90%
.....................................................
Next $500 million 0.85%
.....................................................
Over $1 billion or
thereafter 0.80%
.....................................................
</TABLE>

Applying this fee schedule, the effective advisory fee rate was 0.83% of the
Fund's average daily net assets for the fiscal year ended August 31, 2000. The
Fund's average daily net assets are determined by taking the average of all of
the determinations of the net assets during a given calendar month. Such fee is
payable for each calendar month as soon as practicable after the end of that
month.

Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment, and provides administrative services to the Fund. The
Fund pays all charges and expenses of its day-to-day operations, including
service fees, distribution fees, custodian fees, legal and independent
accountant fees, the costs of reports and proxies to shareholders, compensation
of trustees of the Trust (other than

9
<PAGE> 11

those who are affiliated persons of the Adviser, Distributor or Van Kampen
Investments) and all other ordinary business expenses not specifically assumed
by the Adviser.

From time to time, the Adviser or the Distributor may voluntarily undertake to
reduce the Fund's expenses by reducing the fees payable to them or by reducing
other expenses of the Fund in accordance with such limitations as the Adviser or
Distributor may establish.

The Adviser may utilize, at its own expense, credit analysis, research and
trading support services provided by its affiliate, Van Kampen Investment
Advisory Corp. ("Advisory Corp.").

PERSONAL INVESTMENT POLICIES. The Fund, the Adviser and the Distributor have
adopted Codes of Ethics designed to recognize the fiduciary relationships among
the Fund, the Adviser, the Distributor and their respective employees. The Codes
of Ethics permit directors, trustees, officers and employees to buy and sell
securities for their personal accounts subject to certain restrictions. Persons
with access to certain sensitive information are subject to pre-clearance and
other procedures designed to prevent conflicts of interest.

PORTFOLIO MANAGEMENT. The Fund is managed by a team of portfolio managers.
Senior Portfolio Managers Gary M. Lewis and David Walker are the co-lead
managers of the Fund. Mr. Lewis has overall responsibility for the team of
portfolio managers which manages the Van Kampen Aggressive Growth, Van Kampen
Emerging Growth, Van Kampen Select Growth and Van Kampen Small Cap Growth Funds
in addition to the Fund. Mr. Lewis has been a Senior Vice President of the
Adviser and Advisory Corp. since September 1995. Mr. Lewis became a Vice
President and Portfolio Manager of the Adviser in June 1991. Mr. Lewis has been
employed by the Adviser since September 1986. He has been affiliated with the
Fund since its inception.

Mr. Walker has been a Senior Portfolio Manager since April 2000, and a Portfolio
Manager and Vice President of the Adviser and Advisory Corp. since December
1998. Mr. Walker became an Assistant Vice President of the Adviser and Advisory
Corp. in June 1995. Prior to April 1996, Mr. Walker was a Quantitative Analyst
of the Adviser and has worked for the Adviser since October 1990. Mr. Walker
also has been the portfolio manager for various unit investment trusts managed
by the Adviser or its affiliates since September 1997. He has been affiliated
with the Fund since its inception.

Senior Portfolio Managers Dudley Brickhouse and Janet Luby, and Portfolio
Manager Matthew Hart are responsible for the day-to-day management of the Fund's
investment portfolio.

Mr. Brickhouse has been a Senior Portfolio Manager since April 2000, and a
Portfolio Manager and Vice President of the Adviser and Advisory Corp. since
December 1998. Mr. Brickhouse became an Associate Portfolio Manager of the
Adviser and Advisory Corp. in September 1997. Prior to September 1997, Mr.
Brickhouse was a Vice President and Portfolio Manager with NationsBank, where he
had worked since 1985. He has been affiliated with the Fund since its inception.

Mr. Hart has been a Portfolio Manager since January 1998, and a Vice President
of the Adviser and Advisory Corp. since December 1998. Mr. Hart became an
Associate Portfolio Manager of the Adviser and Advisory Corp. in August 1997.
Prior to August 1997, Mr. Hart held various positions within the portfolio area
of AIM Capital Management, Inc., where he had worked since June 1992. Mr. Hart's
last position in the AIM portfolio area was a convertible bonds analyst. He has
been affiliated with the Fund since February 2000.

Ms. Luby has been a Senior Portfolio Manager since April 2000, and a Portfolio
Manager and Vice President of the Adviser and Advisory Corp. since December
1998. Ms. Luby became an Assistant Vice President of the Adviser and Advisory
Corp. in December 1997 and an Associate Portfolio Manager of the Adviser in July
1995. Prior to July 1995, Ms. Luby spent eight years at AIM Capital Management,
Inc. where she worked five years in the accounting department and three years in
the investment area. Her last position in the AIM investment area was as a
senior securities analyst. Ms. Luby also has been the portfolio manager for
various unit investment trusts managed by the Adviser or its affiliates since
August 1999. She has been affiliated with the Fund since its inception.

10
<PAGE> 12

PURCHASE OF SHARES

GENERAL

This prospectus offers three classes of shares of the Fund, designated as Class
A Shares, Class B Shares and Class C Shares. Other classes of shares of the Fund
may be offered through one or more separate prospectuses of the Fund. By
offering multiple classes of shares, the Fund permits each investor to choose
the class of shares that is most beneficial given the type of investor, the
amount to be invested and the length of time the investor expects to hold the
shares.

Initial investments generally must be at least $1,000 per investor account, and
subsequent investments must be at least $25 per investor account. Minimum
investment amounts may be waived by the Distributor for plans involving periodic
investments and for certain retirement accounts.

Each class of shares represents an interest in the same portfolio of investments
of the Fund and has the same rights except that (i) Class A Shares generally
bear the sales charge expenses at the time of purchase while Class B Shares and
Class C Shares generally bear the sales charge expenses at the time of
redemption and any expenses (including higher distribution fees and transfer
agency costs) resulting from such deferred sales charge arrangement, (ii) each
class of shares has exclusive voting rights with respect to approvals of the
Rule 12b-1 distribution plan and the service plan (each as described below)
under which the class's distribution fee and/or the service fee is paid, (iii)
each class of shares has different exchange privileges, (iv) certain classes of
shares are subject to a conversion feature and (v) certain classes of shares
have different shareholder service options available.

The offering price of the Fund's shares is based upon the Fund's net asset value
per share (plus sales charges, where applicable). The net asset values per share
of the Class A Shares, Class B Shares and Class C Shares are generally expected
to be substantially the same. In certain circumstances, however, the per share
net asset values of the classes of shares may differ from one another,
reflecting the daily expense accruals of the higher distribution fees and
transfer agency costs applicable to the Class B Shares and Class C Shares and
the differential in the dividends that may be paid on each class of shares.

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchase or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset value per share and adjust the offering price more frequently than once
daily if deemed desirable. Net asset value per share for each class is
determined by dividing the value of the Fund's portfolio securities, cash and
other assets (including accrued interest) attributable to such class, less all
liabilities (including accrued expenses) attributable to such class, by the
total number of shares of the class outstanding. Such computation is made by
using prices as of the close of trading on the Exchange and (i) valuing
securities listed or traded on a national securities exchange at the last
reported sale price, or, if there has been no sale that day, at the mean between
the last reported bid and asked prices, (ii) valuing over-the-counter securities
at the last reported sale price from the National Association of Securities
Dealers Automated Quotations ("NASDAQ") or, if there has been no sale that day,
at the mean between the last reported bid and asked prices, (iii) valuing
unlisted securities at the mean between the last reported bid and asked prices
obtained from reputable brokers and (iv) valuing any securities for which market
quotations are not readily available and any other assets at fair value as
determined in good faith by the Adviser in accordance with procedures
established by the Fund's Board of Trustees. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.

The Fund has adopted a distribution plan (the "Distribution Plan") with respect
to each of its Class A Shares, Class B Shares and Class C Shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund also adopted a service plan (the "Service Plan") with respect to
each such class of its shares. Under the Distribution Plan and the Service Plan,
the Fund pays distribution fees in connection with the sale and distribution of
its shares and service fees in connection with the provision of ongoing services
to shareholders of each such class and the maintenance of shareholder accounts.

11
<PAGE> 13

The amount of distribution fees and service fees varies among the classes
offered by the Fund. Because these fees are paid out of the Fund's assets on an
ongoing basis, these fees will increase the cost of your investment in the Fund.
By purchasing a class of shares subject to higher distribution fees and service
fees, you may pay more over time than on a class of shares with other types of
sales charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers, Inc. ("NASD"). The net income
attributable to a class of shares will be reduced by the amount of the
distribution fees and service fees and other expenses of the Fund associated
with that class of shares. To assist investors in comparing classes of shares,
the tables under the Prospectus heading "Fees and Expenses of the Fund" provide
a summary of sales charges and expenses of the Fund and an example of the sales
charges and expenses of the Fund applicable to each class of shares offered
herein.

The shares are offered on a continuous basis through the Distributor as
principal underwriter, which is located at 1 Parkview Plaza, Oakbrook Terrace,
Illinois 60181-5555. Shares may be purchased through members of the NASD who are
acting as securities dealers ("dealers") and NASD members or eligible non-NASD
members who are acting as brokers or agents for investors ("brokers"). "Dealers"
and "brokers" are sometimes referred to herein as "authorized dealers."

Shares may be purchased on any business day by completing the account
application form and forwarding the account application form, directly or
through an authorized dealer, to the Fund's shareholder service agent, Van
Kampen Investor Services Inc. ("Investor Services"), a wholly owned subsidiary
of Van Kampen Investments. When purchasing shares of the Fund through this
prospectus, investors must specify whether the purchase is for Class A Shares,
Class B Shares or Class C Shares by selecting the correct Fund number on the
account application form. Sales personnel of authorized dealers distributing the
Fund's shares are entitled to receive compensation for selling such shares and
may receive differing compensation for selling Class A Shares, Class B Shares or
Class C Shares.

The offering price for shares is based upon the next calculation of net asset
value per share (plus sales charges, where applicable) after an order is
received by Investor Services. Orders received by authorized dealers prior to
the close of the Exchange are priced based on the date of receipt provided such
order is transmitted to Investor Services prior to Investor Services' close of
business on such date. Orders received by authorized dealers after the close of
the Exchange or transmitted to Investor Services after its close of business are
priced based on the date of the next determined net asset value per share
provided they are received by Investor Services prior to Investor Services'
close of business on such date. It is the responsibility of authorized dealers
to transmit orders received by them to Investor Services so they will be
received in a timely manner.

The Fund and the Distributor reserve the right to refuse any order for the
purchase of shares. The Fund also reserves the right to suspend the sale of the
Fund's shares in response to conditions in the securities markets or for other
reasons. Shares of the Fund may be sold in foreign countries where permissible.

Investor accounts will automatically be credited with additional shares of the
Fund after any Fund distributions, such as dividends and capital gain dividends,
unless the investor instructs the Fund otherwise. Investors wishing to receive
cash instead of additional shares should contact the Fund by telephone at (800)
341-2911 or by writing to the Fund, c/o Van Kampen Investor Services Inc., PO
Box 218256, Kansas City, MO 64121-8256.

12
<PAGE> 14

CLASS A SHARES

Class A Shares of the Fund are sold at net asset value plus an initial maximum
sales charge of up to 5.75% of the offering price (or 6.10% of the net amount
invested), reduced on investments of $50,000 or more as follows:

CLASS A SHARES
SALES CHARGE SCHEDULE

<TABLE>
<CAPTION>
As % of As % of
Size of Offering Net Amount
Investment Price Invested
----------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10%
..........................................................
$50,000 but less than
$100,000 4.75% 4.99%
..........................................................
$100,000 but less than
$250,000 3.75% 3.90%
..........................................................
$250,000 but less than
$500,000 2.75% 2.83%
..........................................................
$500,000 but less than
$1,000,000 2.00% 2.04%
..........................................................
$1,000,000 or more * *
..........................................................
</TABLE>

* No sales charge is payable at the time of purchase on investments of $1
million or more, although for such investments the Fund may impose a
contingent deferred sales charge of 1.00% on certain redemptions made within
one year of the purchase. The contingent deferred sales charge is assessed on
an amount equal to the lesser of the then current market value or the cost of
the shares being redeemed. Accordingly, no sales charge is imposed on
increases in net asset value above the initial purchase price.

No sales charge is imposed on Class A Shares received from reinvestment of
dividends or capital gain dividends.

Under the Distribution Plan and the Service Plan, the Fund may spend up to a
total of 0.25% per year of the Fund's average daily net assets with respect to
Class A Shares of the Fund. From such amount, under the Service Plan, the Fund
may spend up to 0.25% per year of the Fund's average daily net assets with
respect to Class A Shares of the Fund.

CLASS B SHARES

Class B Shares of the Fund are sold at net asset value and are subject to a
contingent deferred sales charge if redeemed within five years of purchase as
shown in the table as follows:

CLASS B SHARES

SALES CHARGE SCHEDULE

<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
as a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
------------------------------------------------
<S> <C> <C> <C>
First 5.00%
................................................
Second 4.00%
................................................
Third 3.00%
................................................
Fourth 2.50%
................................................
Fifth 1.50%
................................................
Sixth and After None
................................................
</TABLE>

The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gain dividends. It
is presently the policy of the Distributor not to accept any order for Class B
Shares in an amount of $500,000 or more because it ordinarily will be more
advantageous for an investor making such an investment to purchase Class A
Shares.

The amount of the contingent deferred sales charge, if any, varies depending on
the number of years from the time of payment for each purchase of Class B Shares
until the time of redemption of such shares.

In determining whether a contingent deferred sales charge applies to a
redemption, it is assumed that the shares being redeemed first are any shares in
the shareholder's Fund account that are not subject to a contingent deferred
sales charge, followed by shares held the longest in the shareholder's account.

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
Fund's average daily net assets with respect to Class B Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to Class B Shares of the Fund.

13
<PAGE> 15

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
contingent deferred sales charge of 1.00% of the dollar amount subject to charge
if redeemed within one year of purchase.

The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gain dividends. It
is presently the policy of the Distributor not to accept any order for Class C
Shares in an amount of $1 million or more because it ordinarily will be more
advantageous for an investor making such an investment to purchase Class A
Shares.

In determining whether a contingent deferred sales charge applies to a
redemption, it is assumed that the shares being redeemed first are any shares in
the shareholder's Fund account that are not subject to a contingent deferred
sales charge followed by shares held the longest in the shareholder's account.

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
Fund's average daily net assets with respect to Class C Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to Class C Shares of the Fund.

CONVERSION FEATURE

Class B Shares, including Class B Shares received from reinvestment of
distributions through the dividend reinvestment plan, automatically convert to
Class A Shares eight years after the end of the calendar month in which the
shares were purchased. Such conversion will be on the basis of the relative net
asset values per share, without the imposition of any sales load, fee or other
charge. The conversion schedule applicable to a share of the Fund acquired
through the exchange privilege from another Van Kampen fund participating in the
exchange program is determined by reference to the Van Kampen fund from which
such share was originally purchased.

The conversion of such shares to Class A Shares is subject to the continuing
availability of an opinion of counsel to the effect that (i) the assessment of
the higher distribution fee and transfer agency costs with respect to such
shares does not result in the Fund's dividends or capital gain dividends
constituting "preferential dividends" under the federal income tax law and (ii)
the conversion of shares does not constitute a taxable event under federal
income tax law. The conversion may be suspended if such an opinion is no longer
available and such shares might continue to be subject to the higher aggregate
fees applicable to such shares for an indefinite period.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The contingent deferred sales charge is waived on redemptions of Class B Shares
and Class C Shares (i) within one year following the death or disability (as
disability is defined by federal income tax law) of a shareholder, (ii) for
required minimum distributions from an individual retirement account ("IRA") or
certain other retirement plan distributions, (iii) for withdrawals under the
Fund's systematic withdrawal plan but limited to 12% annually of the initial
value of the account, (iv) if no commission or transaction fee is paid to
authorized dealers at the time of purchase of such shares and (v) if made by the
Fund's involuntary liquidation of a shareholder's account as described under the
Prospectus heading "Redemption of Shares." Subject to certain limitations, a
shareholder who has redeemed Class C Shares of the Fund may reinvest in Class C
Shares at net asset value with credit for any contingent deferred sales charge
if the reinvestment is made within 180 days after the redemption provided that
shares of the Fund are available for sale at the time of such reinvestment. For
a more complete description of contingent deferred sales charge waivers, please
refer to the Fund's Statement of Additional Information or contact your
authorized dealer.

QUANTITY DISCOUNTS

Investors purchasing Class A Shares may, under certain circumstances described
below, be entitled to pay reduced or no sales charges. Investors, or their
authorized dealers, must notify the Fund at the time of the purchase order
whenever a quantity discount is applicable to purchases. Upon such notification,
an investor will pay the lowest applicable sales charge. Quantity discounts may
be modified or terminated at any time. For more information about quantity
discounts, investors should contact their authorized dealer or the Distributor.

A person eligible for a reduced sales charge includes an individual, his or her
spouse and children under

14
<PAGE> 16

21 years of age and any corporation, partnership or sole proprietorship which is
100% owned, either alone or in combination, by any of the foregoing; a trustee
or other fiduciary purchasing for a single trust or for a single fiduciary
account, or a "company" as defined in Section 2(a)(8) of the 1940 Act.

As used herein, "Participating Funds" refers to certain open-end investment
companies advised by Asset Management or Advisory Corp. and distributed by the
Distributor as determined from time to time by the Fund's Board of Trustees.

VOLUME DISCOUNTS. The size of investment shown in the Class A Shares sales
charge table applies to the total dollar amount being invested by any person in
shares of the Fund, or in any combination of shares of the Fund and shares of
other Participating Funds, although other Participating Funds may have different
sales charges.

CUMULATIVE PURCHASE DISCOUNT. The size of investment shown in the Class A
Shares sales charge table may also be determined by combining the amount being
invested in shares of the Participating Funds plus the current offering price of
all shares of the Participating Funds currently owned.

LETTER OF INTENT. A Letter of Intent provides an opportunity for an investor to
obtain a reduced sales charge by aggregating investments over a 13-month period
to determine the sales charge as outlined in the Class A Shares sales charge
table. The size of investment shown in the Class A Shares sales charge table
includes purchases of shares of the Participating Funds over a 13-month period
based on the total amount of intended purchases plus the value of all shares of
the Participating Funds previously purchased and still owned. An investor may
elect to compute the 13-month period starting up to 90 days before the date of
execution of a Letter of Intent. Each investment made during the period receives
the reduced sales charge applicable to the total amount of the investment goal.
The Letter of Intent does not preclude the Fund (or any other Participating
Fund) from discontinuing the sale of its shares. The initial purchase must be
for an amount equal to at least 5% of the minimum total purchase amount of the
level selected. If trades not initially made under a Letter of Intent
subsequently qualify for a lower sales charge through the 90-day backdating
provisions, an adjustment will be made at the expiration of the Letter of Intent
to give effect to the lower sales charge. Such adjustment in sales charge will
be used to purchase additional shares. The Fund initially will escrow shares
totaling 5% of the dollar amount of the Letter of Intent to be held by Investor
Services in the name of the shareholder. In the event the Letter of Intent goal
is not achieved within the specified period, the investor must pay the
difference between the sales charge applicable to the purchases made and the
reduced sales charges previously paid. Such payments may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient escrowed
shares to obtain the difference.

OTHER PURCHASE PROGRAMS

Purchasers of Class A Shares may be entitled to reduced or no initial sales
charges in connection with the unit investment trust reinvestment program and
purchases by registered representatives of selling firms or purchases by persons
affiliated with the Fund or the Distributor. The Fund reserves the right to
modify or terminate these arrangements at any time.

UNIT INVESTMENT TRUST REINVESTMENT PROGRAM. The Fund permits unitholders of
unit investment trusts to reinvest distributions from such trusts in Class A
Shares of the Fund at net asset value per share and with no minimum initial or
subsequent investment requirement, if the administrator of an investor's unit
investment trust program meets certain uniform criteria relating to cost savings
by the Fund and the Distributor. The total sales charge for all other
investments made from unit investment trust distributions will be 1.00% of the
offering price (1.01% of net asset value). Of this amount, the Distributor will
pay to the authorized dealer, if any, through which such participation in the
qualifying program was initiated 0.50% of the offering price as a dealer
concession or agency commission. Persons desiring more information with respect
to this program, including the terms and conditions that apply to the program,
should contact their authorized dealer or the Distributor.

The administrator of such a unit investment trust must have an agreement with
the Distributor pursuant to which the administrator will (1) submit a single
bulk order and make payment with a single remittance for all investments in the
Fund during each distribution period by all investors who choose to invest in
the Fund through the program and (2) provide Investor Services with appropriate
backup data for each investor participating in the program in a computerized
format fully compatible with Investor Services' processing system.

15
<PAGE> 17

To obtain these special benefits, all dividends and other distributions from the
Fund must be reinvested in additional shares and there can not be any systematic
withdrawal program. There will be no minimum for reinvestments from unit
investment trusts. The Fund will send account activity statements to such
participants on a quarterly basis only, even if their investments are made more
frequently. The Fund reserves the right to modify or terminate this program at
any time.

NET ASSET VALUE PURCHASE OPTIONS. Class A Shares of the Fund may be purchased
at net asset value, generally upon written assurance that the purchase is made
for investment purposes and that the shares will not be resold except through
redemption by the Fund, by:

(1) Current or retired trustees or directors of funds advised by Morgan Stanley
Dean Witter & Co. and any of its subsidiaries and such persons' families and
their beneficial accounts.

(2) Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries; employees of an investment
subadviser to any fund described in (1) above or an affiliate of such
subadviser; and such persons' families and their beneficial accounts.

(3) Directors, officers, employees and, when permitted, registered
representatives, of financial institutions that have a selling group
agreement with the Distributor and their spouses and children under 21 years
of age when purchasing for any accounts they beneficially own, or, in the
case of any such financial institution, when purchasing for retirement plans
for such institution's employees; provided that such purchases are otherwise
permitted by such institutions.

(4) Registered investment advisers who charge a fee for their services, trust
companies and bank trust departments investing on their own behalf or on
behalf of their clients. The Distributor may pay authorized dealers through
which purchases are made an amount up to 0.50% of the amount invested, over
a 12-month period.

(5) Trustees and other fiduciaries purchasing shares for retirement plans which
invest in multiple fund families through broker-dealer retirement plan
alliance programs that have entered into agreements with the Distributor and
which are subject to certain minimum size and operational requirements.
Trustees and other fiduciaries should refer to the Statement of Additional
Information for further details with respect to such alliance programs.

(6) Beneficial owners of shares of Participating Funds held by a retirement plan
or held in a tax-advantaged retirement account who purchase shares of the
Fund with proceeds from distributions from such a plan or retirement account
other than distributions taken to correct an excess contribution.

(7) Accounts as to which a bank or broker-dealer charges an account management
fee ("wrap accounts"), provided the bank or broker-dealer has a separate
agreement with the Distributor.

(8) Trusts created under pension, profit sharing or other employee benefit plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), or custodial accounts held by a bank created pursuant
to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code and assets held by an employer
or trustee in connection with an eligible deferred compensation plan under
Section 457 of the Code. Such plans will qualify for purchases at net asset
value provided, for plans initially establishing accounts with the
Distributor in the Participating Funds after January 1, 2000, that (1) the
total plan assets are at least $1 million or (2) such shares are purchased
by an employer sponsored plan with more than 100 eligible employees. Such
plans that have been established with a Participating Fund or have received
proposals from the Distributor prior to January 1, 2000 based on net asset
value purchase privileges previously in effect will be qualified to purchase
shares of the Participating Funds at net asset value. Section 403(b) and
similar accounts for which Van Kampen Trust Company serves as custodian will
not be eligible for net asset value purchases based on the aggregate
investment made by the plan or the number of eligible employees, except
under certain uniform criteria established by the Distributor from time to
time. A commission will be paid to authorized dealers who initiate and are
responsible for such purchases within a

16
<PAGE> 18

rolling twelve-month period as follows: 1.00% on sales to $2 million, plus
0.80% on the next $1 million, plus 0.50% on the next $47 million, plus 0.25%
on the excess over $50 million.

(9) Individuals who are members of a "qualified group." For this purpose, a
qualified group is one which (i) has been in existence for more than six
months, (ii) has a purpose other than to acquire shares of the Fund or
similar investments, (iii) has given and continues to give its endorsement
or authorization, on behalf of the group, for purchase of shares of the Fund
and Participating Funds, (iv) has a membership that the authorized dealer
can certify as to the group's members and (v) satisfies other uniform
criteria established by the Distributor for the purpose of realizing
economies of scale in distributing such shares. A qualified group does not
include one whose sole organizational nexus, for example, is that its
participants are credit card holders of the same institution, policy holders
of an insurance company, customers of a bank or broker-dealer, clients of an
investment adviser or other similar groups. Shares purchased in each group's
participants account in connection with this privilege will be subject to a
contingent deferred sales charge of 1.00% in the event of redemption within
one year of purchase, and a commission will be paid to authorized dealers
who initiate and are responsible for such sales to each individual as
follows: 1.00% on sales to $2 million, plus 0.80% on the next $1 million and
0.50% on the excess over $3 million.

The term "families" includes a person's spouse, children and grandchildren under
21 years of age, parents, and the parents of the person's spouse.

Purchase orders made pursuant to clause (4) may be placed either through
authorized dealers as described above or directly with Investor Services by the
investment adviser, trust company or bank trust department, provided that
Investor Services receives federal funds for the purchase by the close of
business on the next business day following acceptance of the order. An
authorized dealer may charge a transaction fee for placing an order to purchase
shares pursuant to this provision or for placing a redemption order with respect
to such shares. Authorized dealers will be paid a service fee as described above
on purchases made under options (3) through (9) above. The Fund may terminate,
or amend the terms of, offering shares of the Fund at net asset value to such
groups at any time.

REDEMPTION OF
SHARES

Generally shareholders may redeem for cash some or all of their shares without
charge by the Fund (other than applicable sales charge) at any time. As
described under the Prospectus heading "Purchase of Shares," redemptions of
Class B Shares and Class C Shares may be subject to a contingent deferred sales
charge. In addition, certain redemptions of Class A Shares for shareholder
accounts of $1 million or more may be subject to a contingent deferred sales
charge. Redemptions completed through an authorized dealer or a
custodian/trustee of a retirement plan account may involve additional fees
charged by the dealer or custodian/trustee.

Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the redemption request and any other necessary
documents in proper form as described below. Such payment may be postponed or
the right of redemption suspended as provided by the rules of the SEC. Such
payment may, under certain circumstances, be paid wholly or in part by a
distribution-in-kind of portfolio securities. A distribution-in-kind may result
in recognition by the shareholder of a gain or loss for federal income tax
purposes when such securities are distributed, and the shareholder may have
brokerage costs and gain or loss for federal income tax purposes upon the
shareholder's disposition of such securities. If the shares to be redeemed have
been recently purchased by check, Investor Services may delay the payment of
redemption proceeds until it confirms that the purchase check has cleared, which
may take up to 15 calendar days from the date of purchase. A taxable gain or
loss may be recognized by the shareholder upon redemption of shares.
Certificated shares must be properly endorsed for transfer and must accompany a
written redemption request.

WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor

17
<PAGE> 19

Services Inc., PO Box 218256, Kansas City, MO 64121-8256. The request for
redemption should indicate the number of shares or dollar amount to be redeemed,
the Fund name and class designation of such shares and the shareholder's account
number. The redemption request must be signed by all persons in whose names the
shares are registered. Signatures must conform exactly to the account
registration. If the proceeds of the redemption exceed $100,000, or if the
proceeds are not to be paid to the record owner at the record address, or if the
record address has changed within the previous 15 calendar days, signature(s)
must be guaranteed by one of the following: a bank or trust company; a
broker-dealer; a credit union; a national securities exchange, registered
securities association or clearing agency; a savings and loan association; or a
federal savings bank.

Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption request to be in proper form.
In some cases, however, additional documents may be necessary. Certificated
shares may be redeemed only by written request. The certificates for the shares
being redeemed must be properly endorsed for transfer and must accompany the
written redemption request. Generally, in the event a redemption is requested by
and registered to a corporation, partnership, trust, fiduciary, estate or other
legal entity owning shares of the Fund, a copy of the corporate resolution or
other legal documentation appointing the authorized signer and certified within
the prior 120 days must accompany the redemption request. Retirement plan
distribution requests should be sent to the plan custodian/trustee to be
forwarded to Investor Services. Contact the plan custodian/ trustee for further
information.

In the case of written redemption requests sent directly to Investor Services,
the redemption price is the net asset value per share next determined after the
request in proper form is received by Investor Services.

AUTHORIZED DEALER REDEMPTION REQUESTS. Shareholders may place redemption
requests through an authorized dealer. The redemption price for such shares is
the net asset value per share next calculated after an order in proper form is
received by an authorized dealer provided such order is transmitted to the
Distributor prior to the Distributor's close of business on such day. It is the
responsibility of authorized dealers to transmit redemption requests received by
them to the Distributor so they will be received prior to such time. Redemptions
completed through an authorized dealer may involve additional fees charged by
the dealer.

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. A shareholder
automatically has telephone redemption privileges unless the shareholder
indicates otherwise by checking the applicable box on the account application
form. For accounts that are not established with telephone redemption
privileges, a shareholder may call the Fund at (800) 341-2911 to request that a
copy of the Telephone Redemption Authorization form be sent to the shareholder
for completion. To redeem shares, contact the telephone transaction line at
(800) 421-5684. Shares may also be redeemed by telephone through FundInfo(R)
(automated telephone system), which is generally accessible 24 hours a day,
seven days a week at (800) 847-2424. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions, tape
recording telephone communications and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services or the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine.
Telephone redemptions may not be available if the shareholder cannot reach
Investor Services by telephone, whether because all telephone lines are busy or
for any other reason; in such case, a shareholder would have to use the Fund's
other redemption procedure previously described. Requests received by Investor
Services prior to 4:00 p.m., New York time, will be processed at the next
determined net asset value per share. These privileges are available for most
accounts other than retirement accounts or accounts with shares represented by
certificates. If an account has multiple owners, Investor Services may rely on
the instructions of any one owner.

18
<PAGE> 20

must be payable to the shareholder(s) of record and sent to the address of
record for the account or wired directly to their predesignated bank account.
This privilege is not available if the address of record has been changed within
15 days prior to a telephone redemption request. Proceeds from redemptions
payable by wire transfer are expected to be wired on the next business day
following the date of redemption. The Fund reserves the right at any time to
terminate, limit or otherwise modify this redemption privilege.

OTHER REDEMPTION INFORMATION. The Fund may redeem any shareholder account that
has a value on the date of the notice of redemption less than the minimum
initial investment as specified in this prospectus. At least 60 days' advance
written notice of any such involuntary redemption will be provided to the
shareholder and such shareholder will be given an opportunity to purchase the
required value of additional shares at the next determined net asset value
without sales charge. Any involuntary redemption may only occur if the
shareholder account is less than the minimum initial investment due to
shareholder redemptions.

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive distributions from the Fund of dividends and capital
gain dividends.

DIVIDENDS. Dividends from stocks and interest earned from other investments are
the Fund's main sources of net investment income. The Fund's present policy,
which may be changed at any time by the Fund's Board of Trustees, is to
distribute all, or substantially all, of this net investment income at least
annually as dividends to shareholders. Dividends are automatically applied to
purchase additional shares of the Fund at the next determined net asset value
unless the shareholder instructs otherwise.

The per share dividends on Class B Shares and Class C Shares may be lower than
the per share dividends on Class A Shares as a result of the higher distribution
fees and transfer agency costs applicable to such classes of shares.

CAPITAL GAIN DIVIDENDS. The Fund may realize capital gains or losses when it
sells securities, depending on whether the sales prices for the securities are
higher or lower than purchase prices. The Fund distributes any net capital gains
to shareholders as capital gain dividends at least annually. As in the case of
dividends, capital gain dividends are automatically reinvested in additional
shares of the Fund at the next determined net asset value unless the shareholder
instructs otherwise.

SHAREHOLDER SERVICES

Listed below are some of the shareholder services the Fund offers to investors.
For a more complete description of the Fund's shareholder services, such as
investment accounts, share certificates, retirement plans, automated clearing
house deposits, dividend diversification and the systematic withdrawal plan,
please refer to the Fund's Statement of Additional Information or contact your
authorized dealer.

INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instructions regarding internet transactions. Van
Kampen Investments and its subsidiaries, including Investor Services, and the
Fund employ procedures considered by them to be reasonable to confirm that
instructions communicated through the internet are genuine. Such procedures
include requiring use of a personal identification number prior to acting upon
internet instructions and providing written confirmation of instructions
communicated through the internet. If reasonable procedures are employed, none
of Van Kampen Investments, Investor Services or the Fund will be liable for
following instructions received through the internet which it reasonably
believes to be genuine. If an account has multiple owners, Investor Services may
rely on the instructions of any one owner.

19
<PAGE> 21

plan is automatic. This instruction may be made by telephone by calling (800)
341-2911 ((800) 421-2833 for the hearing impaired) or by writing to Investor
Services. The investor may, on the account application form or prior to any
declaration, instruct that dividends and/or capital gain dividends be paid in
cash, be reinvested in the Fund at the next determined net asset value or be
invested in another Participating Fund at the next determined net asset value.

AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under which
a shareholder can authorize Investor Services to debit the shareholder's bank
account on a regular basis to invest predetermined amounts in the Fund.
Additional information is available from the Distributor or your authorized
dealer.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next determined net asset value per
share of each fund after requesting the exchange without any sales charge,
subject to certain limitations. Shares of the Fund may be exchanged for shares
of any Participating Fund only if shares of that Participating Fund are
available for sale. Shareholders seeking an exchange into a Participating Fund
should obtain and read the current prospectus for such fund prior to
implementing an exchange. A prospectus of any of the Participating Funds may be
obtained from an authorized dealer or the Distributor.

To be eligible for exchange, shares of the Fund must have been registered in the
shareholder's name for at least 30 days prior to an exchange. Shares of the Fund
registered in a shareholder's name for less than 30 days may only be exchanged
upon receipt of prior approval of the Adviser. It is the policy of the Adviser,
under normal circumstances, not to approve such requests.

When shares that are subject to a contingent deferred sales charge are exchanged
among Participating Funds, the holding period for purposes of computing the
contingent deferred sales charge is based upon the date of the initial purchase
of such shares from a Participating Fund. When such shares are redeemed and not
exchanged for shares of another Participating Fund, the shares are subject to
the contingent deferred sales charge schedule imposed by the Participating Fund
from which such shares were originally purchased.

Exchanges of shares are sales of shares of one Participating Fund and purchases
of shares of another Participating Fund. The sale may result in a gain or loss
for federal income tax purposes. If the shares sold have been held for less than
91 days, the sales charge paid on such shares is carried over and included in
the tax basis of the shares acquired.

A shareholder wishing to make an exchange may do so by sending a written request
to Investor Services or by contacting the telephone transaction line at (800)
421-5684, through FundInfo(R) (automated telephone system) which is generally
accessible 24 hours a day, seven days a week at (800) 847-2424 or through the
internet at www.vankampen.com. A shareholder automatically has these exchange
privileges unless the shareholder indicates otherwise by checking the applicable
box on the account application form. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions,
tape-recording telephone communications, and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services or the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine. If
the exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gain dividend options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privilege to such shareholders. For further information
on these restrictions, see the Fund's Statement of Additional Information. The
Fund may modify, restrict or terminate the exchange privilege at any time on 60
days' notice to its shareholders of any termination or material amendment.

20
<PAGE> 22

For purposes of determining the sales charge rate previously paid on Class A
Shares, all sales charges paid on the exchanged security and on any security
previously exchanged for such security or for any of its predecessors shall be
included. If the exchanged security was acquired through reinvestment, that
security is deemed to have been sold with a sales charge rate equal to the rate
previously paid on the security on which the dividend or distribution was paid.
If a shareholder exchanges less than all of such shareholder's securities, the
security upon which the highest sales charge rate was previously paid is deemed
exchanged first.

Exchange requests received on a business day prior to the time shares of the
funds involved in the request are priced will be processed on the date of
receipt. "Processing" a request means that shares of the fund which the
shareholder is redeeming will be redeemed at the net asset value per share next
determined on the date of receipt. Shares of the fund that the shareholder is
purchasing will also normally be purchased at the net asset value per share,
plus any applicable sales charge, next determined on the date of receipt.
Exchange requests received on a business day after the time that shares of the
funds involved in the request are priced will be processed on the next business
day in the manner described herein.

FEDERAL INCOME
TAXATION

Distributions of the Fund's investment company taxable income (consisting
generally of ordinary income and net short-term capital gain) are taxable to
shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether paid in cash or reinvested in additional shares. Distributions
of the Fund's net capital gain (which is the excess of net long-term capital
gain over net short-term capital loss) as capital gain dividends, if any, are
taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares, and regardless of how long the shares of the
Fund have been held by such shareholders. The Fund expects that its
distributions will consist primarily of ordinary income and capital gain
dividends. Distributions in excess of the Fund's earnings and profits will first
reduce the adjusted tax basis of a shareholder's shares and, after such adjusted
tax basis is reduced to zero, will constitute capital gains to such shareholder
(assuming such shares are held as a capital asset). Although distributions
generally are treated as taxable in the year they are paid, distributions
declared in October, November or December, payable to shareholders of record on
a specified date in such month and paid during January of the following year
will be treated as having been distributed by the Fund and received by the
shareholders on the December 31st prior to the date of payment. The Fund will
inform shareholders of the source and tax status of all distributions promptly
after the close of each calendar year.

The sale or exchange of shares may be a taxable transaction for federal income
tax purposes. Shareholders who sell their shares will generally recognize a gain
or loss in an amount equal to the difference between their adjusted tax basis in
the shares sold and the amount received. If the shares are held by the
shareholder as a capital asset, the gain or loss will be a capital gain or loss.
Any recognized capital gains may be taxed at different rates depending on how
long the shareholder held the shares.

The Fund is required, in certain circumstances, to withhold 31% of dividends and
certain other payments, including redemptions, paid to shareholders who do not
furnish to the Fund their correct taxpayer identification number (in the case of
individuals, their social security number) and certain required certifications
or who are otherwise subject to backup withholding.

Foreign shareholders, including shareholders who are non-resident aliens, may be
subject to U.S. withholding tax on certain distributions (whether received in
cash or in shares) at a rate of 30% or such lower rate as prescribed by an
applicable treaty. Prospective foreign investors should consult their tax
advisers concerning the tax consequences to them of an investment in shares.

The Fund intends to qualify as a regulated investment company under federal
income tax law. If the Fund so qualifies and distributes each year to its
shareholders at least 90% of its investment company taxable income, the Fund
will not be required to pay federal income taxes on any income it distributes to
shareholders. If the Fund distributes less than an amount equal to the sum of
98% of its ordinary income and 98% of its capital gain net income, then the Fund
will be subject to a 4% excise tax on the undistributed amounts.

21
<PAGE> 23

The federal income tax discussion set forth above is for general information
only. Prospective investors should consult their own tax advisers regarding the
specific federal tax consequences of purchasing, holding and disposing of shares
of the Fund, as well as the effects of state, local and foreign tax law and any
proposed tax law changes.

22
<PAGE> 24

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information for the fiscal year ended August 31, 2000 has been audited by Ernst
& Young LLP, independent auditors, whose report, along with the Fund's most
recent financial statements, is included in the Statement of Additional
Information and may be obtained by shareholders without charge by calling the
telephone number on the back cover of this prospectus. The information for the
fiscal period July 26, 1999 to August 31, 1999 has been audited by
PricewaterhouseCoopers LLP. This information should be read in conjunction with
the financial statements and notes thereto included in the Statement of
Additional Information.

<TABLE>
<CAPTION>
Class A Shares Class B Shares
Year Ended July 26, 1999* Year Ended
August 31, 2000 to August 31, 1999 August 31, 2000
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period.... $11.17 $10.00 $11.16
------- ------ --------
Net Investment Income..................... (.16) (.01) (.28)
Net Realized and Unrealized Gain/Loss..... 15.80 1.18 15.71
------- ------ --------

Total from Investment Operations............ 15.64 1.17 15.43
------- ------ --------

Net Asset Value, End of the Period.......... $26.81 $11.17 $26.59
======= ====== ========

Total Return................................ 139.93%(a) 11.70%**(a) 138.17%(b)
Net Assets at End of the Period (In
millions)................................. $928.8 $49.7 $1,442.2
Ratio of Expenses to Average Net Assets..... 1.47% 1.45% 2.23%
Ratio of Net Investment Income to Average
Net Assets (b)............................ (1.14%) (1.03%) (1.89%)
Portfolio Turnover.......................... 167% 7%** 167%

<CAPTION>
Class B Shares Class C Shares
July 26, 1999* Year Ended July 26, 1999*
to August 31, 1999 August 31, 2000 to August 31, 1999
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period.... $10.00 $11.16 $10.00
------ ------- ------
Net Investment Income..................... (.02) (.27) (.02)
Net Realized and Unrealized Gain/Loss..... 1.18 15.70 1.18
------ ------- ------
Total from Investment Operations............ 1.16 15.43 1.16
------ ------- ------
Net Asset Value, End of the Period.......... $11.16 $26.59 $11.16
====== ======= ======
Total Return................................ 11.60%**(b) 138.17%(c) 11.60%**(c)
Net Assets at End of the Period (In
millions)................................. $164.3 $412.0 $28.0
Ratio of Expenses to Average Net Assets..... 2.21% 2.22% 2.21%
Ratio of Net Investment Income to Average
Net Assets (b)............................ (1.79%) (1.88%) (1.79%)
Portfolio Turnover.......................... 7%** 167% 7%**
</TABLE>

* Commencement of operations

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a CDSC of 1% may
be imposed on certain redemptions made within one year of purchase. If the
sale charges were included, total returns would be lower.

(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 5%,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. If the sales charges were
included, total returns would be lower.

(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 1%,
charged on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower.

23
<PAGE> 25

BOARD OF TRUSTEES
AND OFFICERS

BOARD OF TRUSTEES

<TABLE>
<S> <C>
J. Miles Branagan Richard F. Powers, III*
Jerry D. Choate Phillip B. Rooney
Linda Hutton Heagy Fernando Sisto+
R. Craig Kennedy Wayne W. Whalen*
Mitchell M. Merin* Suzanne H. Woolsey
Jack E. Nelson
</TABLE>

OFFICERS

Richard F. Powers, III*
President

Stephen L. Boyd*

Executive Vice President and Chief Investment Officer

A. Thomas Smith III*

Vice President and Secretary

John H. Zimmermann, III*

Vice President

Michael H. Santo*
Vice President

Richard A. Ciccarone*

Vice President

John R. Reynoldson*

Vice President

John L. Sullivan*

Vice President, Chief Financial Officer and Treasurer

* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.

+Retiring effective December 31, 2000.

FOR MORE INFORMATION

EXISTING SHAREHOLDERS OR PROSPECTIVE INVESTORS
Call your broker or (800) 341-2911
7:00 a.m. to 7:00 p.m. Central time Monday through Friday

DEALERS
For dealer information, selling agreements, wire orders, or
redemptions, call the Distributor at (800) 421-5666

TELECOMMUNICATIONS DEVICE FOR THE DEAF
For shareholder and dealer inquiries through Telecommunications Device for the
Deaf (TDD), call (800) 421-2833

FUNDINFO(R)
For automated telephone services, call (800) 847-2424

WEB SITE
www.vankampen.com

VAN KAMPEN TECHNOLOGY FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser
VAN KAMPEN ASSET MANAGEMENT INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Transfer Agent
VAN KAMPEN INVESTOR SERVICES INC.
PO Box 218256
Kansas City, MO 64121-8256
Attn: Van Kampen Technology Fund

Custodian
STATE STREET BANK AND TRUST COMPANY

225 Franklin Street, PO Box 1713

Boston, MA 02105-1713
Attn: Van Kampen Technology Fund

Legal Counsel
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606

Independent Auditors

ERNST & YOUNG LLP

233 South Wacker Drive

Chicago, IL 60606

<PAGE> 26

VAN KAMPEN
TECHNOLOGY FUND

Class A Shares

Class B Shares

Class C Shares

PROSPECTUS

DECEMBER 29, 2000

A Statement of Additional Information, which
contains more details about the Fund, is
incorporated by reference in its entirety into
this prospectus.

You will find additional information about the
Fund in its annual and semiannual reports to
shareholders. The annual report explains the
market conditions and investment strategies
affecting the Fund's performance during its
last fiscal year.

You can ask questions or obtain a free copy of
the Fund's reports or its Statement of
Additional Information by calling (800)
341-2911 from 7:00 a.m. to 7:00 p.m., Central
time, Monday through Friday.
Telecommunications Device for the Deaf users
may call (800) 421-2833. A free copy of the
Fund's reports can also be ordered from our
web site at www.vankampen.com.

Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC's Public
Reference Room in Washington, DC or on the
EDGAR database on the SEC's internet site
(http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room
may be obtained by calling the SEC at
1-202-942-8090. You can also request copies of
these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail
address ([email protected]), or by writing
the Public Reference Section of the SEC,
Washington, DC 20549-0102.

[VAN KAMPEN FUNDS LOGO]

TECH PRO 12/00
The Fund's Investment Company Act File No. is 811-9279. 65030

<PAGE> 27

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN TECHNOLOGY FUND

Van Kampen Technology Fund's (the "Fund") investment objective is to seek
capital appreciation. The Fund's investment adviser seeks to achieve the Fund's
investment objective by investing primarily in a portfolio of common stocks of
companies considered by the Fund's investment adviser to rely extensively on
technology, science or communications in their product development or
operations.

The Fund is organized as a diversified series of the Van Kampen Equity
Trust II, an open-end investment company (the "Trust").

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the
Fund's prospectus (the "Prospectus") dated as of the same date as this Statement
of Additional Information. This Statement of Additional Information does not
include all the information that a prospective investor should consider before
purchasing shares of the Fund. Investors should obtain and read the Prospectus
prior to purchasing shares of the Fund. A Prospectus may be obtained without
charge by writing or calling Van Kampen Funds Inc. at 1 Parkview Plaza, PO Box
5555, Oakbrook Terrace, Illinois 60181-5555 or (800) 341-2911 (or (800) 421-2833
for the hearing impaired).

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

TABLE OF CONTENTS
---------------------------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective, Policies and Risks.................... B-4
Options, Futures Contracts and Related Options.............. B-7
Investment Restrictions..................................... B-14
Trustees and Officers....................................... B-15
Investment Advisory Agreement............................... B-25
Other Agreements............................................ B-26
Distribution and Service.................................... B-27
Transfer Agent.............................................. B-31
Portfolio Transactions and Brokerage Allocation............. B-31
Shareholder Services........................................ B-33
Redemption of Shares........................................ B-36
Contingent Deferred Sales Charge-Class A.................... B-36
Waiver of Class B and Class C Contingent Deferred Sales
Charges................................................... B-36
Taxation.................................................... B-38
Fund Performance............................................ B-43
Other Information........................................... B-46
Report of Independent Auditors.............................. F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-11
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED DECEMBER 29, 2000.

<PAGE> 28

GENERAL INFORMATION

The Fund is organized as a series of the Trust. The Trust is a business
trust organized under the laws of the State of Delaware as of April 1, 1999.

Van Kampen Asset Management Inc. (the "Adviser" or "Asset Management"), Van
Kampen Funds Inc. (the "Distributor"), and Van Kampen Investor Services Inc.
("Investor Services") are wholly owned subsidiaries of Van Kampen Investments
Inc. ("Van Kampen Investments"), which is a wholly owned subsidiary of Morgan
Stanley Dean Witter & Co. ("Morgan Stanley Dean Witter"). The principal office
of the Trust, the Fund, the Adviser, the Distributor and Van Kampen Investments
is located at 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555. The
principal office of Investor Services is located at 7501 Tiffany Springs
Parkway, Kansas City, Missouri 64153.

Morgan Stanley Dean Witter is a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.

The authorized capitalization of the Trust consists of an unlimited number
of shares of beneficial interest, par value $0.01 per share, which can be
divided into series, such as the Fund, and further subdivided into classes of
each series. Each share represents an equal proportionate interest in the assets
of the series with each other share in such series and no interest in any other
series. No series is subject to the liabilities of any other series. The
Declaration of Trust provides that shareholders are not liable for any
liabilities of the Trust or any of its series, requires inclusion of a clause to
that effect in every agreement entered into by the Trust or any of its series
and indemnifies shareholders against any such liability.

The Fund currently offers three classes of shares, designated Class A
Shares, Class B Shares and Class C Shares. Other classes may be established from
time to time in accordance with provisions of the Declaration of Trust. Each
class of shares of the Fund generally is identical in all respects except that
each class bears certain distribution expenses and has exclusive voting rights
with respect to its distribution fee. Shares of the Trust entitle their holders
to one vote per share; however, separate votes are taken by each series on
matters affecting an individual series and separate votes are taken by each
class of a series on matters affecting an individual class of such series. For
example, a change in investment policy for a series would be voted upon by
shareholders of only the series involved and a change in the distribution fee
for a class of a series would be voted upon by shareholders of only the class of
such series involved. Except as otherwise described in the Prospectus or herein,
shares do not have cumulative voting rights, preemptive rights or any
conversion, subscription or exchange rights.

The Trust does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of two-thirds of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
Investment Company Act of 1940, as amended (the "1940 Act"), or rules or
regulations promulgated by the Securities and Exchange Commission ("SEC").

In the event of liquidation, each of the shares of the Fund is entitled to
its portion of all of the Fund's net assets after all debts and expenses of the
Fund have been paid. Since

B-2
<PAGE> 29

Class B Shares and Class C Shares have higher distribution fees and transfer
agency costs, the liquidation proceeds to holders of Class B Shares and Class C
Shares are likely to be less than the liquidation proceeds to holders of Class A
Shares.

The Trustees may amend the Declaration of Trust (including with respect to
any series) in any manner without shareholder approval, except that the Trustees
may not adopt any amendment adversely affecting the rights of shareholders of
any series without approval by a majority of the shares of each affected series
outstanding and entitled to vote (or such higher vote as may be required by the
1940 Act or other applicable law) and except that the Trustees cannot amend the
Declaration of Trust to impose any liability on shareholders, make any
assessment on shares or impose liabilities on the Trustees without approval from
each affected shareholder or Trustee, as the case may be.

Statements contained in this Statement of Additional Information as to the
contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms a part, each such statement being
qualified in all respects by such reference.

As of December 1, 2000, no person was known by the Fund to own beneficially
or to hold of record 5% or more of the outstanding Class A Shares, Class B
Shares or Class C Shares of the Fund, except as follows:

<TABLE>
<CAPTION>
Amount of
Ownership at
December 1, Class Percentage
Name and Address of Holder 2000 of Shares Ownership
-------------------------- ------------ --------- ----------
<S> <C> <C> <C>
Van Kampen Trust Company........................ 4,529,781 A 12.01%
2800 Post Oak Blvd. 6,156,488 B 10.96%
Houston, TX 77056
Edward Jones & Co............................... 11,945,192 A 1.66%
Attn: Mutual Funds Shareholder Accounting 2,958,923 B 5.27%
201 Progress Pkwy 1,117,917 C 6.93%
Maryland Hts, MO 63043-3009
MLPF&S For the Sole Benefit of its Customers.... 2,919,802 A 7.74%
Attn: Fund Administration 97FW6 1,738,138 C 10.77%
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>

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

Van Kampen Trust Company acts as custodian for certain employee benefit
plans
and individual retirement accounts.

B-3
<PAGE> 30

INVESTMENT OBJECTIVE, POLICIES AND RISKS

The following disclosure supplements the disclosure set forth under the
same caption in the Prospectus and does not, standing alone, present a complete
or accurate explanation of the matters disclosed. Readers must refer also to
this caption in the Prospectus for a complete presentation of the matters
disclosed below.

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with broker-dealers, banks and
other financial institutions in order to earn a return on temporarily available
cash. A repurchase agreement is a short-term investment in which the purchaser
(i.e., the Fund) acquires ownership of a security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the holding period. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund may enter into repurchase
agreements with broker-dealers, banks and other financial institutions deemed to
be creditworthy by the Adviser under guidelines approved by the Fund's Board of
Trustees. The Fund will not invest in repurchase agreements maturing in more
than seven days if any such investment, together with any other illiquid
securities held by the Fund, would exceed the Fund's limitation on illiquid
securities described herein. The Fund does not bear the risk of a decline in the
value of the underlying security unless the seller defaults under its repurchase
obligation. In the event of the bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses including: (a) possible decline in the value of
the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible lack of access to income on the underlying security
during this period; and (c) expenses of enforcing its rights.

For the purpose of investing in repurchase agreements, the Adviser may
aggregate the cash that certain funds advised or subadvised by the Adviser or
certain of its affiliates would otherwise invest separately into a joint
account. The cash in the joint account is then invested in repurchase agreements
and the funds that contributed to the joint account share pro rata in the net
revenue generated. The Adviser believes that the joint account produces
efficiencies and economies of scale that may contribute to reduced transaction
costs, higher returns, higher quality investments and greater diversity of
investments for the Fund than would be available to the Fund investing
separately. The manner in which the joint account is managed is subject to
conditions set forth in an exemptive order from the SEC permitting this
practice, which conditions are designed to ensure the fair administration of the
joint account and to protect the amounts in that account.

Repurchase agreements are fully collateralized by the underlying securities
and are considered to be loans under the 1940 Act. The Fund pays for such
securities only upon physical delivery or evidence of book entry transfer to the
account of a custodian or bank acting as agent. The seller under a repurchase
agreement will be required to maintain the value of the underlying securities
marked-to-market daily at not less than the repurchase price. The underlying
securities (normally securities of the U.S. government, its agencies or
instrumentalities) may have maturity dates exceeding one year.

B-4
<PAGE> 31

PORTFOLIO TURNOVER

The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Fund's portfolio securities during such fiscal year. The
turnover rate may vary greatly from year to year as well as within a year.

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of longer than seven days and generally includes
securities that are restricted from sale to the public without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The sale of such
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of liquid
securities trading on national securities exchanges or in the over-the-counter
markets. Restricted securities are often purchased at a discount from the market
price of unrestricted securities of the same issuer reflecting the fact that
such securities may not be readily marketable without some time delay.
Investments in securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Adviser in
accordance with procedures approved by the Fund's Board of Trustees. Ordinarily,
the Fund would invest in restricted securities only when it receives the
issuer's commitment to register the securities without expense to the Fund.
However, registration and underwriting expenses (which typically range from 7%
to 15% of the gross proceeds of the securities sold) may be paid by the Fund.
Restricted securities which can be offered and sold to qualified institutional
buyers under Rule 144A under the 1933 Act ("144A Securities") and are determined
to be liquid under guidelines adopted by and subject to the supervision of the
Fund's Board of Trustees are not subject to the limitation on illiquid
securities. Such 144A Securities are subject to monitoring and may become
illiquid to the extent qualified institutional buyers become, for a time,
uninterested in purchasing such securities. Factors used to determine whether
144A Securities are liquid include, among other things, a security's trading
history, the availability of reliable pricing information, the number of dealers
making quotes or making a market in such security and the number of potential
purchasers in the market for such security. For purposes hereof, investments by
the Fund in securities of other investment companies will not be considered
investments in restricted securities to the extent permitted by (i) the 1940
Act, as amended from time to time, (ii) the rules and regulations promulgated by
the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption
or other relief (such as "no action" letters issued by the staff of the SEC
interpreting or providing guidance on the 1940 Act or regulations thereunder)
from the provisions of the 1940 Act, as amended from time to time.

CONVERTIBLE SECURITIES

The Fund's investments in convertible securities may include securities
with enhanced convertible features or "equity-linked" features. These securities
come in many forms and may include features, among others, such as the
following: (i) may be issued by the issuer of the underlying equity security on
its own securities or securities it holds of another company or be issued by a
third party (typically a brokerage firm or other financial entity)

B-5
<PAGE> 32

on a security of another company, (ii) may convert into equity securities, such
as common stock, or may be redeemed for cash or some combination of cash and the
linked security at a value based upon the value of the underlying equity
security, (iii) may have various conversion features prior to maturity at the
option of the holder or the issuer or both, (iv) may limit the appreciation
value with caps or collars of the value of underlying equity security and (v)
may have fixed, variable or no interest payments during the life of the security
which reflect the actual or a structured return relative to the underlying
dividends of the linked equity security. Generally these securities are designed
to give investors enhanced yield opportunities to the equity securities of an
issuer, but these securities may involve a limited appreciation potential,
downside exposure, or a finite time in which to capture the yield advantage. For
example, certain securities may provide a higher current dividend income than
the dividend income on the underlying security while capping participation in
the capital appreciation of such security. Other securities may involve
arrangements with no interest or dividend payments made until maturity of the
security or an enhanced principal amount received at maturity based on the yield
and value of the underlying equity security during the security's term or at
maturity. Besides enhanced yield opportunities, another advantage of using such
securities is that they may be used for portfolio management or hedging purposes
to reduce the risk of investing in a more volatile underlying equity security.
There may be additional types of convertible securities with features not
specifically referred to herein in which the Fund may invest consistent with its
investment objective and policies.

Investments in enhanced convertible or equity-linked securities may subject
the Fund to additional risks not ordinarily associated with investments in
traditional convertible securities. Particularly when such securities are issued
by a third party on an underlying linked security of another company, the Fund
is subject to risks if the underlying security underperforms or the issuer
defaults on the payment of the dividend or the underlying security at maturity.
Additionally, the trading market for certain securities may be less liquid than
for other convertible securities making it difficult for the Fund to dispose of
a particular security in a timely manner, and reduced liquidity in the secondary
market for any such securities may make it more difficult to obtain market
quotations for valuing the Fund's portfolio.

WARRANTS

Warrants are in effect longer-term call options. They give the holder the
right to purchase a given number of shares of a particular company at specified
prices within certain periods of time. The purchaser of a warrant expects that
the market price of the security will exceed the purchase price of the warrant
plus the exercise price of the warrant, thus giving him a profit. Of course,
since the market price may never exceed the exercise price before the expiration
date of the warrant, the purchaser of the warrant risks the loss of the entire
purchase price of the warrant. Warrants generally trade in the open market and
may be sold rather than exercised. Warrants are sometimes sold in unit form with
other securities of an issuer. Units of warrants and common stock may be
employed in financing young, unseasoned companies. The purchase price of a
warrant varies with the exercise price of the warrant, the current market value
of the underlying security, the life of the warrant and various other investment
factors.

B-6
<PAGE> 33

SECURITIES OF FOREIGN ISSUERS

The Fund may purchase foreign securities in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs") or other securities
representing underlying shares of foreign companies. These securities are not
necessarily denominated in the same currency as the underlying securities but
generally are denominated in the currency of the market in which they are
traded. ADRs are receipts typically issued by an American bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. ADRs are publicly traded on exchanges or over-the-counter in the
United States and are issued through "sponsored" or "unsponsored" arrangements.
In a sponsored ADR arrangement, the foreign issuer assumes the obligation to pay
some or all of the depositary's transaction fees, whereas under an unsponsored
arrangement, the foreign issuer assumes no obligations and the depositary's
transaction fees are paid by the ADR holders. In addition, less information
generally is available for an unsponsored ADR than for a sponsored ADR and
financial information about a company may not be as reliable for an unsponsored
ADR as it is for a sponsored ADR. The Fund may invest in ADRs through both
sponsored and unsponsored arrangements. EDRs are receipts issued in Europe by
banks or depositaries which evidence similar ownership arrangement.

OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS

The Fund may, but is not required to, use various investment strategies as
described below to earn income, facilitate portfolio management and mitigate
risks. Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur. Although the Fund's
Adviser seeks to use such transactions to further the Fund's investment
objective, no assurance can be given that the use of these transactions will
achieve these results.

SELLING CALL AND PUT OPTIONS

Purpose. The principal reason for selling options is to obtain, through
receipt of premiums, a greater current return than would be realized on the
underlying securities alone. Such current return could be expected to fluctuate
because premiums earned from an option selling program and dividend or interest
income yields on portfolio securities vary as economic and market conditions
change. Selling options on portfolio securities is likely to result in a higher
portfolio turnover rate.

Selling Options. The purchaser of a call option pays a premium to the
seller (i.e., the writer) for the right to buy the underlying security from the
seller at a specified price during a certain period. The Fund would write call
options only on a covered basis or for cross-hedging purposes. A call option is
covered if, at all times during the option period, the Fund would own or have
the right to acquire securities of the type that it would be obligated to
deliver if any outstanding option were exercised. An option is for cross-hedging
purposes if it is not covered by the security subject to the option, but is
designed to provide a hedge against another security which the Fund owns or has
the right to acquire. In such circumstances, the Fund collateralizes the option
by maintaining in a segregated account cash or liquid securities in an amount
not less than the market value of the underlying security, marked to market
daily, while the option is outstanding.

The purchaser of a put option pays a premium to the seller (i.e., the
writer) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would sell put options only on
a secured basis, which means that, at all

B-7
<PAGE> 34

times during the option period, the Fund would maintain in a segregated account
cash or liquid securities in an amount of not less than the exercise price of
the option, or would hold a put on the same underlying security at an equal or
greater exercise price.

Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously sold by the Fund. The Fund would realize a
gain (loss) if the premium plus commission paid in the closing purchase
transaction is lesser (greater) than the premium it received on the sale of the
option. The Fund would also realize a gain if an option it has written lapses
unexercised.

The Fund could sell options that are listed on an exchange as well as
options which are privately negotiated in over-the-counter transactions. The
Fund could close out its position as a seller of an option only if a liquid
secondary market exists for options of that series, but there is no assurance
that such a market will exist, particularly in the case of over-the-counter
options, since they can be closed out only with the other party to the
transaction. Alternatively, the Fund could purchase an offsetting option, which
would not close out its position as a seller, but would provide an asset of
equal value to its obligation under the option sold. If the Fund is not able to
enter into a closing purchase transaction or to purchase an offsetting option
with respect to an option it has sold, it will be required to maintain the
securities subject to the call or the collateral securing the option until a
closing purchase transaction can be entered into (or the option is exercised or
expires) even though it might not be advantageous to do so. The staff of the SEC
currently takes the position that, in general, over-the-counter options on
securities purchased by the Fund, and portfolio securities "covering" the amount
of the Fund's obligation pursuant to the over-the-counter option sold by it (the
cost of the sell-back plus the in-the-money amount, if any) are illiquid and
subject to the Fund's limitation on illiquid securities as described herein.

Risks of Writing Options. By selling a call option, the Fund loses the
potential for gain on the underlying security above the exercise price while the
option is outstanding; by selling a put option the Fund might become obligated
to purchase the underlying security at an exercise price that exceeds the then
current market price.

PURCHASING CALL AND PUT OPTIONS

The Fund could purchase call options to protect against anticipated
increases in the prices of securities it wishes to acquire. Alternatively, call
options could be purchased for capital appreciation. Since the premium paid for
a call option is typically a small fraction of the price of the underlying
security, a given amount of funds will purchase call options covering a much
larger quantity of such security than could be purchased directly. By purchasing
call options, the Fund could benefit from any significant increase in the price
of the underlying security to a greater extent than had it invested the same
amount in the security directly. However, because of the very high volatility of
option premiums, the Fund would bear a significant risk of losing the entire
premium if the price of the underlying security did not rise sufficiently, or if
it did not do so before the option expired.

B-8
<PAGE> 35

Put options may be purchased to protect against anticipated declines in the
market value of either specific portfolio securities or of the Fund's assets
generally. Alternatively, put options may be purchased for capital appreciation
in anticipation of a price decline in the underlying security and a
corresponding increase in the value of the put option. The purchase of put
options for capital appreciation involves the same significant risk of loss as
described above for call options.

In any case, the purchase of options for capital appreciation would
increase the Fund's volatility by increasing the impact of changes in the market
price of the underlying securities on the Fund's net asset value.

OPTIONS ON STOCK INDICES

Options on stock indices are similar to options on stock, but the delivery
requirements are different. Instead of giving the right to take or make delivery
of stock at a specified price, an option on a stock index gives the holder the
right to receive an amount of cash which amount will depend upon the closing
level of the stock index upon which the option is based being greater than (in
the case of a call) or less than (in the case of a put) the exercise price of
the option. The amount of cash received will be the difference between the
closing price of the index and the exercise price of the option, multiplied by a
specified dollar multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount.

Some stock index options are based on a broad market index such as the
Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower index such as the Standard & Poor's 100. Indices are also based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index. A stock index fluctuates with changes in the
market values of the stocks included in the index. Options are currently traded
on several exchanges.

Gain or loss to the Fund on transactions in stock index options will depend
on price movements in the stock market generally (or in a particular industry or
segment of the market) rather than price movements of individual securities. As
with stock options, the Fund may offset its position in stock index options
prior to expiration by entering into a closing transaction on an exchange, or it
may let the option expire unexercised.

FUTURES CONTRACTS

The Fund may engage in transactions involving futures contracts and related
options in accordance with the rules and interpretations of the Commodity
Futures Trading Commission ("CFTC") under which the Fund would be exempt from
registration as a "commodity pool."

A stock index futures contract is an agreement pursuant to which a party
agrees to take or make delivery of an amount of cash equal to a specified dollar
amount multiplied by the difference between the stock index value at a specified
time and the price at which the futures contract originally was struck. No
physical delivery of the underlying stocks in the index is made.

Currently, stock index futures contracts can be purchased with respect to
several indices on various exchanges. Differences in the stocks included in the
indices may result

B-9
<PAGE> 36

in differences in correlation of the futures contracts with movements in the
value of the securities being hedged.

The Fund also may invest in foreign stock index futures traded outside the
United States which involve additional risks including fluctuations in foreign
exchange rates, foreign currency exchange controls, political and economic
instability, differences in financial reporting and securities regulation and
trading, and foreign taxation issues.

Initial and Variation Margin. In contrast to the purchase or sale of a
security, no price is paid or received upon the purchase or sale of a futures
contract. Initially, the Fund is required to deposit an amount of cash or liquid
securities equal to a percentage (which will normally range between 2% and 10%)
of the contract amount with either a futures commission merchant pursuant to
rules and regulations promulgated under the 1940 Act or with its custodian in an
account in the broker's name. This amount is known as initial margin. The nature
of initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transaction. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract, which is returned to the Fund upon termination of the futures
contract and satisfaction of its contractual obligations. Subsequent payments to
and from the initial margin account, called variation margin, are made on a
daily basis as the price of the underlying securities or index fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as marking to market.

For example, when the Fund purchases a futures contract and the price of
the underlying security or index rises, that position increases in value, and
the Fund receives a variation margin payment equal to that increase in value.
Conversely, where the Fund purchases a futures contract and the value of the
underlying security or index declines, the position is less valuable, and the
Fund is required to make a variation margin payment.

At any time prior to expiration of the futures contract, the Fund may elect
to terminate the position by taking an opposite position. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain.

Futures Strategies. When the Fund anticipates a significant market or
market sector advance, the purchase of a futures contract affords a hedge
against not participating in the advance at a time when the Fund is otherwise
fully invested ("anticipatory hedge"). Such purchase of a futures contract would
serve as a temporary substitute for the purchase of individual securities, which
may be purchased in an orderly fashion once the market has stabilized. As
individual securities are purchased, an equivalent amount of futures contracts
could be terminated by offsetting sales. The Fund may sell futures contracts in
anticipation of or in a general market or market sector decline that may
adversely affect the market value of the Fund's securities ("defensive hedge").
To the extent that the Fund's portfolio of securities changes in value in
correlation with the underlying security or index, the sale of futures contracts
would substantially reduce the risk to the Fund of a market decline and, by so
doing, provides an alternative to the liquidation of securities positions in the
Fund. Ordinarily transaction costs associated with futures transactions are
lower than transaction costs that would be incurred in the purchase and sale of
the underlying securities.

B-10
<PAGE> 37

Special Risks Associated with Futures Transactions. There are several risks
connected with the use of futures contracts. These include the risk of imperfect
correlation between movements in the price of the futures contracts and of the
underlying securities or index; the risk of market distortion; the risk of
illiquidity; and the risk of error in anticipating price movement.

There may be an imperfect correlation (or no correlation) between movements
in the price of the futures contracts and of the securities being hedged. The
risk of imperfect correlation increases as the composition of the securities
being hedged diverges from the securities upon which the futures contract is
based. If the price of the futures contract moves less than the price of the
securities being hedged, the hedge will not be fully effective. To compensate
for the imperfect correlation, the Fund could buy or sell futures contracts in a
greater dollar amount than the dollar amount of securities being hedged if the
historical volatility of the securities being hedged is greater than the
historical volatility of the securities underlying the futures contract.
Conversely, the Fund could buy or sell futures contracts in a lesser dollar
amount than the dollar amount of securities being hedged if the historical
volatility of the securities being hedged is less than the historical volatility
of the securities underlying the futures contracts. It is also possible that the
value of futures contracts held by the Fund could decline at the same time as
portfolio securities being hedged; if this occurred, the Fund would lose money
on the futures contract in addition to suffering a decline in value in the
portfolio securities being hedged.

There is also the risk that the price of futures contracts may not
correlate perfectly with movements in the securities or index underlying the
futures contract due to certain market distortions. First, all participants in
the futures market are subject to margin depository and maintenance
requirements. Rather than meet additional margin depository requirements,
investors may close futures contracts through offsetting transactions, which
could distort the normal relationship between the futures market and the
securities or index underlying the futures contract. Second, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary price
distortions. Due to the possibility of price distortion in the futures markets
and because of the imperfect correlation between movements in futures contracts
and movements in the securities underlying them, a correct forecast of general
market trends by the Adviser may still not result in a successful hedging
transaction.

There is also the risk that futures markets may not be sufficiently liquid.
Futures contracts may be closed out only on an exchange or board of trade that
provides a market for such futures contracts. Although the Fund intends to
purchase or sell futures only on exchanges and boards of trade where there
appears to be an active secondary market, there can be no assurance that an
active secondary market will exist for any particular contract or at any
particular time. In the event of such illiquidity, it might not be possible to
close a futures position and, in the event of adverse price movement, the Fund
would continue to be required to make daily payments of variation margin. Since
the securities being hedged would not be sold until the related futures contract
is sold, an increase, if any, in the price of the securities may to some extent
offset losses on the related futures contract. In such event, the Fund would
lose the benefit of the appreciation in value of the securities.

Successful use of futures is also subject to the Adviser's ability to
correctly predict the direction of movements in the market. For example, if the
Fund hedges against a decline

B-11
<PAGE> 38

in the market, and market prices instead advance, the Fund will lose part or all
of the benefit of the increase in value of its securities holdings because it
will have offsetting losses in futures contracts. In such cases, if the Fund has
insufficient cash, it may have to sell portfolio securities at a time when it is
disadvantageous to do so in order to meet the daily variation margin.

Although the Fund intends to enter into futures contracts only if there is
an active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time. Most U.S. futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. It is possible that futures contract prices would move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event, and in the event of
adverse price movements, the Fund would be required to make daily cash payments
of variation margin. In such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. However, as described above, there is no
guarantee that the price of the securities being hedged will, in fact, correlate
with the price movements in a futures contract and thus provide an offset to
losses on the futures contract.

The Fund will not enter into futures contracts or options transactions
(except for closing transactions) other than for bona fide hedging purposes if,
immediately thereafter, the sum of its initial margin and premiums on open
futures contracts and options exceed 5% of the fair market value of the Fund's
assets; however, in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. In order to prevent leverage in connection with the purchase of
futures contracts by the Fund, an amount of cash or liquid securities equal to
the market value of the obligation under the futures contracts (less any related
margin deposits) will be maintained in a segregated account with the custodian.

OPTIONS ON FUTURES CONTRACTS

The Fund could also purchase and write options on futures contracts. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option period. As a writer of an option on
a futures contract, the Fund would be subject to initial margin and maintenance
requirements similar to those applicable to futures contracts. In addition, net
option premiums received by the Fund are required to be included as initial
margin deposits. When an option on a futures contract is exercised, delivery of
the futures position is accompanied by cash representing the difference between
the current market price of the futures contract and the exercise price of the
option. The Fund could purchase put options on futures contracts in lieu of, and
for the same purposes as, the sale of a futures contract; at the same time, it
could write put options at a lower strike price (a "put bear spread") to offset
part of the cost of the strategy to the Fund. The purchase of call options on
futures contracts is intended to serve the same purpose as the actual purchase
of the futures contracts.

Risks of Transactions in Options on Futures Contracts. In addition to the
risks described above which apply to all options transactions, there are several
special risks

B-12
<PAGE> 39

relating to options on futures. The Adviser will not purchase options on futures
on any exchange unless in the Adviser's opinion, a liquid secondary exchange
market for such options exists. Compared to the use of futures, the purchase of
options on futures involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the options (plus transaction costs).
However, there may be circumstances, such as when there is no movement in the
price of the underlying security or index, when the use of an option on a future
would result in a loss to the Fund when the use of a future would not.

ADDITIONAL RISKS OF OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security or futures
contract (whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether such
options are written on the same or different exchanges or are held or written on
one or more accounts or through one or more brokers). Option positions of all
investment companies advised by the Adviser are combined for purposes of these
limits. An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
These position limits may restrict the number of listed options which the Fund
may write.

In the event of the bankruptcy of a broker through which the Fund engages
in transactions in options, futures or related options, the Fund could
experience delays or losses in liquidating open positions purchased or incur a
loss of all or part of its margin deposits with the broker. Transactions are
entered into by the Fund only with brokers or financial institutions deemed
creditworthy by the Adviser.

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

Many derivative transactions, in addition to other requirements, require
that the Fund segregate cash and liquid securities to the extent the Fund's
obligations are not otherwise "covered" as described above. In general, either
the full amount of any obligation by the Fund to pay or deliver securities or
assets must be covered at all times by the securities, instruments or currency
required to be delivered (or securities convertible into the needed securities
without additional consideration), or, subject to applicable regulatory
restrictions, an amount of cash or liquid securities at least equal to the
current amount of the obligation must be segregated. The segregated assets
cannot be sold or transferred unless equivalent assets are substituted in their
place or it is no longer necessary to segregate them. In the case of a futures
contract or an option thereon, the Fund must deposit initial margin and possible
daily variation margin in addition to segregating cash and liquid securities
sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. Derivative transactions may be covered by other means when
consistent with applicable regulatory policies. The Fund may also enter into
offsetting transactions so that its combined position, coupled with any
segregated cash and liquid securities, equals its net outstanding obligation.

B-13
<PAGE> 40

INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment restrictions
which may not be changed without shareholder approval by the vote of a majority
of its outstanding voting securities, which is defined by the 1940 Act as the
lesser of (i) 67% or more of the Fund's voting securities present at a meeting,
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy; or (ii) more than 50% of the Fund's
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities. With respect to the limitations on illiquid securities and
borrowings, the percentage limitations apply at the time of purchase and on an
ongoing basis. These restrictions provide that the Fund shall not:

1. As to 75% of the Fund's total assets, invest more than 5% of the value
of its total assets in the securities of any one issuer (not including
federal government securities) or acquire more than 10% of any class of
the outstanding voting securities of any one issuer, except that the
Fund may purchase securities of other investment companies to the
extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940
Act, as amended from time to time or (iii) an exemption or other relief
from the provisions of the 1940 Act, as amended from time to time.

2. Issue senior securities and shall not borrow money except for temporary
purposes and in an amount not exceeding 5% of the Fund's total assets.
Notwithstanding the foregoing, the Fund may enter into transactions in
options, futures contracts and related options and may make margin
deposits and payments in connection therewith.

3. Underwrite securities of other issuers, except that the Fund may
acquire restricted securities and other securities which, if sold,
might make the Fund an underwriter under federal securities laws.

4. Make loans of money or property to any person, except (i) to the extent
the securities in which the Fund may invest are considered to be loans,
(ii) through the loan of portfolio securities, and (iii) to the extent
that the Fund may lend money or property in connection with maintenance
of the value of, or the Fund's interest with respect to, the securities
owned by the Fund.

5. Invest directly in real estate interests, although the Fund may invest
indirectly through media such as real estate investment trusts.

6. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related
options.

7. Invest in securities issued by other investment companies except as
part of a merger, reorganization or other acquisition and except to the
extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940
Act, as amended from time to time, or (iii) an exemption or other
relief from the provisions of the 1940 Act, as amended from time to
time.

B-14
<PAGE> 41

TRUSTEES AND OFFICERS

The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and officers of the Fund and
executive officers of the Fund's investment adviser and their principal
occupations for the last five years and their affiliations, if any, with Van
Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Investment
Advisory Corp. ("Advisory Corp."), Van Kampen Asset Management Inc. ("Asset
Management"), Van Kampen Funds Inc. (the "Distributor"), Van Kampen Management
Inc., Van Kampen Advisors Inc., Van Kampen Insurance Agency of Illinois Inc.,
Van Kampen Insurance Agency of Texas Inc., Van Kampen System Inc., Van Kampen
Recordkeeping Services Inc., American Capital Contractual Services, Inc., Van
Kampen Trust Company, Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc. ("Investor Services"). Advisory Corp. and Asset Management sometimes are
referred to herein collectively as the "Advisers". For purposes hereof, the term
"Fund Complex" includes each of the open-end investment companies advised by the
Advisers (excluding Van Kampen Exchange Fund).

TRUSTEES

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of
1632 Morning Mountain Road the funds in the Fund Complex. Co-founder,
Raleigh, NC 27614 and prior to August 1996, Chairman, Chief
Date of Birth: 07/14/32 Executive Officer and President, MDT
Age: 68 Corporation (now known as Getinge/Castle,
Inc., a subsidiary of Getinge Industrier AB),
a company which develops, manufactures,
markets and services medical and scientific
equipment.

Jerry D. Choate........................... Director of Amgen Inc., a biotechnological
53 Monarch Bay Drive company, and Director of Valero Energy
Dana Point, CA 92629 Corporation, an independent refining company.
Date of Birth: 09/16/38 Trustee/Director of each of the funds in the
Age: 62 Fund Complex. Prior to January 1999, Chairman
and Chief Executive Officer of The Allstate
Corporation ("Allstate") and Allstate
Insurance Company. Prior to January 1995,
President and Chief Executive Officer of
Allstate. Prior to August 1994, various
management positions at Allstate.

Linda Hutton Heagy........................ Managing Partner of Heidrick & Struggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
Age: 52 President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of
</TABLE>

B-15
<PAGE> 42

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Chicago Hospitals Board, Vice Chair of the
Board of The YMCA of Metropolitan Chicago and
a member of the Women's Board of the
University of Chicago. Prior to 1996, Trustee
of The International House Board, a
fellowship and housing organization for
international graduate students.

R. Craig Kennedy.......................... President and Director, German Marshall Fund
11 DuPont Circle, N.W. of the United States, an independent U.S.
Washington, D.C. 20016 foundation created to deepen understanding,
Date of Birth: 02/29/52 promote collaboration and stimulate exchanges
Age: 48 of practical experience between Americans and
Europeans. Trustee/Director of each of the
funds in the Fund Complex. Formerly, advisor
to the Dennis Trading Group Inc., a managed
futures and option company that invests money
for individuals and institutions. Prior to
1992, President and Chief Executive Officer,
Director and Member of the Investment
Committee of the Joyce Foundation, a private
foundation.

Mitchell M. Merin*........................ President and Chief Operating Officer of
Two World Trade Center Asset Management of Morgan Stanley Dean
66th Floor Witter since December 1998. President and
New York, NY 10048 Director since April 1997 and Chief Executive
Date of Birth: 08/13/53 Officer since June 1998 of Morgan Stanley
Age: 47 Dean Witter Advisors Inc. and Morgan Stanley
Dean Witter Services Company Inc. Chairman,
Chief Executive Officer and Director of
Morgan Stanley Dean Witter Distributors Inc.
since June 1998. Chairman and Chief Executive
Officer since June 1998, and Director since
January 1998, of Morgan Stanley Dean Witter
Trust FSB. Director of various Morgan Stanley
Dean Witter subsidiaries. President of the
Morgan Stanley Dean Witter Funds since May
1999. Trustee/Director of each of the funds
in the Fund Complex. Previously Chief
Strategic Officer of Morgan Stanley Dean
Witter Advisors Inc. and Morgan Stanley Dean
Witter Services Company Inc. and Executive
Vice President of Morgan Stanley Dean Witter
Distributors Inc. April 1997-June 1998, Vice
President of the Morgan Stanley Dean Witter
Funds May 1997-April 1999, and Executive Vice
President of Dean Witter, Discover & Co.
</TABLE>

B-16
<PAGE> 43

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President and owner, Nelson Investment
423 Country Club Drive Planning Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser in
Date of Birth: 02/13/36 the State of Florida. President and owner,
Age: 64 Nelson Ivest Brokerage Services Inc., a
member of the National Association of
Securities Dealers, Inc. and Securities
Investors Protection Corp. Trustee/Director
of each of the funds in the Fund Complex.

Richard F. Powers, III*................... Chairman, President and Chief Executive
1 Parkview Plaza Officer of Van Kampen Investments. Chairman,
P.O. Box 5555 Director and Chief Executive Officer of the
Oakbrook Terrace, IL 60181-5555 Advisers, the Distributor, Van Kampen
Date of Birth: 02/02/46 Advisors Inc. and Van Kampen Management Inc.
Age: 54 Director and officer of certain other
subsidiaries of Van Kampen Investments. Chief
Sales and Marketing Officer of Morgan Stanley
Dean Witter Asset Management Inc.
Trustee/Director and President of each of the
funds in the Fund Complex. Trustee, President
and Chairman of the Board of other investment
companies advised by the Advisers and their
affiliates, and Chief Executive Officer of
Van Kampen Exchange Fund. Prior to May 1998,
Executive Vice President and Director of
Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and
Dean Witter Realty. Prior to 1996, Director
of Dean Witter Reynolds Inc.

Phillip B. Rooney......................... Vice Chairman (since April 1997) and Director
One ServiceMaster Way (since 1994) of The ServiceMaster Company, a
Downers Grove, IL 60515 business and consumer services company.
Date of Birth: 07/08/44 Director of Illinois Tool Works, Inc., a
Age: 56 manufacturing company and the Urban Shopping
Centers Inc., a retail mall management
company. Trustee, University of Notre Dame.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of
Stone Smurfit Container Corp., a paper
manufacturing company. From May 1996 through
February 1997 he was President, Chief
Executive Officer and Chief Operating Officer
of Waste Management, Inc., an environmental
services company, and from November 1984
through May 1996 he was President and Chief
Operating Officer of Waste Management, Inc.
</TABLE>

B-17
<PAGE> 44

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Fernando Sisto+........................... Professor Emeritus. Prior to August 1996, a
155 Hickory Lane George M. Bond Chaired Professor with Stevens
Closter, NJ 07624 Institute of Technology, and prior to 1995,
Date of Birth: 08/02/24 Dean of the Graduate School, Stevens
Age: 76 Institute of Technology. Director, Dynalysis
of Princeton, a firm engaged in engineering
research. Trustee/Director of each of the
funds in the Fund Complex.

Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex and
Date of Birth: 08/22/39 other investment companies advised by the
Age: 61 Advisers. Trustee/ Director of each of the
funds in the Fund Complex, and
Trustee/Managing General Partner of other
investment companies advised by the Advisers.

Suzanne H. Woolsey........................ Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution, since 1993. Director of
Date of Birth: 12/27/41 Neurogen Corporation, a pharmaceutical
Age: 59 company, since January 1998. Director of the
German Marshall Fund of the United States,
Trustee of Colorado College, and Vice Chair
of the Board of the Council for Excellence in
Government. Trustee/Director of each of the
funds in the Fund Complex. Prior to 1993,
Executive Director of the Commission on
Behavioral and Social Sciences and Education
at the National Academy of Sciences/National
Research Council. From 1980 through 1989,
Partner of Coopers & Lybrand.
</TABLE>

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

+ Retiring effective December 31, 2000.

* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Whalen is an interested person of each of the funds in
the Fund Complex by reason of his firm currently acting as legal counsel to
each of the funds in the Fund Complex. Messrs. Merin and Powers are interested
persons of each of the funds in the Fund Complex and the Advisers by reason of
their positions with Morgan Stanley Dean Witter or its affiliates.

B-18
<PAGE> 45

OFFICERS

Messrs. Smith, Santo, Ciccarone, Reynoldson, Sullivan and Zimmermann are
located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555. Mr. Boyd is
located at 2800 Post Oak Blvd., Houston, TX 77056.

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>

A. Thomas Smith III.................. Executive Vice President, General Counsel,
Vice President and Secretary Secretary and Director of Van Kampen Investments,
Date of Birth: 12/14/56 the Advisers, Van Kampen Advisors Inc., Van
Age: 44 Kampen Management Inc., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary of each of the
funds in the Fund Complex and Vice President and
Secretary/Vice President, Principal Legal Officer
and Secretary of other investment companies
advised by the Advisers or their affiliates.
Prior to January 1999, Vice President and
Associate General Counsel to New York Life
Insurance Company ("New York Life"), and prior to
March 1997, Associate General Counsel of New York
Life. Prior to December 1993, Assistant General
Counsel of The Dreyfus Corporation. Prior to
August 1991, Senior Associate, Willkie Farr &
Gallagher. Prior to January 1989, Staff Attorney
at the Securities and Exchange Commission,
Division of Investment Management, Office of
Chief Counsel.

Michael H. Santo..................... Executive Vice President, Chief Administrative
Vice President Officer and Director of Van Kampen Investments,
Date of Birth: 10/22/55 the Advisers, the Distributor, Van Kampen
Age: 45 Advisors Inc., Van Kampen Management Inc. and Van
Kampen Investor Services Inc., and serves as a
Director or Officer of certain other subsidiaries
of Van Kampen Investments. Vice President of each
of the funds in the Fund Complex and certain
other investment companies advised by the
Advisers and their affiliates. Prior to 1998,
Senior Vice President and Senior Planning Officer
for Individual Asset Management of Morgan Stanley
Dean Witter and its predecessor since 1994. From
1990-1994, First Vice President and Assistant
Controller in Dean Witter's Controller's
Department.
</TABLE>

B-19
<PAGE> 46

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Stephen L. Boyd...................... Executive Vice President and Chief Investment
Executive Vice President and Chief Officer of Van Kampen Investments, and President
Investment Officer and Chief Operating Officer of the Advisers.
Date of Birth: 11/16/40 Executive Vice President and Chief Investment
Age: 60 Officer of each of the funds in the Fund Complex
and certain other investment companies advised by
the Advisers or their affiliates. Prior to April
2000, Executive Vice President and Chief
Investment Officer for Equity Investments of the
Advisers. Prior to October 1998, Vice President
and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior
Vice President and Portfolio Manager of Van
Kampen American Capital Asset Management, Inc.,
Van Kampen American Capital Investment Advisory
Corp. and Van Kampen American Capital Management,
Inc.

Richard A. Ciccarone................. Senior Vice President and Co-head of the Fixed
Vice President Income Department of the Advisers, Van Kampen
Date of Birth: 06/15/52 Management Inc. and Van Kampen Advisors Inc.
Age: 48 Prior to May 2000, he served as Co-head of
Municipal Investments and Director of Research of
the Advisers, Van Kampen Management Inc. and Van
Kampen Advisors Inc. Mr. Ciccarone first joined
the Adviser in June 1983, and worked for the
Adviser until May 1989, with his last position
being a Vice President. From June 1989 to April
1996, he worked at EVEREN Securities (formerly
known as Kemper Securities), with his last
position at EVEREN being an Executive Vice
President. Since April 1996, Mr. Ciccarone has
been a Senior Vice President of the Advisers, Van
Kampen Management Inc. and Van Kampen Advisors
Inc.

John R. Reynoldson................... Senior Vice President and Co-head of the Fixed
Vice President Income Department of the Advisers, Van Kampen
Date of Birth: 05/15/53 Management Inc. and Van Kampen Advisors Inc.
Age: 47 Prior to May 2000, he managed the investment
grade taxable group for the Adviser since July
1999. From July 1988 to June 1999, he managed the
government securities bond group for Asset
Management. Mr. Reynoldson has been with Asset
Management since April 1987, and has been a
Senior Vice President of Asset Management since
July 1988. He has been a Senior Vice President of
the Adviser and Van Kampen Management Inc. since
June 1995 and Senior Vice President of Van Kampen
Advisors Inc. since June 2000.
</TABLE>

B-20
<PAGE> 47

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
John L. Sullivan..................... Senior Vice President of Van Kampen Investments
Vice President, Chief Financial and the Advisers. Vice President, Chief Financial
Officer and Treasurer Officer and Treasurer of each of the funds in the
Date of Birth: 08/20/55 Fund Complex and certain other investment
Age: 45 companies advised by the Advisers or their
affiliates.

John H. Zimmermann, III.............. Senior Vice President and Director of Van Kampen
Vice President Investments, President and Director of the
Date of Birth: 11/25/57 Distributor, and President of Van Kampen
Age: 43 Insurance Agency of Illinois Inc. Vice President
of each of the funds in the Fund Complex. From
November 1992 to December 1997, Mr. Zimmermann
was Senior Vice President of the Distributor.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 61 operating funds in the Fund Complex. Each trustee/director who is not an
affiliated person of the Van Kampen Investments, the Advisers or the Distributor
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees/directors to defer receipt of their compensation
and earn a return on such deferred amounts. Deferring compensation has the
economic effect as if the Non-Affiliated Trustee reinvested his or her
compensation into the funds. Each fund in the Fund Complex provides a retirement
plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.

The compensation of each Non-Affiliated Trustee includes an annual retainer
in an amount equal to $50,000 per calendar year, due in four quarterly
installments on the first business day of each quarter. Payment of the annual
retainer is allocated among the funds in the Fund Complex on the basis of the
relative net assets of each fund as of the last business day of the preceding
calendar quarter. The compensation of each Non-Affiliated Trustee includes a per
meeting fee from each fund in the Fund Complex in the amount of $200 per
quarterly or special meeting attended by the Non-Affiliated Trustee, due on the
date of the meeting, plus reasonable expenses incurred by the Non-Affiliated
Trustee in connection with his or her services as a trustee/director, provided
that no compensation will be paid in connection with certain telephonic special
meetings.

Under the deferred compensation plan, each Non-Affiliated Trustee generally
can elect to defer receipt of all or a portion of the compensation earned by
such Non-Affiliated Trustee until retirement. Amounts deferred are retained by
the Fund and earn a rate of return determined by reference to the return on the
common shares of such Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund Complex. To
the extent permitted by the 1940 Act, the Fund may invest in securities of those
funds selected by the Non-Affiliated Trustees in order to match the

B-21
<PAGE> 48

deferred compensation obligation. The deferred compensation plan is not funded
and obligations thereunder represent general unsecured claims against the
general assets of the Fund.

Under the retirement plan, a Non-Affiliated Trustee who is receiving
compensation from such Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such retirement from such Fund. Non-Affiliated Trustees
retiring prior to the age of 60 or with fewer than 10 years but more than 5
years of service may receive reduced retirement benefits from such Fund. Each
trustee/director has served as a member of the Board of Trustees of the Fund
since he or she was first appointed or elected in the year set forth below. The
retirement plan contains a Fund Complex retirement benefit cap of $60,000 per
year.

Additional information regarding compensation and benefits for trustees is
set forth below for the periods described in the notes accompanying the table.

COMPENSATION TABLE

<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Estimated
Aggregate Maximum
Pension or Annual Total
Aggregate Retirement Benefits from Compensation
Compensation Benefits the Fund before
before Deferral Accrued as Complex Deferral from
from the Part of Upon Fund
Name(1) Registrant(2) Expenses(3) Retirement(4) Complex(5)
------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
J. Miles Branagan $2,707 $40,303 $60,000 $126,000
Jerry D. Choate(1) 2,707 0 60,000 88,700
Linda Hutton Heagy 2,707 5,045 60,000 126,000
R. Craig Kennedy 2,707 3,571 60,000 125,600
Jack E. Nelson 2,707 21,664 60,000 126,000
Phillip B. Rooney 2,707 7,787 60,000 113,400
Dr. Fernando Sisto 2,707 72,060 60,000 126,000
Wayne W. Whalen 2,707 15,189 60,000 126,000
Suzanne H. Woolsey(1) 2,507 0 60,000 88,700
</TABLE>

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

(1)Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Choate and Ms. Woolsey became members of the Board of Trustees for
the Trust and other funds in the Fund Complex on May 26, 1999 and therefore
do not have a full year of information to report. Paul G. Yovovich resigned
as a member of the Board of Trustees for other funds in the Fund Complex on
April 14, 2000.

(2)The amounts shown in this column represent the aggregate compensation before
deferral from the operating series of the Trust during the fiscal year ended
August 31, 2000. The details of aggregate compensation before deferral for
each operating series of the Trust during the fiscal year ended August 31,
2000 are shown in Table A below. The details of compensation deferred for
each operating series of the Trust

B-22
<PAGE> 49

during the fiscal year ended August 31, 2000 are shown in Table B below.
Amounts deferred are retained by the Fund and earn a rate of return
determined by reference to either the return on the common shares of the Fund
or other funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund Complex.
To the extent permitted by the 1940 Act, each fund may invest in securities
of those funds selected by the Non-Affiliated Trustees in order to match the
deferred compensation obligation. The details of cumulative deferred
compensation (including interest) for each operating series of the Trust as
of August 31, 2000 are shown in Table C below. The deferred compensation plan
is described above the Compensation Table.

(3)The amounts shown in this column represent the sum of the retirement benefits
accrued by the operating funds in the Fund Complex for each of the trustees
for the funds' respective fiscal years ended in 1999. The retirement plan is
described above the Compensation Table.

(4)For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
retirement plan is described above the Compensation Table. Each
Non-Affiliated Trustee of the Board of Trustees has served as a member of the
Board of Trustees since the year set forth in Table D below.

(5)The amounts shown in this column represent the aggregate compensation paid by
all funds in the Fund Complex as of December 31, 1999 before deferral by the
trustees under the deferred compensation plan. Because the funds in the Fund
Complex have different fiscal year ends, the amounts shown in this column are
presented on a calendar year basis. Certain trustees deferred all or a
portion of their aggregate compensation from the Fund Complex during the
calendar year ended December 31, 1999. The deferred compensation earns a rate
of return determined by reference to the return on the shares of the funds in
the Fund Complex as selected by the respective Non-Affiliated Trustee, with
the same economic effect as if such Non-Affiliated Trustee had invested in
one or more funds in the Fund Complex. To the extent permitted by the 1940
Act, the Fund may invest in securities of those funds selected by the
Non-Affiliated Trustees in order to match the deferred compensation
obligation. The Advisers and their affiliates also serve as investment
adviser for other investment companies; however, with the exception of Mr.
Whalen, the Non-Affiliated Trustees were not trustees of such investment
companies. Combining the Fund Complex with other investment companies advised
by the Advisers and their affiliates, Mr. Whalen received Total Compensation
of $279,250 during the calendar year ended December 31, 1999.

The Fund, the Adviser and the Distributor have adopted Codes of Ethics
(collectively, the "Code of Ethics") that set forth general and specific
standards relating to the securities trading activities of their employees. The
Code of Ethics does not prohibit employees from acquiring securities that may be
purchased or held by the Fund, but is intended to ensure that all employees
conduct their personal transactions in a manner that does not interfere with the
portfolio transactions of the Fund or other Van Kampen funds, or that such
employees take unfair advantage of their relationship with the Fund. Among other
things, the Code of Ethics prohibits certain types of transactions absent prior

B-23
<PAGE> 50

approval, imposes various trading restrictions (such as time periods during
which personal transactions may or may not be made) and requires quarterly
reporting of securities transactions and other reporting matters. All reportable
securities transactions and other required reports are to be reviewed by
appropriate personnel for compliance with the Code of Ethics. Additional
restrictions apply to portfolio managers, traders, research analysts and others
who may have access to nonpublic information about the trading activities of the
Fund or other Van Kampen funds or who otherwise are involved in the investment
advisory process. Exceptions to these and other provisions of the Code of Ethics
may be granted in particular circumstances after review by appropriate
personnel.

TABLE A

2000 AGGREGATE COMPENSATION FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ----------------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY
--------- -------- -------- ------ ----- ------- ------ ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax Managed Equity Growth
Fund*..................... 8/31 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600
Technology Fund............. 8/31 2,107 2,107 2,107 2,107 2,107 2,107 2,107 2,107 1,907
------ ------ ------ ------ ------ ------ ------ ------ ------
Trust Total............... $2,707 $2,707 $2,707 $2,707 $2,707 $2,707 $2,707 $2,707 $2,507
</TABLE>

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

* The Tax Managed Equity Growth Fund commenced investment operations on March
28, 2000, and does not have a full year of information to report.

TABLE B

2000 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- -------- -------- ------ ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax Managed Equity Growth Fund*..... 8/31 $ 600 $ 600 $ 600 $ 450 $ 600 $ 600 $ 300 $ 600
Technology Fund..................... 8/31 2,107 2,107 2,107 1,334 2,107 2,107 1,054 2,107
------ ------ ------ ------ ------ ------ ------ ------
Trust Total....................... $2,707 $2,707 $2,707 $1,784 $2,707 $2,707 $1,354 $2,707
</TABLE>

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

* The Tax Managed Equity Growth Fund commenced investment operations on March
28, 2000, and does not have a full year of information to report.

B-24
<PAGE> 51

TABLE C

2000 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- -------- -------- ------ ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax Managed Equity Growth Fund*..... 8/31 $ 655 $ 681 $ 693 $ 501 $ 661 $ 704 $ 329 $ 677
Technology Fund..................... 8/31 2,717 2,974 2,566 1,708 2,814 3,172 1,388 2,776
------ ------ ------ ------ ------ ------ ------ ------
Trust Total....................... $3,372 $3,655 $3,259 $2,209 $3,475 $3,876 $1,717 $3,453
</TABLE>

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

*The Tax Managed Equity Growth Fund commenced investment operations on March 28,
2000, and does not have a full year of information to report.

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
---------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY
--------- -------- ------ ----- ------- ------ ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax Managed Equity Growth Fund........ 2000 2000 2000 2000 2000 2000 2000 2000 2000
Technology Fund....................... 1999 1999 1999 1999 1999 1999 1999 1999 1999
</TABLE>

As of December 1, 2000 the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

INVESTMENT ADVISORY AGREEMENT

The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. The Adviser obtains
and evaluates economic, statistical and financial information to formulate
strategy and implement the Fund's investment objective. The Adviser also
furnishes offices, necessary facilities and equipment, provides administrative
services to the Fund, renders periodic reports to the Fund's Board of Trustees
and permits its officers and employees to serve without compensation as trustees
of the Trust or officers of the Fund if elected to such positions. The Fund,
however, bears the cost of its day-to-day operations, including distribution
fees, service fees, custodian fees, legal and independent accountant fees, the
costs of reports and proxies to shareholders, compensation of trustees of the
Trust (other than those who are affiliated persons of the Adviser, Distributor
or Van Kampen Investments) and all other ordinary business expenses not
specifically assumed by the Adviser. The Advisory Agreement also provides that
the Adviser shall not be liable to the Fund for any error of judgment or of law,
or for any loss suffered by the Fund in connection with the matters to which the
Advisory Agreement relates, except a loss resulting from willful misfeasance,
bad faith, 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 the Advisory Agreement.

The Advisory Agreement also provides that, in the event the expenses of the
Fund for any fiscal year exceed the most restrictive expense limitation
applicable in any jurisdiction

B-25
<PAGE> 52

in which the Fund's shares are qualified for offer and sale (excluding any
expenses permitted to be excluded from the computation under applicable law or
regulation), the compensation due the Adviser will be reduced by the amount of
such excess and that, if a reduction in and refund of the advisory fee is
insufficient, the Adviser will pay the Fund monthly an amount sufficient to make
up the deficiency, subject to readjustment during the fiscal year.

The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Fund's Board of Trustees or (ii) by a
vote of a majority of the Fund's outstanding voting securities and (b) by a vote
of a majority of the Trustees who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. The Advisory Agreement provides that it shall terminate automatically
if assigned and that it may be terminated without penalty by either party on 60
days' written notice.

During the fiscal year ended August 31, 2000 and the fiscal period ended
August 31, 1999, the Adviser received approximately $12,987,000 and $178,000,
respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund supplementary to those provided by the custodian. Such services are
expected to enable the Fund to more closely monitor and maintain its accounts
and records. The Fund pays all costs and expenses related to such services,
including all salary and related benefits of accounting personnel, as well as
the overhead and expenses of office space and the equipment necessary to render
such services. The Fund shares together with the other Van Kampen funds in the
cost of providing such services with 25% of such costs shared proportionately
based on the respective number of classes of securities issued per fund and the
remaining 75% of such costs based proportionately on the respective net assets
per fund.

During the fiscal year ended August 31, 2000 and the fiscal period ended
August 31, 1999, Advisory Corp. received approximately $80,000 and $1,000,
respectively, in accounting service fees from the Fund.

Legal Services Agreement. The Fund and certain of the other Van Kampen
funds have entered into legal services agreements pursuant to which Van Kampen
Investments provides legal services, including without limitation: accurate
maintenance of each fund's minute books and records, preparation and oversight
of each fund's regulatory reports, and other information provided to
shareholders, as well as responding to day-to-day legal issues on behalf of the
funds. Payment by the funds for such services is made on a cost basis for the
salary and salary-related benefits, including but not limited to bonuses, group
insurance and other regular wages for the employment of personnel, as well as
overhead and the expenses related to the office space and the equipment
necessary to render the legal services. Of the total costs for legal services
provided to funds, one half of such costs are allocated equally to each fund and
the remaining one half of such costs are allocated to specific funds based on
monthly time records.

B-26
<PAGE> 53

During the fiscal year ended August 31, 2000 and the fiscal period ended
August 31, 1999, Van Kampen Investments received no legal service fees from the
Fund.

DISTRIBUTION AND SERVICE

The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized dealers on a continuous basis. The Distributor's obligation is an
agency or "best efforts" arrangement under which the Distributor is required to
take and pay for only such shares of the Fund as may be sold to the public. The
Distributor is not obligated to sell any stated number of shares. The
Distributor bears the cost of printing (but not typesetting) prospectuses used
in connection with this offering and certain other costs including the cost of
supplemental sales literature and advertising. The Distribution and Service
Agreement is renewable from year to year if approved (a)(i) by the Fund's Board
of Trustees or (ii) by a vote of a majority of the Fund's outstanding voting
securities and (b) by a vote of a majority of Trustees who are not parties to
the Distribution and Service Agreement or interested persons of any party, by
votes cast in person at a meeting called for such purpose. The Distribution and
Service Agreement provides that it will terminate if assigned, and that it may
be terminated without penalty by either party on 90 days' written notice. Total
underwriting commissions on the sale of shares of the Fund for the last two
fiscal years are shown in the chart below.

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal year ended August 31, 2000....................... $24,055,839 $3,287,505
Fiscal year ended August 31, 1999....................... $ 2,417,000 $ 204,674
</TABLE>

With respect to sales of Class A Shares of the Fund, the total sales
charges and concessions reallowed to authorized dealers at the time of purchase
are as follows:

CLASS A SHARES SALES CHARGE TABLE

<TABLE>
<CAPTION>
Total Sales Charge
------------------------- Reallowed
As % of As % of Net To Dealers
Size of Offering Amount As a % of
Investment Price Invested Offering Price
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000........................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............. 4.75% 4.99% 4.00%
$100,000 but less than $250,000............. 3.75% 3.90% 3.00%
$250,000 but less than $500,000............. 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000........... 2.00% 2.04% 1.75%
$1,000,000 or more.......................... * * *
------------------------------------------------------------------------------------------------
</TABLE>

* No sales charge is payable at the time of purchase on investments of $1
million or more, although the Fund may impose a contingent deferred sales
charge of 1.00% on certain redemptions made within one year of the purchase. A
commission or transaction fee will be paid by the Distributor at the time of
purchase directly out of the Distributor's assets (and not out of the Fund's
assets) to authorized dealers who initiate and are responsible for purchases
of $1 million or more computed on a percentage of the dollar value of

B-27
<PAGE> 54

such shares sold as follows: 1.00% on sales to $2 million, plus 0.80% on the
next $1 million and 0.50% on the excess over $3 million. For single purchases
of $20 million or more by an individual retail investor, the Distributor will
pay, at the time of purchase and directly out of the Distributor's assets (and
not out of the Fund's assets), a commission or transaction fee of 1.00% to
authorized dealers who initiate and are responsible for such purchases. The
commission or transaction fee of 1.00% will be computed on a percentage of the
dollar value of such shares sold.

With respect to sales of Class B Shares and Class C Shares of the Fund, a
commission or transaction fee generally will be paid by the Distributor at the
time of purchase directly out of the Distributor's assets (and not out of the
Fund's assets) to authorized dealers who initiate and are responsible for such
purchases computed based on a percentage of the dollar value of such shares sold
of 4.00% on Class B Shares and 1.00% on Class C Shares.

Proceeds from any contingent deferred sales charge and any distribution
fees on Class B Shares and Class C Shares of the Fund are paid to the
Distributor and are used by the Distributor to defray its distribution related
expenses in connection with the sale of the Fund's shares, such as the payment
to authorized dealers for selling such shares. With respect to Class C Shares,
the authorized dealers generally are paid the ongoing commission and transaction
fees of up to 0.75% of the average daily net assets of the Fund's Class C Shares
annually commencing in the second year after purchase.

In addition to reallowances or commissions described above, the Distributor
may from time to time implement programs under which an authorized dealer's
sales force may be eligible to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any authorized dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor, or participates in sales programs sponsored by the Distributor, an
amount not exceeding the total applicable sales charges on the sales generated
by the authorized dealer at the public offering price during such programs.
Also, the Distributor in its discretion may from time to time, pursuant to
objective criteria established by the Distributor, pay fees to, and sponsor
business seminars for, qualifying authorized dealers for certain services or
activities which are primarily intended to result in sales of shares of the Fund
or other Van Kampen funds. Fees may include payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In some instances
additional compensation or promotional incentives may be offered to brokers,
dealers or financial intermediaries that have sold or may sell significant
amounts of shares during specified periods of time. The Distributor may provide
additional compensation to Edward D. Jones & Co. or an affiliate thereof based
on a combination of its quarterly sales of shares of the Fund and other Van
Kampen funds and increases in net assets of the Fund and other Van Kampen funds
over specified thresholds. All of the foregoing payments are made by the
Distributor out of its own assets. Such fees paid for such services and
activities with respect to the Fund will not exceed in the aggregate 1.25% of
the average total daily net assets of the Fund on an annual basis. These
programs will not change the price an investor will pay for shares or the amount
that a Fund will receive from such sale.

The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has

B-28
<PAGE> 55

adopted a service plan (the "Service Plan") with respect to each class of its
shares. The Distribution Plan and the Service Plan sometimes are referred to
herein as the "Plans". The Plans provide that the Fund may spend a portion of
the Fund's average daily net assets attributable to each class of shares in
connection with distribution of the respective class of shares and in connection
with the provision of ongoing services to shareholders of such class,
respectively. The Distribution Plan and the Service Plan are being implemented
through the Distribution and Service Agreement with the Distributor of each
class of the Fund's shares, sub-agreements between the Distributor and members
of the NASD who are acting as securities dealers and NASD members or eligible
non-members who are acting as brokers or agents and similar agreements between
the Fund and financial intermediaries who are acting as brokers (collectively,
"Selling Agreements") that may provide for their customers or clients certain
services or assistance, which may include, but not be limited to, processing
purchase and redemption transactions, establishing and maintaining shareholder
accounts regarding the Fund, and such other services as may be agreed to from
time to time and as may be permitted by applicable statute, rule or regulation.
Brokers, dealers and financial intermediaries that have entered into
sub-agreements with the Distributor and sell shares of the Fund are referred to
herein as "financial intermediaries."

Certain financial intermediaries may be prohibited under law from providing
certain underwriting or distribution services. If a financial intermediary were
prohibited from acting in any capacity or providing any of the described
services, the Distributor would consider what action, if any, would be
appropriate. The Distributor does not believe that termination of a relationship
with a financial intermediary would result in any material adverse consequences
to the Fund.

The Distributor must submit quarterly reports to the Board of Trustees of
the Trust, of which the Fund is a series, setting forth separately by class of
shares all amounts paid under the Distribution Plan and the purposes for which
such expenditures were made, together with such other information as from time
to time is reasonably requested by the Trustees. The Plans provide that they
will continue in full force and effect from year to year so long as such
continuance is specifically approved by a vote of the Trustees, and also by a
vote of the disinterested Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each of the Plans may not be amended to increase
materially the amount to be spent for the services described therein with
respect to any class of shares without approval by a vote of a majority of the
outstanding voting shares of such class, and all material amendments to either
of the Plans must be approved by the Trustees and also by the disinterested
Trustees. Each of the Plans may be terminated with respect to any class of
shares at any time by a vote of a majority of the disinterested Trustees or by a
vote of a majority of the outstanding voting shares of such class.

For Class A Shares in any given year in which the Plans are in effect, the
Plans generally provide for the Fund to pay the Distributor the lesser of (i)
the amount of the Distributor's actual expenses incurred during such year less
any deferred sales charges (if any) it received during such year (the "actual
net expenses") or (ii) the distribution and service fees at the rates specified
in the Prospectus (the "plan fees"). Therefore, to the extent the Distributor's
actual net expenses in a given year are less than the plan fees for such year,
the Fund only pays the actual net expenses. Alternatively, to the extent the
Distributor's actual net expenses in a given year exceed the plan fees for such
year, the

B-29
<PAGE> 56

Fund only pays the plan fees for such year. For Class A Shares, there is no
carryover of any unreimbursed actual net expenses to succeeding years.

The Plans for Class B and Class C Shares are similar to the Plans for Class
A Shares, except that any actual net expenses which exceed plan fees for a given
year are carried forward and are eligible for payment in future years by the
Fund so long as the Plans remain in effect. Thus, for each of the Class B Shares
and Class C Shares, in any given year in which the Plans are in effect, the
Plans generally provide for the Fund to pay the Distributor the lesser of (i)
the applicable amount of the Distributor's actual net expenses incurred during
such year for such class of shares plus any actual net expenses from prior years
that are still unpaid by the Fund for such class of shares or (ii) the
applicable plan fees for such class of shares. Except as may be mandated by
applicable law, the Fund does not impose any limit with respect to the number of
years into the future that such unreimbursed actual net expenses may be carried
forward (on a Fund level basis). These unreimbursed actual net expenses may or
may not be recovered through plan fees or contingent deferred sales charges in
future years.

Because of fluctuation in net asset value, the plan fees with respect to a
particular Class B Share or Class C Share may be greater or less than the amount
of the initial commission (including carrying cost) paid by the Distributor with
respect to such share. In such circumstances, a shareholder of a share may be
deemed to incur expenses attributable to other shareholders of such class. As of
August 31, 2000, there were $29,525,929 and $1,334,857 of unreimbursed
distribution-related expenses with respect to Class B Shares and Class C Shares,
respectively, representing 2.05% and 0.32% of the Fund's net assets attributable
to Class B Shares and Class C Shares, respectively. If the Plans were terminated
or not continued, the Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund or recovered
through contingent deferred sales charges.

For the fiscal period ended August 31, 2000, the Fund's aggregate expenses
paid under the Plans for Class A Shares was $1,062,043 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Class A
shareholders and for administering the Class A Share Plans. For the fiscal
period ended August 31, 2000, the Fund's aggregate expenses paid under the Plans
for Class B Shares was $7,541,081 or 1.00% of the Class B Shares' average daily
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $5,690,055 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B Shares of the Fund and
$1,851,026 for fees paid to financial intermediaries for servicing Class B
shareholders and for administering the Class B Share Plans. For the fiscal
period ended August 31, 2000, the Fund's aggregate expenses paid under the Plans
for Class C Shares was $2,090,462 or 1.00% of the Class C Shares' average daily
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $1,989,863 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class C Shares of the Fund and
$100,599 for fees paid to financial intermediaries for servicing Class C
shareholders and for administering the Class C Share Plans.

The Distributor has entered into agreements whereby shares of the Fund will
be offered pursuant to retirement plan alliance program(s) with the following
firms: (i) Merrill Lynch, Pierce, Fenner & Smith, Inc., (ii) Salomon Smith
Barney, Inc.,

B-30
<PAGE> 57

(iii) The Prudential Insurance Company of America, (iv) Buck Consultants Inc.
and (v) The Vanguard Group, Inc. Trustees and other fiduciaries of retirement
plans seeking to invest in multiple fund families through a broker-dealer
retirement plan alliance program should contact the firms mentioned above for
further information concerning the program(s) including, but not limited to,
minimum size and operational requirements.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and dividend
disbursing agent is Van Kampen Investor Services Inc. The transfer agency prices
are determined through negotiations with the Fund's Board of Trustees and are
based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of brokers and dealers to effect the transactions and the
negotiation of prices and any brokerage commissions on such transactions. While
the Adviser will be primarily responsible for the placement of the Fund's
portfolio business, the policies and practices in this regard will at all times
be subject to review by the Board of Trustees of the Fund.

The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser to the Fund and still must be analyzed
and reviewed by its staff, the receipt of research information is not expected
to reduce its expenses materially. The investment advisory fee is not reduced as
a result of the Adviser's receipt of such research services. Services provided
may include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). Research
services furnished by firms through which the Fund effects its securities
transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund.

B-31
<PAGE> 58

The Adviser also may place portfolio transactions, to the extent permitted
by law, with brokerage firms affiliated with the Fund, the Adviser or the
Distributor and with brokerage firms participating in the distribution of the
Fund's shares if it reasonably believes that the quality of execution and the
commission are comparable to that available from other qualified firms.
Similarly, to the extent permitted by law and subject to the same considerations
on quality of execution and comparable commission rates, the Adviser may direct
an executing broker to pay a portion or all of any commissions, concessions or
discounts to a firm supplying research or other services.

The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for the Fund and another advisory account.
In some cases, this procedure could have an adverse effect on the price or the
amount of securities available to the Fund. In making such allocations among the
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of the Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and opinions of the persons responsible
for recommending the investment.

Effective October 31, 1996, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") became an affiliate of the Adviser. Effective May 31, 1997, Dean
Witter Reynolds, Inc. ("Dean Witter") became an affiliate of the Adviser. The
Fund's Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the SEC under the 1940 Act which requires that
the commissions paid to affiliates of the Fund must be reasonable and fair
compared to the commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time. The rule and procedures
also contain review requirements and require the Adviser to furnish reports to
the Trustees and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Trustees will consider from
time to time whether the advisory fee for the Fund will be reduced by all or a
portion of the brokerage commission given to affiliated brokers.

The Fund paid the following commissions to all brokers and affiliated
brokers during the years shown:

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated Brokers
---------------------
All Morgan Dean
Brokers Stanley Witter
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fiscal year ended August 31, 2000............... $1,294,085 $ 22,095 $ 0
Fiscal year ended August 31, 1999............... $ 55,285 $ 0 $ 0
Fiscal year 2000 Percentages:
Commissions with affiliate to total
commissions................................ 1.71% 0%
Value of brokerage transactions with affiliate
to total transactions...................... 0.14% 0%
-------------------------------------------------------------------------------------------
</TABLE>

B-32
<PAGE> 59

During the fiscal year ended August 31, 2000, the Fund paid $1,031,937 in
brokerage commissions on transactions totaling $1,315,116,764 to brokers
selected primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. Below is a
description of such services. The following information supplements the section
in the Fund's Prospectus captioned "Shareholder Services."

INVESTMENT ACCOUNT

Each shareholder has an investment account under which the investor's
shares of the Fund are held by Investor Services, the Fund's transfer agent.
Investor Services performs bookkeeping, data processing and administrative
services related to the maintenance of shareholder accounts. Except as described
in the Prospectus and this Statement of Additional Information, after each share
transaction in an account, the shareholder receives a statement showing the
activity in the account. Each shareholder who has an account in any of the Van
Kampen funds will receive statements quarterly from Investor Services showing
any reinvestments of dividends and capital gain dividends and any other activity
in the account since the preceding statement. Such shareholders also will
receive separate confirmations for each purchase or sale transaction other than
reinvestment of dividends and capital gain dividends and systematic purchases or
redemptions. Additional shares may be purchased at any time through authorized
dealers or by mailing a check and detailed instructions directly to Investor
Services.

SHARE CERTIFICATES

Generally, the Fund will not issue share certificates. However, upon
written or telephone request to the Fund, a share certificate will be issued
representing shares (with the exception of fractional shares) of the Fund. A
shareholder will be required to surrender such certificates upon an exchange or
redemption of the shares represented by the certificate. In addition, if such
certificates are lost the shareholder must write to Van Kampen Funds Inc., c/o
Investor Services, PO Box 218256, Kansas City, MO 64121-8256, requesting an
"Affidavit of Loss" and obtain a Surety Bond in a form acceptable to Investor
Services. On the date the letter is received, Investor Services will calculate
the fee for replacing the lost certificate equal to no more than 1.50% of the
net asset value of the issued shares, and bill the party to whom the replacement
certificate was mailed.

RETIREMENT PLANS

Eligible investors may establish individual retirement accounts ("IRAs");
SEP; 401(k) plans; 403(b)(7) plans in the case of employees of public school
systems and certain non-profit organizations; or other pension or profit sharing
plans. Documents and forms containing detailed information regarding these plans
are available from the Distributor. Van Kampen Trust Company serves as custodian
under the IRA, 403(b)(7) and Money Purchase and Profit Sharing Keogh plans.

B-33
<PAGE> 60

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

Shareholders can use ACH to have redemption proceeds deposited
electronically into their bank accounts. Redemption proceeds transferred to a
bank account via the ACH plan are available to be credited to the account on the
second business day following normal payment. In order to utilize this option,
the shareholder's bank must be a member of ACH. In addition, the shareholder
must fill out the appropriate section of the account application form. The
shareholder must also include a voided check or deposit slip from the bank
account into which redemption proceeds are to be deposited together with the
completed application. Once Investor Services has received the application and
the voided check or deposit slip, such shareholder's designated bank account,
following any redemption, will be credited with the proceeds of such redemption.
Once enrolled in the ACH plan, a shareholder may terminate participation at any
time by writing Investor Services or by calling (800) 341-2911 ((800) 421-2833
for the hearing impaired).

DIVIDEND DIVERSIFICATION

A shareholder may, upon written request by completing the appropriate
section of the account application form or by calling (800) 341-2911 ((800)
421-2833 for the hearing impaired), elect to have all dividends and capital gain
dividends paid on a class of shares of the Fund invested into shares of the same
class of any Participating Fund so long as the investor has a pre-existing
account for such class of shares of the other fund. Both accounts must be of the
same type, either non-retirement or retirement. If the accounts are retirement
accounts, they must both be for the same class and of the same type of
retirement plan (e.g. IRA, 403(b)(7), 401(k), Money Purchase and Profit Sharing
Keogh) and for the benefit of the same individual. If a qualified, pre-existing
account does not exist, the shareholder must establish a new account subject to
minimum investment and other requirements of the fund into which distributions
would be invested. Distributions are invested into the selected fund, provided
that shares of the Fund are available for sale, at its net asset value per share
as of the payable date of the distribution from the Fund.

SYSTEMATIC WITHDRAWAL PLAN

A shareholder may establish a monthly, quarterly, semiannual or annual
withdrawal plan if the shareholder owns shares in a single account valued at
$10,000 or more at the next determined net asset value per share at the time the
plan is established. If the shareholder owns shares in a single account valued
at $5,000 or more at the next determined net asset value per share at the time
the plan is established, the shareholder may establish a quarterly, semiannual
or annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each payment
represents the proceeds of a redemption of shares on which any capital gain or
loss will be recognized. The planholder may arrange for periodic checks in any
amount, not less than $25. Such a systematic withdrawal plan may also be
maintained by an investor purchasing shares for a retirement plan established on
a form made available by the Fund when Van Kampen Trust Company serves as the
plan custodian. See "Shareholder Services--Retirement Plans."

B-34
<PAGE> 61

Class B Shareholders and Class C Shareholders who establish a systematic
withdrawal plan may redeem up to 12% annually of the shareholder's initial
account balance without incurring a contingent deferred sales charge. Initial
account balance means the amount of the shareholder's investment at the time the
election to participate in the plan is made.

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gain dividends
on shares held in accounts with systematic withdrawal plans are reinvested in
additional shares at the next determined net asset value per share. If periodic
withdrawals continuously exceed reinvested dividends and capital gain dividends,
the shareholder's original investment will be correspondingly reduced and
ultimately exhausted. Redemptions made concurrently with the purchase of
additional shares ordinarily will be disadvantageous to the shareholder because
of the duplication of sales charges. Any gain or loss realized by the
shareholder upon redemption of shares is a taxable event. The Fund reserves the
right to amend or terminate the systematic withdrawal program upon 30 days'
notice to its shareholders.

EXCHANGE PRIVILEGE

All shareholders are limited to eight exchanges per fund during a rolling
365-day period.

Exchange privileges will be suspended on a particular fund if more than
eight exchanges out of that fund are made by a shareholder during a rolling
365-day period. If exchange privileges are suspended, subsequent exchange
requests during the stated period will not be processed. Exchange privileges
will be restored when the account history shows fewer than eight exchanges in
the rolling 365-day period.

This policy does not apply to money market funds, systematic exchange
plans, or employer-sponsored retirement plans.

REINSTATEMENT PRIVILEGE

A Class A Shareholder or Class B Shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption
(and may include that amount necessary to acquire a fractional share to round
off his or her purchase to the next full share) in Class A Shares of the Fund. A
Class C Shareholder who has redeemed shares of the Fund may reinstate any
portion or all of the net proceeds of such redemption (and may include that
amount necessary to acquire a fractional share to round off his or her purchase
to the next full share) in Class C Shares of the Fund with credit given for any
contingent deferred sales charge paid upon such redemption, provided that such
shareholder has not previously exercised this reinvestment privilege with
respect to Class C Shares of the Fund. Shares acquired in this manner will be
deemed to have the original cost and purchase date of the redeemed shares for
purposes of applying the CDSC-Class C (defined below) to subsequent redemptions.
Such reinstatement is made at the net asset value per share (without sales
charge) next determined after the order is received, which must be made within
180 days after the date of the redemption, provided that shares of the Fund are
available for sale. Reinstatement at net asset value per share is also offered
to participants in those eligible retirement plans held or administered by

B-35
<PAGE> 62

Van Kampen Trust Company for repayment of principal (and interest) on their
borrowings on such plans, provided that shares of the Fund are available for
sale.

REDEMPTION OF SHARES

Redemptions are not made on days during which the New York Stock Exchange
(the "Exchange") is closed. The right of redemption may be suspended and the
payment therefor may be postponed for more than seven days during any period
when (a) the Exchange is closed for other than customary weekends or holidays;
(b) the SEC determines trading on the Exchange is restricted; (c) the SEC
determines an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund to fairly determine the value of its net assets; or (d)
the SEC, by order, so permits.

In addition, if the Fund's Board of Trustees determines that payment wholly
or partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. A
distribution-in-kind may result in recognition by the shareholder of a gain or
loss for federal income tax purposes when such securities are distributed, and
the shareholder may incur brokerage charges and a gain or loss for federal
income tax purposes upon the shareholder's disposition of such securities.

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

As described in the Prospectus under "Purchase of Shares -- Class A
Shares," there is no sales charge payable on Class A Shares at the time of
purchase on investments of $1 million or more, but a contingent deferred sales
charge ("CDSC -- Class A") may be imposed on certain redemptions made within one
year of purchase. For purposes of the CDSC-Class A, when shares of one fund are
exchanged for shares of another fund, the purchase date for the shares of the
fund exchanged into will be assumed to be the date on which shares were
purchased in the fund from which the exchange was made. If the exchanged shares
themselves are acquired through an exchange, the purchase date is assumed to
carry over from the date of the original election to purchase shares subject to
a CDSC-Class A rather than a front-end load sales charge. In determining whether
a CDSC-Class A is payable, it is assumed that shares being redeemed first are
any shares in the shareholder's account not subject to a contingent deferred
sales charge followed by shares held the longest in the shareholder's account.
The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gain dividends.

WAIVER OF CLASS B AND CLASS C

CONTINGENT DEFERRED SALES CHARGES

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge

B-36
<PAGE> 63

("CDSC- Class B and C"). The CDSC-Class B and C is waived on redemptions of
Class B Shares and Class C Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

The Fund will waive the CDSC-Class B and C on redemptions following the
death or disability of a Class B shareholder and Class C shareholder. An
individual will be considered disabled for this purpose if he or she meets the
definition thereof in Section 72(m)(7) of the Internal Revenue Code of 1986, as
amended (the "Code"), which in pertinent part defines a person as disabled if
such person "is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite duration."
While the Fund does not specifically adopt the balance of the Code's definition
which pertains to furnishing the Secretary of Treasury with such proof as he or
she may require, the Distributor will require satisfactory proof of death or
disability before it determines to waive the CDSC-Class B and C.

In cases of death or disability, the CDSC-Class B and C will be waived
where the decedent or disabled person is either an individual shareholder or
owns the shares as a joint tenant with right of survivorship or is the
beneficial owner of a custodial or fiduciary account, and where the redemption
is made within one year of the death or initial determination of disability.
This waiver of the CDSC-Class B and C applies to a total or partial redemption,
but only to redemptions of shares held at the time of the death or initial
determination of disability.

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

The Fund will waive the CDSC-Class B and C when a total or partial
redemption is made in connection with certain distributions from retirement
plans. The CDSC-Class B and C will be waived upon the tax-free rollover or
transfer of assets to another retirement plan invested in one or more
Participating Funds; in such event, as described below, the Fund will "tack" the
period for which the original shares were held on to the holding period of the
shares acquired in the transfer or rollover for purposes of determining what, if
any, CDSC-Class B and C is applicable in the event that such acquired shares are
redeemed following the transfer or rollover. The charge also will be waived on
any redemption which results from the return of an excess contribution or other
contribution pursuant to Code Section 408(d)(4) or (5), the return of excess
contributions or excess deferral amounts pursuant to Code Section 401(k)(8) or
402(g)(2), the financial hardship of the employee pursuant to U.S. Treasury
Regulation Section 1.401(k)-1(d)(2), or from the death or disability of the
employee (see Code Section 72(m)(7) and 72(t)(2)(A)(ii)). In addition, the
charge will be waived on any minimum distribution required to be distributed in
accordance with Code Section 401(a)(9).

The Fund does not intend to waive the CDSC-Class B and C for any
distributions from IRAs or other retirement plans not specifically described
above.

REDEMPTION PURSUANT TO THE FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the systematic
withdrawal plan, a dollar
B-37
<PAGE> 64

amount of a participating shareholder's investment in the Fund will be redeemed
systematically by the Fund on a periodic basis, and the proceeds sent to the
designated payee of record. The amount to be redeemed and frequency of the
systematic withdrawals will be specified by the shareholder upon his or her
election to participate in the systematic withdrawal plan. The CDSC-Class B and
C will be waived on redemptions made under the systematic withdrawal plan.

The amount of the shareholder's investment in the Fund at the time the
election to participate in the systematic withdrawal plan is made with respect
to the Fund is hereinafter referred to as the "initial account balance." The
amount to be systematically redeemed from the Fund without the imposition of a
CDSC-Class B and C may not exceed a maximum of 12% annually of the shareholder's
initial account balance. The Fund reserves the right to change the terms and
conditions of the systematic withdrawal plan and the ability to offer the
systematic withdrawal plan.

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares. See "Purchase of Shares -- Waiver of Contingent Deferred
Sales Charge" in the Prospectus.

INVOLUNTARY REDEMPTIONS OF SHARES

The Fund reserves the right to redeem shareholder accounts with balances of
less than a specified dollar amount as set forth in the Prospectus. Prior to
such redemptions, shareholders will be notified in writing and allowed a
specified period of time to purchase additional shares to bring the value of the
account up to the required minimum balance. The Fund will waive the CDSC-Class B
and C upon such involuntary redemption.

REDEMPTION BY ADVISER

The Fund may waive the CDSC-Class B and C when a total or partial
redemption is made by the Adviser with respect to its investments in the Fund.

TAXATION

FEDERAL INCOME TAXATION OF THE FUND

The Fund has elected and qualified, and intends to continue to qualify each
year, to be treated as a regulated investment company under Subchapter M of the
Code. To qualify as a regulated investment company, the Fund must comply with
certain requirements of the Code relating to, among other things, the source of
its income and diversification of its assets.

If the Fund so qualifies and distributes each year to its shareholders at
least 90% of its investment company taxable income (generally including ordinary
income and net short-term capital gain, but not net capital gain, which is the
excess of net long-term capital gain over net short-term capital loss), and
meets certain other requirements, it will not be required to pay federal income
taxes on any income it distributes to shareholders. The Fund intends to
distribute at least the minimum amount of investment company

B-38
<PAGE> 65

taxable income necessary to satisfy the 90% distribution requirement. The Fund
will not be subject to federal income tax on any net capital gain distributed to
shareholders.

To avoid a 4% excise tax, the Fund will be required to distribute, by
December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income for such year and (ii) 98% of its capital gain net income
(the latter of which generally is computed on the basis of the one-year period
ending on October 31st of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.

If the Fund failed to qualify as a regulated investment company or failed
to satisfy the 90% distribution requirement in any taxable year, the Fund would
be taxed as an ordinary corporation on its taxable income (even if such income
were distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. In addition, the Fund
could be required to recognize unrealized gains, pay taxes and interest charges
and make distributions before requalifying for taxation as a regulated
investment company.

Some of the Fund's investment practices are subject to special provisions
of the Code that may, among other things, (i) disallow, suspend or otherwise
limit the allowance of certain losses or deductions, (ii) convert lower taxed
long-term capital gain into higher taxed short-term capital gain or ordinary
income, (iii) convert an ordinary loss or a deduction into a capital loss (the
deductability of which is more limited) and/or (iv) cause the Fund to recognize
income or gain without a corresponding receipt of cash with which to make
distributions in amounts necessary to satisfy the 90% distribution requirement
and the distribution requirements for avoiding income and excise taxes. The Fund
will monitor its transactions and may make certain tax elections to mitigate the
effect of these rules and prevent disqualification of the Fund as a regulated
investment company.

Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year to maintain its qualification as a
regulated investment company and to avoid income and excise taxes. To generate
sufficient cash to make distributions necessary to satisfy the 90% distribution
requirement and to avoid income and excise taxes, the Fund may have to dispose
of securities that it would otherwise have continued to hold.

PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in non-U.S.
corporations that could be classified as "passive foreign investment companies"
as defined for federal income tax purposes. For federal income tax purposes,
such an investment may, among other things, cause the Fund to recognize income
or gain without a corresponding receipt of cash, to incur an interest charge on
taxable income that is deemed to have been deferred and/or to recognize ordinary
income that would otherwise have been treated as capital gain.

B-39
<PAGE> 66

DISTRIBUTIONS TO SHAREHOLDERS

Distributions of the Fund's investment company taxable income are taxable
to shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether paid in cash or reinvested in additional shares. Distributions
of the Fund's net capital gain as capital gain dividends, if any, are taxable to
shareholders as long-term capital gains regardless of the length of time shares
of the Fund have been held by such shareholders. Distributions in excess of the
Fund's earnings and profits will first reduce the adjusted tax basis of a
holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming such shares are held as a
capital asset). For a summary of the maximum tax rates applicable to capital
gains (including capital gain dividends), see "Capital Gains Rates" below.
Tax-exempt shareholders not subject to federal income tax on their income
generally will not be taxed on distributions from the Fund.

Shareholders receiving distributions in the form of additional shares
issued by the Fund will be treated for federal income tax purposes as receiving
a distribution in an amount equal to the fair market value of the shares
received, determined as of the distribution date. The basis of such shares will
equal the fair market value on the distribution date.

The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. Some portion of
the distributions from the Fund may be eligible for the dividends received
deduction for corporations if the Fund receives qualifying dividends during the
year and if certain requirements of the Code are satisfied.

Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such month and paid during January of the
following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31st prior to the date of payment.
In addition, certain other distributions made after the close of a taxable year
of the Fund may be "spilled back" and treated as paid by the Fund (except for
purposes of the 4% excise tax) during such taxable year. In such case,
shareholders will be treated as having received such dividends in the taxable
year in which the distribution was actually made.

Income from investments in foreign securities received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions. Such taxes will not be deductible or creditable by
shareholders. Tax conventions between certain countries and the United States
may reduce or eliminate such taxes.

Certain foreign currency gains or losses attributable to currency exchange
rate fluctuations are treated as ordinary income or loss. Such income or loss
may increase or decrease (or possibly eliminate) the Fund's income available for
distribution. If, under the rules governing the tax treatment of foreign
currency gains and losses, the Fund's income available for distribution is
decreased or eliminated, all or a portion of the dividends declared by the Fund
may be treated for federal income tax purposes as a return of capital or, in
some circumstances, as capital gains. Generally, a shareholder's tax basis in
Fund shares will be reduced to the extent that an amount distributed to such
shareholder is treated as a return of capital.

B-40
<PAGE> 67

SALE OF SHARES

The sale of shares (including transfers in connection with a redemption or
repurchase of shares) may be a taxable transaction for federal income tax
purposes. Selling shareholders will generally recognize gain or loss in an
amount equal to the difference between their adjusted tax basis in the shares
sold and the amount received. If the shares sold are held as a capital asset,
the gain or loss will be a capital gain or loss. For a summary of the maximum
tax rates applicable to capital gains (including capital gain dividends), see
"Capital Gains Rates" below. Any loss recognized upon a taxable disposition of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any capital gain dividends received with respect to such
shares. For purposes of determining whether shares have been held for six months
or less, the holding period is suspended for any periods during which the
shareholder's risk of loss is diminished as a result of holding one or more
other positions in substantially similar or related property or through certain
options or short sales.

CAPITAL GAINS RATES

The maximum tax rate applicable to net capital gains recognized by
individuals and other non-corporate taxpayers investing in the Fund is (i) the
same as the maximum ordinary income tax 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%.

NON-U.S. SHAREHOLDERS

A shareholder who is not (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized under the laws of the
United States or any state thereof, (iii) an estate, the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a trust
whose administration is subject to the primary supervision of a U.S. court and
which has one or more U.S. fiduciaries who have the authority to control all
substantial decisions of the trust (a "Non-U.S. Shareholder") generally will be
subject to withholding of U.S. federal income tax at a 30% rate (or lower
applicable treaty rate) on dividends from the Fund (other than capital gain
dividends) that are not "effectively connected" with a U.S. trade or business
carried on by such shareholder.

Non-effectively connected capital gain dividends and gains realized from
the sale of shares will not be subject to U.S. federal income tax in the case of
(i) a Non-U.S. Shareholder that is a corporation and (ii) an individual Non-U.S.
Shareholder who is not present in the United States for more than 182 days
during the taxable year (assuming that certain other conditions are met).
However, certain Non-U.S. Shareholders may nonetheless be subject to backup
withholding on capital gain dividends and gross proceeds paid to them upon the
sale of their shares. See "Backup Withholding" below.

If income from the Fund or gains realized from the sale of shares are
effectively connected with a Non-U.S. Shareholder's U.S. trade or business, then
such amounts will be subject to U.S. federal income tax on a net basis at the
tax rates applicable to U.S. citizens or domestic corporations. Non-U.S.
Shareholders that are corporations may also be subject to an additional "branch
profits tax" with respect to income from the Fund that is effectively connected
with a U.S. trade or business.

B-41
<PAGE> 68

United States Treasury Regulations, generally effective for payments made
after December 31, 2000, modify the withholding, backup withholding and
information reporting rules, including the procedures to be followed by foreign
investors in establishing foreign status. Shareholders and prospective foreign
investors should consult their advisers concerning the applicability and effect
of such Treasury Regulations on an investment in shares of the Fund.

The tax consequences to a Non-U.S. Shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described in
this section. Non-U.S. Shareholders may be required to provide appropriate
documentation to establish their entitlement to the benefits of such a treaty.
Foreign investors are advised to consult their tax advisers with respect to the
tax implications of purchasing, holding and disposing of shares of the Fund.

BACKUP WITHHOLDING

The Fund may be required to withhold federal income tax at a rate of 31%
("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) the
shareholder fails to properly furnish the Fund with its correct taxpayer
identification number, (ii) the Internal Revenue Service ("IRS") notifies the
Fund that the shareholder has failed to properly report certain interest and
dividend income to the IRS and to respond to notices to that effect or (iii)
when required to do so, the shareholder fails to certify that he or she is not
subject to backup withholding. Redemption proceeds may be subject to withholding
under the circumstances described in (i) above.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from payments made to a shareholder may be refunded or
credited against such shareholder's U.S. federal income tax liability, if any,
provided that the required information is furnished to the IRS.

INFORMATION REPORTING

The Fund must report annually to the IRS and to each shareholder (other
than a Non-U.S. Shareholder) the amount of dividends paid to such shareholder
and the amount, if any, of tax withheld pursuant to backup withholding rules
with respect to such dividends. In the case of a Non-U.S. Shareholder, the Fund
must report to the IRS and such shareholder the aggregate amount of dividends
paid that are subject to backup withholding (if any) and the amount of tax
withheld with respect to such dividends pursuant to the backup withholding
rules. This information may also be made available to the tax authorities in the
Non-U.S. Shareholder's country of residence. Generally, dividends paid to
Non-U.S. Shareholders that are subject to the 30% federal income tax withholding
described above under "Non-U.S. Shareholders" are not subject to backup
withholding.

GENERAL

The federal income tax discussion set forth above is for general
information only. Prospective investors and shareholders should consult their
advisers regarding the specific federal tax consequences of purchasing, holding
and disposing of shares, as well as the effects of state, local and foreign tax
law and any proposed tax law changes.

B-42
<PAGE> 69

FUND PERFORMANCE

From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one-year, five-year and ten-year periods. Other total
return quotations, aggregate or average, over other time periods may also be
included.

The total return of the Fund for a particular period represents the
increase (or decrease) in the value of a hypothetical investment in the Fund
from the beginning to the end of the period. Total return is calculated by
subtracting the value of the initial investment from the ending value and
showing the difference as a percentage of the initial investment; the
calculation assumes the initial investment is made at the current maximum public
offering price (which includes the maximum sales charge for Class A Shares);
that all income dividends or capital gain dividends during the period are
reinvested in Fund shares at net asset value; and that any applicable contingent
deferred sales charge has been paid. The Fund's total return will vary depending
on market conditions, the securities comprising the Fund's portfolio, the Fund's
operating expenses and unrealized net capital gains or losses during the period.
Total return is based on historical earnings and asset value fluctuations and is
not intended to indicate future performance. No adjustments are made to reflect
any income taxes payable by shareholders on dividends and capital gain dividends
paid by the Fund.

Average annual total return quotations are computed by finding the average
annual compounded rate of return over the period that would equate the initial
amount invested to the ending redeemable value.

The Fund may, in supplemental sales literature, advertise non-standardized
total return figures representing the cumulative, non-annualized total return of
each class of shares of the Fund from a given date to a subsequent given date.
Cumulative non-standardized total return is calculated by measuring the value of
an initial investment in a given class of shares of the Fund at a given time,
deducting the maximum initial sales charge, if any, determining the value of all
subsequent reinvested distributions, and dividing the net change in the value of
the investment as of the end of the period by the amount of the initial
investment and expressing the result as a percentage. Non-standardized total
return will be calculated separately for each class of shares.

Non-standardized total return calculations do not reflect the imposition of
a contingent deferred sales charge, and if any contingent deferred sales charge
imposed at the time of redemption were reflected, it would reduce the
performance quoted.

Total return is calculated separately for Class A Shares, Class B Shares
and Class C Shares. Total return figures for Class A Shares include the maximum
sales charge. Total return figures for Class B Shares and Class C Shares include
any applicable contingent deferred sales charge. Because of the differences in
sales charges and distribution fees, the total returns for each class of shares
will differ.

B-43
<PAGE> 70

which is a measure of the income actually earned by the Fund's investments plus
the effect of any realized and unrealized appreciation or depreciation of such
investments during a stated period. Distribution rate is, therefore, not
intended to be a complete measure of the Fund's performance. Distribution rate
may sometimes be greater than yield since, for instance, it may not include the
effect of amortization of bond premiums, and may include non-recurring
short-term capital gains and premiums from futures transactions engaged in by
the Fund. Distribution rates will be computed separately for each class of the
Fund's shares.

From time to time marketing materials may provide a portfolio manager
update, an Adviser update and discuss general economic conditions and outlooks.
The Fund's marketing materials may also show the Fund's asset class
diversification, top sector holdings and largest holdings. Materials may also
mention how the Distributor believes the Fund compares relative to other Van
Kampen funds. Materials may also discuss the Dalbar Financial Services study
from 1984 to 1994 which studied investor cash flow into and out of all types of
mutual funds. The ten-year study found that investors who bought mutual fund
shares and held such shares outperformed investors who bought and sold. The
Dalbar study conclusions were consistent regardless of whether shareholders
purchased their fund shares in direct or sales force distribution channels. The
study showed that investors working with a professional representative have
tended over time to earn higher returns than those who invested directly. The
performance of the funds purchased by the investors in the Dalbar study and the
conclusions based therein are not necessarily indicative of future performance
of such funds or conclusions that may result from similar studies in the future.
The Fund may also be marketed on the internet.

In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds with the Consumer Price Index, the Dow
Jones Industrial Average, Standard & Poor's indices, NASDAQ Composite Index,
other appropriate indices of investment securities, or with investment or
savings vehicles. The performance information may also include evaluations of
the Fund published by nationally recognized ranking or rating services and by
nationally recognized financial publications. Such comparative performance
information will be stated in the same terms in which the comparative data or
indices are stated. Such advertisements and sales material may also include a
yield quotation as of a current period. In each case, such total return and
yield information, if any, will be calculated pursuant to rules established by
the SEC and will be computed separately for each class of the Fund's shares. For
these purposes, the performance of the Fund, as well as the performance of other
mutual funds or indices, do not reflect sales charges, the inclusion of which
would reduce the Fund's performance. The Fund will include performance data for
each class of shares of the Fund in any advertisement or information including
performance data of the Fund.

B-44
<PAGE> 71

made in a rising market; (3) illustrate allocations among different types of
mutual funds for investors at different stages of their lives; and (4) in
reports or other communications to shareholders or in advertising material,
illustrate the benefits of compounding at various assumed rates of return.

The Fund's Annual Report and Semiannual Report contain additional
performance information. A copy of the Annual Report or Semiannual Report may be
obtained without charge by calling or writing the Fund at the telephone number
and address printed on the cover of this Statement of Additional Information.

CLASS A SHARES

The Fund's average annual total return assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
August 31, 2000 was 126.13%, (ii) the approximately one-year, one-month period
since July 26, 1999, the commencement of distribution for Class A Shares of the
Fund, through August 31, 2000 was 132.43%

The Fund's cumulative non-standardized total return, including payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to August 31, 2000 was 152.59%

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to August 31, 2000 was 168.00%

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended August 31, 2000 was 133.17% and (ii) the approximately one-year,
one-month period since July 26, 1999, the commencement of distribution for Class
B Shares of the Fund, through August 31, 2000 was 140.13%

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class B Shares from
July 26, 1999 (commencement of distribution for Class B Shares) to August 31,
2000 was 161.80%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
July 26, 1999 (commencement of distribution for Class B Shares) to August 31,
2000 was 165.80%

CLASS C SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended August 31, 2000 was 137.17% and (ii) the approximately one-year,
one-month period since July 26, 1999, the commencement of distribution for Class
C Shares of the Fund, through August 31, 2000 was 143.47%

B-45
<PAGE> 72

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class C Shares from
July 26, 1999 (commencement of distribution for Class C Shares) to August 31,
2000 was 165.80%

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
July 26, 1999 (commencement of distribution for Class C Shares) to August 31,
2000 was 165.80%

These results are based on historical earnings and asset value fluctuations
and are not intended to indicate future performance. Such information should be
considered in light of the Fund's investment objective and policies as well as
the risks incurred in the Fund's investment practices.

OTHER INFORMATION

CUSTODY OF ASSETS

Except for segregated assets held by a futures commission merchant pursuant
to rules and regulations promulgated under the 1940 Act, all securities owned by
the Fund and all cash, including proceeds from the sale of shares of the Fund
and of securities in the Fund's investment portfolio, are held by State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, as
custodian. The custodian also provides accounting services to the Fund.

SHAREHOLDER REPORTS

Semiannual statements are furnished to shareholders, and annually such
statements are audited by the independent auditors.

INDEPENDENT AUDITORS

Independent auditors for the Fund perform an annual audit of the Fund's
financial statements. The Fund's Board of Trustees has engaged Ernst & Young
LLP, located at 233 South Wacker Drive, Chicago, Illinois 60606, to be the
Fund's independent auditors.

PricewaterhouseCoopers LLP, located at 200 East Randolph Drive, Chicago,
Illinois 60601 ("PWC"), ceased being the Fund's independent auditors, effective
May 18, 2000. The cessation of the client-auditor relationship between the Fund
and PWC was based solely on a possible future business relationship by PWC with
an affiliate of the Fund's investment adviser. The change in independent
auditors was approved by the Fund's audit committee and the Fund's Board of
Trustees, including Trustees who are not "interested persons" of the Fund (as
defined in the 1940 Act).

LEGAL COUNSEL

Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom (Illinois).

B-46
<PAGE> 73

REPORT OF INDEPENDENT AUDITORS

To the Shareholders and Board of Trustees of Van Kampen Technology Fund

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Van Kampen Technology Fund (the "Fund"), as of
August 31, 2000, and the related statement of operations, changes in net assets
and financial highlights for the year then ended. 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 based on
our audit. The statement of changes in net assets of the Fund for the period
July 26, 1999 (Commencement of Operations) through August 31, 1999, and the
financial highlights for the period presented was audited by other auditors
whose report dated October 6, 1999, expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 disclosure in
the financial statements. Our procedures included confirmation of securities
owned as of August 31, 2000, by correspondence with the custodian and brokers.
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 audit provides a reasonable basis
for our opinion.

In our opinion, the 2000 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of August 31, 2000, the results of its operations,
changes in net assets and financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States.

[/s/ ENRST & YOUNG]

Chicago, Illinois
October 13, 2000

F-1
<PAGE> 74

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

August 31, 2000
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCK 99.3%
COMMUNICATIONS TECHNOLOGY--EQUIPMENT 25.6%
ADC Telecommunications, Inc. (a)........................... 500,000 $ 20,468,750
Alcatel SA--ADR (France)................................... 350,000 29,006,250
Avanex Corp. (a)........................................... 100,000 15,146,875
Bookham Technology PLC (ADR--United Kingdom) (a)........... 300,000 18,525,000
CIENA Corp. (a)............................................ 200,000 44,337,500
Corning, Inc............................................... 400,000 131,175,000
Digital Lightwave, Inc. (a)................................ 125,000 10,968,750
Finisar Corp. (a).......................................... 200,000 9,275,000
New Focus, Inc. (a)........................................ 150,000 20,709,375
Newport Corp. ............................................. 525,000 83,475,000
Nortel Networks Corp. ..................................... 1,100,000 89,718,750
Scientific-Atlanta, Inc. .................................. 700,000 54,556,250
SDL, Inc. (a).............................................. 307,500 122,173,594
Sonus Networks, Inc. (a)................................... 75,000 12,478,125
Sycamore Networks, Inc. (a)................................ 375,000 51,562,500
--------------
713,576,719
--------------
COMPUTERS--HARDWARE 9.2%
Brocade Communications Systems, Inc. (a)................... 350,000 79,034,375
Emulex Corp. (a)........................................... 100,000 10,468,750
Juniper Networks, Inc. (a)................................. 775,000 165,656,250
--------------
255,159,375
--------------
COMPUTERS--NETWORKING 14.5%
Avici Systems, Inc. (a).................................... 150,000 22,471,875
Cisco Systems, Inc. (a).................................... 600,000 41,175,000
Corvis Corp. (a)........................................... 450,600 46,777,912
EMC Corp. (a).............................................. 800,000 78,400,000
Extreme Networks, Inc. (a)................................. 500,000 46,531,250
MMC Networks, Inc. (a)..................................... 250,000 30,453,125
Network Appliance, Inc. (a)................................ 300,000 35,100,000
ONI Systems Corp. (a)...................................... 175,000 16,679,688
Redback Networks, Inc. (a)................................. 150,000 22,406,250
Sun Microsystems, Inc. .................................... 400,000 50,775,000
Turnstone Systems, Inc. (a)................................ 207,000 12,187,125
--------------
402,957,225
--------------
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 75

YOUR FUND'S INVESTMENTS

August 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMPUTERS--SERVICES 0.7%
Mercury Interactive Corp. (a).............................. 175,000 $ 21,382,813
--------------

COMPUTERS--SOFTWARE 22.4%
Adobe Systems, Inc. ....................................... 250,000 32,500,000
Ariba, Inc. (a)............................................ 600,000 94,425,000
Art Technology Group, Inc. (a)............................. 425,000 43,323,437
BEA Systems, Inc. (a)...................................... 600,000 40,837,500
Check Point Software Technologies Ltd. (a)................. 500,000 72,906,250
I2 Technologies, Inc. (a).................................. 550,000 93,053,125
Interwoven, Inc. (a)....................................... 550,000 52,800,000
McDATA Corp. (a)........................................... 200,000 21,512,500
Micromuse, Inc. (a)........................................ 175,000 26,578,125
Oracle Corp. (a)........................................... 350,000 31,828,125
Rational Software Corp. (a)................................ 300,000 38,606,250
Siebel Systems, Inc. (a)................................... 300,000 59,343,750
VeriSign, Inc. (a)......................................... 75,000 14,915,625
--------------
622,629,687
--------------
CONSUMER SERVICES 0.9%
TMP Worldwide, Inc. (a).................................... 350,000 24,215,625
--------------

ELECTRONICS--MANUFACTURING 2.2%
Flextronics International Ltd. (Singapore) (a)............. 125,000 10,414,063
Jabil Circuit, Inc. (a).................................... 225,000 14,357,813
Power-One, Inc. (a)........................................ 225,000 35,648,437
--------------
60,420,313
--------------
ELECTRONICS--SEMICONDUCTORS 21.4%
Analog Devices, Inc. (a)................................... 250,000 25,125,000
Applied Micro Circuits Corp. (a)........................... 625,000 126,835,938
Broadcom Corp. (a)......................................... 300,000 75,000,000
GlobeSpan Semiconductor, Inc. (a).......................... 475,000 57,207,812
Intel Corp. ............................................... 750,000 56,156,250
Micron Technology, Inc. ................................... 700,000 57,225,000
PMC Sierra, Inc. (a)....................................... 425,000 100,300,000
QLogic Corp. (a)........................................... 75,000 8,512,500
TranSwitch Corp. (a)....................................... 250,000 15,046,875
Virata Corp. (a)........................................... 150,000 10,312,500
Vitesse Semiconductor Corp. (a)............................ 325,000 28,864,062
Xilinx, Inc. (a)........................................... 400,000 35,550,000
--------------
596,135,937
--------------
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 76

YOUR FUND'S INVESTMENTS

August 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
HEALTHCARE 2.4%
Allergan, Inc. ............................................ 125,000 $ 9,140,625
MedImmune, Inc. (a)........................................ 340,000 28,602,500
MiniMed, Inc. (a).......................................... 200,000 14,359,375
Quest Diagnostics, Inc. (a)................................ 125,000 15,468,750
--------------
67,571,250
--------------

TOTAL LONG-TERM INVESTMENTS 99.3%
(Cost $1,800,593,586)............................................... 2,764,048,944

REPURCHASE AGREEMENT 0.5%
State Street Bank & Trust Co. ($13,465,000 par collateralized by
U.S. Government Obligations in a pooled cash account, dated
08/31/00, to be sold on 09/01/00 at $13,467,457)
(Cost $13,465,000).................................................. 13,465,000
--------------

TOTAL INVESTMENTS 99.8%
(Cost $1,814,058,586)............................................... 2,777,513,944

OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%........................... 5,467,561
--------------
NET ASSETS 100.0%.................................................... $2,782,981,505
==============
</TABLE>

(a) Non-income producing security as this stock does not currently declare
dividends.

ADR--American Depositary Receipt

See Notes to Financial Statements

F-4
<PAGE> 77

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
August 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $1,814,058,586)..................... $2,777,513,944
Cash........................................................ 7,456,490
Receivables:
Investments Sold.......................................... 30,171,766
Fund Shares Sold.......................................... 11,085,577
Dividends................................................. 119,625
Interest.................................................. 2,457
--------------
Total Assets............................................ 2,826,349,859
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 35,732,973
Fund Shares Repurchased................................... 3,428,604
Distributor and Affiliates................................ 1,983,889
Investment Advisory Fee................................... 1,101,932
Accrued Expenses............................................ 1,094,050
Trustees' Deferred Compensation and Retirement Plans........ 26,906
--------------
Total Liabilities....................................... 43,368,354
--------------
NET ASSETS.................................................. $2,782,981,505
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,942,518,315
Net Unrealized Appreciation................................. 963,455,358
Accumulated Net Investment Loss............................. (26,236)
Accumulated Net Realized Loss............................... (122,965,932)
--------------
NET ASSETS.................................................. $2,782,981,505
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $928,793,267 and 34,646,131 shares of
beneficial interest issued and outstanding)............. $ 26.81
Maximum sales charge (5.75%* of offering price)......... 1.64
--------------
Maximum offering price to public........................ $ 28.45
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $1,442,188,143 and 54,233,016 shares of
beneficial interest issued and outstanding)............. $ 26.59
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $412,000,095 and 15,494,114 shares of
beneficial interest issued and outstanding)............. $ 26.59
==============
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

F-5
<PAGE> 78

Statement of Operations
For the Year Ended August 31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,711,398
Dividends................................................... 474,348
-------------
Total Income............................................ 5,185,746
-------------
EXPENSES:
Investment Advisory Fee..................................... 12,986,971
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $1,213,003, $8,199,161 and $2,260,357,
respectively)............................................. 11,672,521
Shareholder Services........................................ 4,044,981
Registration Fee............................................ 880,273
Shareholder Reports......................................... 407,818
Custody..................................................... 138,758
Legal....................................................... 37,850
Trustees' Fees and Related Expenses......................... 11,601
Other....................................................... 270,785
-------------
Total Expenses.......................................... 30,451,558
Less Credits Earned on Cash Balances.................... 25,089
-------------
Net Expenses............................................ 30,426,469
-------------
NET INVESTMENT LOSS......................................... $ (25,240,723)
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $(121,140,584)
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 25,307,608
End of the Period......................................... 963,455,358
-------------
Net Unrealized Appreciation During the Period............... 938,147,750
-------------
NET REALIZED AND UNREALIZED GAIN............................ $ 817,007,166
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 791,766,443
=============
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 79

Statement of Changes in Net Assets
For the Year Ended August 31, 2000 and the Period July 26, 1999 (Commencement of
Investment Operations) through August 31, 1999

<TABLE>
<CAPTION>
JULY 26, 1999
(COMMENCEMENT OF
YEAR ENDED INVESTMENT OPERATIONS)
AUGUST 31, 2000 TO AUGUST 31, 1999
------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss............................ $ (25,240,723) $ (325,266)
Net Realized Loss.............................. (121,140,584) (1,825,348)
Net Unrealized Appreciation During the
Period....................................... 938,147,750 25,307,608
-------------- ------------

NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... 791,766,443 23,156,994
-------------- ------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold...................... 2,224,548,079 220,058,816
Cost of Shares Repurchased..................... (475,324,655) (1,324,172)
-------------- ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................. 1,749,223,424 218,734,644
-------------- ------------
TOTAL INCREASE IN NET ASSETS................... 2,540,989,867 241,891,638
NET ASSETS:
Beginning of the Period........................ 241,991,638 100,000
-------------- ------------
End of the Period (Including accumulated net
investment loss of $26,236 and $1,367,
respectively)................................ $2,782,981,505 $241,991,638
============== ============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 80

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JULY 26, 1999
(COMMENCEMENT OF
YEAR ENDED INVESTMENT OPERATIONS)
AUGUST 31, 2000 TO AUGUST 31, 1999
CLASS A SHARES -----------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $ 11.17 $10.00
------- ------
Net Investment Loss........................ (.16) (.01)
Net Realized and Unrealized Gain........... 15.80 1.18
------- ------
Total from Investment Operations............. 15.64 1.17
------- ------
NET ASSET VALUE, END OF THE PERIOD........... $ 26.81 $11.17
======= ======

Total Return (a)............................. 139.93% 11.70%*
Net Assets at End of the Period (In
millions).................................. $ 928.8 $ 49.7
Ratio of Expenses to Average Net Assets...... 1.47% 1.45%
Ratio of Net Investment Loss to Average Net
Assets..................................... (1.14%) (1.03%)
Portfolio Turnover........................... 167% 7%*
</TABLE>

* Non-Annualized

See Notes to Financial Statements

F-8
<PAGE> 81

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JULY 26, 1999
(COMMENCEMENT OF
YEAR ENDED INVESTMENT OPERATIONS)
AUGUST 31, 2000 TO AUGUST 31, 1999
CLASS B SHARES -----------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 11.16 $ 10.00
------- -------
Net Investment Loss........................... (.28) (.02)
Net Realized and Unrealized Gain.............. 15.71 1.18
------- -------
Total from Investment Operations................ 15.43 1.16
------- -------
NET ASSET VALUE, END OF THE PERIOD.............. $ 26.59 $ 11.16
======= =======

Total Return (a)................................ 138.17% 11.60%*
Net Assets at End of the Period (In millions)... $1,442.2 $ 164.3
Ratio of Expenses to Average Net Assets......... 2.23% 2.21%
Ratio of Net Investment Loss to Average Net
Assets........................................ (1.89%) (1.79%)
Portfolio Turnover.............................. 167% 7%*
</TABLE>

* Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 5%,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. If the sales charges were
included, total returns would be lower.

See Notes to Financial Statements

F-9
<PAGE> 82

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JULY 26, 1999
(COMMENCEMENT OF
YEAR ENDED INVESTMENT OPERATIONS)
AUGUST 31, 2000 TO AUGUST 31, 1999
CLASS C SHARES -----------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD........ $ 11.16 $10.00
------- ------
Net Investment Loss........................... (.27) (.02)
Net Realized and Unrealized Gain.............. 15.70 1.18
------- ------
Total from Investment Operations................ 15.43 1.16
------- ------
NET ASSET VALUE, END OF THE PERIOD.............. $ 26.59 $11.16
======= ======

Total Return (a)................................ 138.17% 11.60%*
Net Assets at End of the Period (In millions)... $ 412.0 $ 28.0
Ratio of Expenses to Average Net Assets......... 2.22% 2.21%
Ratio of Net Investment Loss to Average Net
Assets........................................ (1.88%) (1.79%)
Portfolio Turnover.............................. 167% 7%*
</TABLE>

* Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 1%,
charged on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower.

See Notes to Financial Statements

F-10
<PAGE> 83

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Technology Fund (the "Fund") is organized as a series of Van Kampen
Equity Trust II (the "Trust"), a Delaware business trust, and is registered as a
diversified open-end investment management company under the Investment Company
Act of 1940, as amended. The Fund's investment objective is to seek capital
appreciation through investments in common stock of companies considered by the
Fund's management to rely extensively on technology, science or communications
in their product development or operations. The Fund commenced investment
operations on July 26, 1999 with three classes of common shares: Class A, Class
B, and Class C.

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 accounting principles
generally accepted in the United States of America 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 Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the mean of the bid and asked prices, or, if not
available, their fair value as determined in accordance with procedures
established in good faith by the Board of Trustees. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost which
approximates market value.

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

The Fund may invest in repurchase agreements which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to

F-11
<PAGE> 84

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.

C. INCOME AND EXPENSE Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Income and expenses of the
Fund are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and transfer agency costs which are unique to each
class of shares.

D. 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.

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of loss and offset such losses against any future realized capital gains.
At August 31, 2000, the Fund had an accumulated capital loss carryforward for
tax purposes of $10,164,534 which will expire between August 31, 2007 and August
31, 2008.

Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions and as a result of post October 31 losses which are not recognized
for tax purposes until the first day following the fiscal year.

At August 31, 2000, for federal income tax purposes, cost of long- and
short-term investments is $1,823,426,636, the aggregate gross unrealized
appreciation is $969,434,037 and the aggregate gross unrealized depreciation is
$15,346,729, resulting in net unrealized appreciation on long- and short-term
investments of $954,087,308.

E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
annually 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 and expenses under
generally accepted accounting principles and federal income tax purposes,
permanent differences between book and tax basis reporting for the current
fiscal year have been identified and appropriately reclassified. For the year
ended August 31, 2000, a permanent difference related to a net operating loss
totaling $25,215,854 has been reclassified from accumulated undistributed net
investment income to capital.

F-12
<PAGE> 85

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

F. EXPENSE REDUCTIONS During the year ended August 31, 2000, the Fund's custody
fee was reduced by $25,089 as a result of credits earned on overnight cash
balances.

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 DAILY NET ASSETS % PER ANNUM
<S> <C>
First $500 million.......................................... .90 of 1%
Next $500 million........................................... .85 of 1%
Over $1 billion or thereafter............................... .80 of 1%
</TABLE>

For the year ended August 31, 2000, the Fund recognized expenses of
approximately $37,900 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 year ended August 31, 2000, the Fund recognized expenses of
approximately $80,000 representing Van Kampen Funds Inc. or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended August 31,
2000, the Fund recognized expenses of approximately $2,852,100. 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.

At August 31, 2000, Van Kampen owned 4,000 shares of Class A, 3,000 shares
of Class B, and 3,000 shares of Class C.

F-13
<PAGE> 86

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

3. CAPITAL TRANSACTIONS

At August 31, 2000, capital aggregated $686,518,418, $955,762,216 and
$300,237,681 for Classes A, B and C, respectively. For the year ended August 31,
2000, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................. 42,306,325 $ 925,557,334
Class B............................................. 45,612,013 954,197,222
Class C............................................. 16,045,889 344,793,523
----------- --------------
Total Sales........................................... 103,964,227 $2,224,548,079
=========== ==============
Repurchases:
Class A............................................. (12,109,800) $ (275,662,184)
Class B............................................. (6,093,733) (133,604,658)
Class C............................................. (3,060,811) (66,057,813)
----------- --------------
Total Repurchases..................................... (21,264,344) $ (475,324,655)
=========== ==============
</TABLE>

At August 31, 1999, capital aggregated $45,038,940, $148,236,808 and
$25,234,997 for Classes A, B and C, respectively. For the period ended August
31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................... 4,494,651 $ 45,603,198
Class B............................................... 14,753,444 148,873,096
Class C............................................... 2,537,523 25,582,522
---------- ------------
Total Sales............................................. 21,785,618 $220,058,816
========== ============
Repurchases:
Class A............................................... (49,045) $ (537,859)
Class B............................................... (41,708) (446,360)
Class C............................................... (31,487) (339,953)
---------- ------------
Total Repurchases....................................... (122,240) $ (1,324,172)
========== ============
</TABLE>

Class B shares and any dividend reinvestment plan Class B shares received
thereon, automatically convert to Class A Shares eight years after the end of
the calendar month in which the shares were purchased. For the year ended August
31, 2000 and the period ended August 31, 1999, no Class B shares converted to
Class A shares. Class C shares do not possess a conversion feature.

F-14
<PAGE> 87

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC for Class B and C
shares will be imposed on most redemptions made within five years of the
purchase for Class B and within one year of the purchase for Class C as detailed
in the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE OF DOLLAR
AMOUNT SUBJECT TO CHANGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
<S> <C> <C>
First...................................................... 5.00% 1.00%
Second..................................................... 4.00% None
Third...................................................... 3.00% None
Fourth..................................................... 2.50% None
Fifth...................................................... 1.50% None
Sixth and Thereafter....................................... None None
</TABLE>

For the year ended August 31, 2000, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$3,271,100 and CDSC on redeemed shares of approximately $2,292,800. Sales
charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $4,144,589,917 and $2,413,634,645,
respectively.

5. DISTRIBUTION AND SERVICE PLANS

The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended August 31, 2000, are payments retained by Van Kampen of
approximately $7,729,800.

F-15
<PAGE> 88

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

6. BORROWINGS

In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, entered into a $650 million committed line of credit facility
with a group of banks which expires on November 28, 2000, but is renewable with
the consent of the participating banks. Each fund is permitted to utilize the
facility in accordance with the restrictions of its prospectus. In the event the
demand for the credit facility meets or exceeds $650 million on a complex-wide
basis, each fund will be limited to its pro-rata percentage based on the net
assets of each participating fund. Interest on borrowings is charged under the
agreement at a rate of 0.50% above the federal funds rate per annum. An annual
commitment fee of 0.09% per annum is charged on the unused portion of the credit
facility, which each fund incurs based on its pro-rata percentage of quarterly
net assets. The Fund has not borrowed against the credit facility during the
period.

F-16
<PAGE> 89

VAN KAMPEN
TAX MANAGED EQUITY GROWTH FUND

Van Kampen Tax Managed Equity Growth Fund's investment objective is to seek to
provide long-term capital appreciation on an after-tax basis. The Fund's
investment adviser seeks to achieve the Fund's investment objective by investing
primarily in growth-oriented equity securities while attempting to minimize the
impact of federal income taxes on shareholder returns.

This prospectus is dated DECEMBER 29, 2000.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

PROSPECTUS

[VAN KAMPEN FUNDS LOGO]
<PAGE> 90

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 9
Purchase of Shares................................. 10
Redemption of Shares............................... 17
Distributions from the Fund........................ 18
Shareholder Services............................... 19
Federal Income Taxation............................ 20
Financial Highlights............................... 22
</TABLE>

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek to provide long-term capital
appreciation on an after-tax basis.

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's investment adviser seeks to achieve
the Fund's investment objective by investing primarily in a portfolio of
growth-oriented equity securities while attempting to minimize the impact of
federal income taxes on shareholder returns.

The Fund's investment adviser seeks to minimize the impact of federal income
taxes on shareholder returns by employing certain tax sensitive investment
strategies such as:

- Maintaining a long-term investment focus in an attempt to minimize portfolio
turnover, and, thus, reduce capital gains distributions made by the Fund.

- To minimize taxable dividends to the extent possible without subjecting the
Fund to undue risk, investing principally in stocks which pay relatively low
(or no) dividends.

- Selling securities to realize losses for purposes of offsetting capital gains
the Fund has realized or expects to realize.

- When selling a security, selling, in most cases, the shares with the higher
cost basis first.

The Fund invests primarily in a portfolio of equity securities of companies with
market capitalizations of at least $10 billion that exhibit strong or
accelerating earnings growth. The Fund emphasizes individual security selection
and buys securities of companies based upon such factors as potential growth in
earnings, quality of management and business prospects. Portfolio securities are
typically sold when assessments of the Fund's investment adviser for growth of
such securities materially change.

The Fund invests in equity securities including common and preferred stocks,
convertible securities, rights and warrants to purchase common stocks,
depository receipts and other specialty securities having equity features. The
Fund may invest up to 25% of its total assets in securities of foreign issuers.

INVESTMENT RISKS

An investment in the Fund is subject to risks, and you could lose money on your
investment in the Fund. There can be no assurance that the Fund will achieve its
investment objective.

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. Investments in equity
securities generally are affected by changes in the stock markets, which
fluctuate substantially over time, sometimes suddenly and sharply. The Fund
emphasizes securities of growth-oriented companies. The market values of growth
equity securities may be more volatile than those of other types of investments.
The returns on growth equity securities may or may not move in tandem with the
returns on other styles of investing or the overall stock markets. Different
types of stocks tend to shift in and out of favor depending on market and
economic conditions. Thus, the value of the Fund's investments will vary and at
times may be lower or higher than that of other types of funds. During an
overall stock market decline, stock prices of smaller companies (in which the
Fund may invest) often fluctuate more and may fall more than the stock prices of
larger companies.

TAX MANAGED INVESTING. Managing for after-tax returns may negatively impact the
Fund's performance. Since the Fund balances investment and tax considerations
when deciding whether to buy or sell securities, its pre-tax return may be lower
than that of a similar fund that is not tax managed. The Fund may therefore not
be a suitable investment for individual retirement accounts ("IRAs"), other tax-
exempt or tax-deferred accounts or for investors who are not sensitive to the
federal income tax consequences of their investments. Although the Fund strives
to avoid realizing taxable capital gains, it utilizes an active management style
and may realize capital gains on the sale of securities. For instance, portfolio
securities may be sold when the Fund's investment adviser believes that the tax
impact of the sale is outweighed by other factors such as the risks of holding
the security or the availability of other investments that have better potential
returns. There can be no assurance that your after-tax returns from the Fund
will be better than those you would earn from an investment in a growth fund
that is not tax managed. Changes in tax laws may limit the effective-ness of the
Fund's tax management strategies.

3
<PAGE> 92

FOREIGN RISKS. Because the Fund may own securities of foreign issuers, it may be
subject to risks not usually associated with owning securities of U.S. issuers.
These risks can include fluctuations in foreign currencies, foreign currency
exchange controls, political and economic instability, differences in financial
reporting, differences in securities regulation and trading, and foreign
taxation issues. The risks of investing in developing or emerging market
countries are greater than the risks generally associated with foreign
investment, including investment and trading limitations, greater credit and
liquidity concerns, greater political uncertainties, an economy's dependence on
international development assistance and greater foreign exchange risk and
currency transfer restrictions.

INVESTOR PROFILE

In light of the Fund's investment objective and strategies, the Fund may be
appropriate for investors who:

- Seek capital appreciation over the long term

- Seek lower taxable distributions than a traditional equity growth fund (the
Fund may not be an appropriate investment for IRAs, other tax-exempt or
tax-deferred accounts or for investors who are not sensitive to the federal
income tax consequences of their investments)

- Do not seek current income from their investment

- Can withstand substantial volatility in the value of their Fund shares

- Wish to add to their investment portfolio a fund that emphasizes a growth
style of investing primarily in equity securities while attempting to minimize
the impact of federal income taxes on shareholder returns (including investors
who have already contributed the maximum permitted amounts to IRAs or other
tax-deferred accounts, investors saving for childrens' educational expenses or
investors seeking more liquidity than that offered by variable annuities)

PERFORMANCE INFORMATION

The Fund commenced investment operations on March 28, 2000. When the Fund has
completed a full calendar year of investment operations, this section will
include charts that show annual total returns, highest and lowest quarterly
returns and average annual total returns compared to a benchmark index selected
for the Fund. This information serves as a basis for investors to evaluate the
Fund's performance and risks by looking at how the Fund's performance varies
from year-to-year and how the Fund's performance compares to a broad-based
market index that the Fund's investment adviser believes is an appropriate
benchmark for the Fund. Past performance of the Fund is not indicative of its
future performance.

4
<PAGE> 93

FEES AND EXPENSES
OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
----------------------------------------------------------------
<S> <C> <C> <C> <C>

SHAREHOLDER FEES

(fees paid directly from your investment)
----------------------------------------------------------------
</TABLE>

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets)
----------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
Management fees(5) 0.80% 0.80% 0.80%
................................................................
Distribution and/or
service (12b-1) 0.25% 1.00%(7) 1.00%(7)
fees(6)
................................................................
Other expenses(5) 3.75% 3.75% 3.74%
................................................................
Total annual fund
operating expenses(5) 4.80% 5.55% 5.54%
................................................................
</TABLE>

(5)The Fund's investment adviser is currently waiving or reimbursing a portion
of the Fund's management fees and other expenses such that the actual total
annual fund operating expenses were 1.55% for Class A Shares, 2.30% for Class
B Shares and 2.30% for Class C Shares for the fiscal period ended August 31,
2000. The fee waivers or expense reimbursements can be terminated at any
time.

(6) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and Class C Shares are each subject to a combined annual distribution
and service fee of up to 1.00% of the average daily net assets attributable
to such class of shares. See "Purchase of Shares."

(7) Because distribution and/or service (12b-1) fees are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.

Example:

The following example is intended to help you compare the cost of investing in
the Fund with the costs of investing in other mutual funds.

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,028 $1,936 $2,848 $5,145
.................................................................
Class B Shares $1,053 $1,951 $2,887 $5,264*
.................................................................
Class C Shares $653 $1,649 $2,733 $5,393
.................................................................
</TABLE>

You would pay the following expenses if you did not redeem your shares:

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,028 $1,936 $2,848 $5,145
.................................................................
Class B Shares $553 $1,651 $2,737 $5,264*
.................................................................
Class C Shares $553 $1,649 $2,733 $5,393
.................................................................
</TABLE>

*Based on conversion to Class A Shares after eight years.

5
<PAGE> 94

INVESTMENT OBJECTIVE,
POLICIES AND RISKS

The Fund's investment objective is to seek to provide long-term capital
appreciation on an after-tax basis. The Fund's investment objective may be
changed by the Fund's Board of Trustees without shareholder approval, but no
change is anticipated. If the Fund's investment objective changes, the Fund will
notify shareholders and shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. There are risks inherent in all investments in securities; accordingly,
there can be no assurance that the Fund will achieve its investment objective.

In managing the Fund, the Fund's investment adviser seeks to employ investment
strategies that attempt to achieve high after-tax returns by balancing
investment and tax considerations when deciding whether to buy or sell
securities. The Fund is designed to minimize income distributions and the
distributions of capital gains. The Fund may use, but is not limited to, the
following tax management techniques and strategies:

- Maintaining a long-term investment focus in an attempt to minimize portfolio
turnover, and, thus, reduce capital gains distributions made by the Fund.

- To minimize taxable dividends to the extent possible without subjecting the
Fund to undue risk, investing principally in stocks which pay relatively low
(or no) dividends.

- Selling securities to realize losses for purposes of offsetting capital gains
the Fund has realized or expects to realize.

- When selling a security, selling, in most cases, the shares with the higher
cost basis first.

The Fund's tax managed strategy can generally be expected to lead to lower
distributions of income and realized capital gains than funds managed without
regard to tax considerations. The Fund is actively managed, however, and there
can be no assurance that taxable distributions can always be avoided.

The Fund invests primarily in a portfolio of equity securities of companies with
market capitalizations of at least $1 billion that exhibit strong or
accelerating earnings growth. The Fund's investment adviser emphasizes a
"bottom-up" stock selection process, seeking attractive growth investments on an
individual company basis. In selecting securities for investment, the Fund's
investment adviser seeks those companies with the potential for consistent or
rising earnings growth and compelling business strategies. Investments in
growth-oriented equity securities may have above-average volatility of price
movement. Because prices of equity securities fluctuate, the value of an
investment in the Fund will vary based upon the Fund's investment performance.
The Fund attempts to reduce overall exposure to risk by adhering to a
disciplined program of intensive research, careful security selection and the
continual monitoring of the Fund's investments.

The Fund generally follows a flexible investment program seeking attractive
growth opportunities on an individual company basis. Fundamental research drives
the investment process. The Fund emphasizes companies that the Fund's investment
adviser believes are positioned to deliver stronger earnings growth than
originally anticipated by the market. The Fund's investment adviser continually
and rigorously studies company developments including business strategy,
management's focus and financial results, and closely monitors analysts' views
and expectations in seeking to identify such companies. The Fund's investment
adviser expects that many of the companies in which the Fund invests will, at
the time of investment, be experiencing high rates of earnings growth. The
securities of such companies may trade at higher price to earnings ratios
relative to more established companies and rates of earnings growth may be
volatile. However, the valuation of a security is of secondary importance in the
Fund's investment program and is viewed in context of the security's potential
for sustainable earnings growth and its ability to produce earnings higher than
the market initially anticipated.

6
<PAGE> 95

While the Fund invests primarily in common stocks, the Fund may invest in other
equity securities including preferred stocks, convertible securities, rights and
warrants to purchase common stocks, depositary receipts and other specialty
securities having equity features. Preferred stock generally has a preference as
to dividends and liquidation over an issuer's common stock but ranks junior to
debt securities in an issuer's capital structure. Unlike interest payments on
debt securities, preferred stock dividends are payable only if declared by the
issuer's board of directors. Preferred stock also may be subject to optional or
mandatory redemption provisions.

A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock or other equity security of the same or a different issuer or into
cash within a particular period of time at a specified price or formula. A
convertible security generally entitles the holder to receive interest paid or
accrued on debt securities or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities generally have characteristics similar to
both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying equity securities although the
market prices of convertible securities may be affected by any dividend changes
or other changes in the underlying equity securities.

Rights and warrants entitle the holder to buy equity securities at a specific
price for a specific period of time. Rights typically have a substantially
shorter duration than do warrants. Rights and warrants may be considered more
speculative and less liquid than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
underlying securities nor do they represent any rights in the assets of the
issuing company. Rights and warrants may lack a secondary market.

The Fund may invest in companies of any capitalization range including
securities of medium- and smaller-sized companies. The securities of medium-and
smaller-sized companies may be subject to more abrupt or erratic market
movements. These securities may have lower trading volumes or more erratic
trading than securities of large-sized companies or the market averages in
general. To the extent the Fund invests in medium- and smaller-sized companies,
it will be subject to greater investment risk than that assumed through its
investment in the securities of large-sized companies.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

7
<PAGE> 96

the Fund may experience settlement difficulties or delays not usually
encountered in the United States.

Delays in making trades in foreign securities relating to volume constraints,
limitations or restrictions, clearance or settlement procedures, or otherwise,
could impact returns and result in temporary periods when assets of the Fund are
not fully invested or attractive investment opportunities are foregone.

The Fund may invest in securities of issuers in developing or emerging market
countries. Investments in securities of issuers in developing or emerging market
countries are subject to greater risks than investments in securities of
developed countries since emerging market countries tend to have economic
structures that are less diverse and mature, and political systems that are less
stable than developed countries.

Investors should carefully consider the risks of foreign investments before
investing in the Fund.

OTHER INVESTMENTS AND RISK FACTORS

The Fund may lend its portfolio securities to broker-dealers, banks or other
recognized institutional borrowers of securities in order to generate income on
the loaned security and any collateral received. The Fund may incur lending fees
and other costs in connection with securities lending, and securities lending is
subject to the risk of default by the other party.

The Fund may from time to time sell securities short. A short sale is a
transaction in which the Fund sells a security in anticipation that the market
price of such security will decline. The Fund may sell securities it owns or has
the right to acquire at no added cost (i.e., "against the box") or it does not
own. When the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale in
order to satisfy its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security will be secured by
collateral of cash or liquid securities. Depending on arrangements made with the
broker-dealer from which it borrowed the security, the Fund may not receive any
payments (including interest) on its collateral. If the price of the security
sold short increases between the time of the short sale and the time the Fund
replaces the borrowed security, the Fund will incur a capital loss; conversely,
if the price declines, the Fund will realize a capital gain. The Fund, however,
may take advantage of hedging exceptions permitted under the Internal Revenue
Code of 1986, as amended (the "Code"), to defer the taxable event. Any gain will
be decreased, and any loss increased, by the transaction costs described above.
Although the Fund's gain is limited to the price at which it sold the security
short, its potential loss is theoretically unlimited.

The Fund may invest up to 15% of the Fund's net assets in illiquid securities
and certain restricted securities. Such securities may be difficult or
impossible to sell at the time and the price that the Fund would like. Thus, the
Fund may have to sell such securities at a lower price, sell other securities
instead to obtain cash or forego other investment opportunities.

Further information about these types of investments and other investment
practices that may be used by the Fund is contained in the Fund's Statement of
Additional Information.

The Fund balances investment and tax considerations when deciding whether to buy
and sell securities. A strategy of the Fund is to minimize capital gain
producing portfolio turnover. Notwithstanding the

8
<PAGE> 97

foregoing, the Fund may sell securities and recognize gains when the investment
adviser deems it advisable in order to take advantage of new investment
opportunities, or when the Fund's investment adviser believes the potential for
capital appreciation has lessened, or for other reasons. The Fund's portfolio
turnover rate may vary from year to year. A high portfolio turnover rate (100%
or more) increases a fund's transaction costs (including brokerage commissions
or dealer costs), which would adversely impact fund's performance. Higher
portfolio turnover may result in the realization of more short-term capital
gains than if a fund had lower portfolio turnover.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may, on a temporary basis, hold cash or invest a
portion or all of its assets in money-market instruments including obligations
of the U.S. government, its agencies or instrumentalities, obligations of
foreign sovereignties, other high-quality debt securities, including prime
commercial paper, repurchase agreements and bank obligations, such as bankers'
acceptances and certificates of deposit (including Eurodollar certificates of
deposit). Under normal market conditions, the potential for capital appreciation
on these securities will tend to be lower than the potential for capital
appreciation on other securities that may be owned by the Fund. In taking such a
defensive position, the Fund temporarily would not be pursuing and may not
achieve its investment objective.

INVESTMENT ADVISORY SERVICES

INVESTMENT ADVISER

THE ADVISER. Van Kampen Investment Advisory Corp. is the Fund's investment
adviser (the "Adviser" or "Advisory Corp."). The Adviser is a wholly owned
subsidiary of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company that administers more than
three million retail investor accounts, has extensive capabilities for managing
institutional portfolios and has more than $100 billion under management or
supervision as of September 30, 2000. Van Kampen Investments has more than 50
open-end funds, more than 30 closed-end funds and more than 2,700 unit
investment trusts that are distributed by authorized dealers nationwide. Van
Kampen Funds Inc., the distributor of the Fund (the "Distributor") and the
sponsor of the funds mentioned above, is also a wholly owned subsidiary of Van
Kampen Investments. Van Kampen Investments is an indirect wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's principal office is
located at 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555.

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
------------------------------------------------
<S> <C> <C> <C>
First $500 million 0.80%
................................................
Next $500 million 0.75%
................................................
Over $1 billion 0.70%
................................................
</TABLE>

Applying this fee schedule, the effective advisory fee rate was 0.80% of the
Fund's average daily net assets for the Fund's fiscal year ended August 31,
2000. The Fund's average daily net assets are determined by taking the average
of all of the determinations of the net assets during a given calendar month.
Such fee is payable for each calendar month as soon as practicable after the end
of that month.

The Adviser may utilize, at its own expense, credit analysis, research and
trading support services provided by its affiliate, Van Kampen Asset Management
Inc. ("Asset Management").

9
<PAGE> 98

INVESTMENT SUBADVISER

Morgan Stanley Dean Witter Investment Management Inc. is the Fund's investment
subadviser (the "Subadviser"). The Subadviser is a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. The Subadviser conducts a worldwide portfolio
management business and provides a broad range of portfolio management services
to customers in the United States and abroad. At November 30, 2000, the
Subadviser, together with its affiliated institutional asset management
companies, managed assets of approximately $171 billion, including assets under
fiduciary advice. The Subadviser's principal office is located at 1221 Avenue of
the Americas, New York, New York 10020. On December 1, 1998, Morgan Stanley
Asset Management Inc. changed its name to Morgan Stanley Dean Witter Investment
Management Inc. but continues to do business in certain instances using the name
Morgan Stanley Asset Management.

SUBADVISORY AGREEMENT. The Adviser has entered into a subadvisory agreement with
the Subadviser to assist the Adviser in performing its investment advisory
functions. The Adviser pays the Subadviser on a monthly basis a portion of the
net advisory fees the Adviser receives from the Fund.

GENERAL

From time to time, the Adviser, the Subadviser or the Distributor may
voluntarily undertake to reduce the Fund's expenses by reducing the fees payable
to them or by reducing other expenses of the Fund in accordance with such
limitations as the Adviser, the Subadviser or Distributor may establish.

PERSONAL INVESTMENT POLICIES. The Fund, the Adviser, the Subadviser and the
Distributor have adopted Codes of Ethics designed to recognize the fiduciary
relationships among the Fund, the Adviser, the Subadviser, the Distributor and
their respective employees. The Codes of Ethics permit directors, trustees,
officers and employees to buy and sell securities for their personal accounts
subject to certain restrictions. Persons with access to certain sensitive
information are subject to pre-clearance and other procedures designed to
prevent conflicts of interest.

PORTFOLIO MANAGEMENT. The Fund's portfolio managers are Philip W. Friedman,
William S. Auslander and Peter Dannenbaum.

Mr. Friedman, a Managing Director and leader of the Institutional Equity Group,
joined the Subadviser in 1997. Prior to joining the Subadviser, Mr. Friedman was
the North American Director of Equity Research at Morgan Stanley & Co.
Incorporated ("Morgan Stanley & Co.") From 1990 to 1995, he was a member of
Morgan Stanley & Co.'s Equity Research team. Mr. Friedman graduated from Rutgers
University with a B.A. (Phi Beta Kappa, Summa Cum Laude) in Economics. He also
holds an M.B.A. from J.L. Kellogg School of Management at Northwestern
University. Mr. Friedman has been a co-manager of the Fund since its inception.

Mr. Auslander, a Principal and a Portfolio Manager in the Institutional Equity
Group, joined the Subadviser in 1995 as an equity analyst in the Institutional
Equity Group. Prior to joining the Subadviser, Mr. Auslander was an equity
analyst for nine years at Icahn & Co. He graduated from the University of
Wisconsin at Madison with a B.A. in Economics and received an M.B.A. from
Columbia University in 1993. Mr. Auslander has been a co-manager of the Fund
since its inception.

Mr. Dannenbaum, a Vice President and Equity Analyst in the Institutional Equity
Group, joined the Subadviser in January 1999. Mr. Dannenbaum was an Equity
Analyst in Morgan Stanley & Co.'s Equity Research department from 1993-1998, and
a Research Associate from 1991-1993. Mr. Dannenbaum joined Morgan Stanley & Co.
in its Mergers and Acquisitions department in 1989. Mr. Dannenbaum graduated
from Temple University with a B.B.A. in Finance (Magna Cum Laude) and is a
Chartered Financial Analyst. Mr. Dannenbaum has been a co-manager of the Fund
since its inception.

PURCHASE OF SHARES

GENERAL

10
<PAGE> 99

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchase or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset value per share and adjust the offering price more frequently than once
daily if deemed desirable. Net asset value per share for each class is
determined by dividing the value of the Fund's portfolio securities, cash and
other assets (including accrued interest) attributable to such class, less all
liabilities (including accrued expenses) attributable to such class, by the
total number of shares of the class outstanding. Such computation is made by
using prices as of the close of trading on the Exchange and (i) valuing
securities listed or traded on a national securities exchange at the last
reported sale price, or if there has been no sale that day, at the mean between
the last reported bid and asked prices, (ii) valuing over-the-counter securities
at the last reported sale price from the National Association of Securities
Dealers Automated Quotations ("NASDAQ") or, if there has been no sale on that
day, at the mean between the last reported bid and asked prices, (iii) valuing
unlisted securities at the mean between the last reported bid and asked prices
obtained from reputable brokers and (iv) valuing any securities for which market
quotations are not readily available and any other assets at fair value as
determined in good faith by the Adviser in accordance with procedures
established by the Fund's Board of Trustees. Debt securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.

The Fund has adopted a distribution plan (the "Distribution Plan") with respect
to each of its Class A Shares, Class B Shares and Class C Shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund also has adopted a service plan (the "Service Plan") with
respect to each such class of its shares. Under the Distribution Plan and the
Service Plan, the Fund pays distribution fees in connection with the sale and
distribution of its shares and service fees in connection with the provision of
ongoing services to shareholders of each such class and the maintenance of
shareholder accounts.

11
<PAGE> 100

comparing classes of shares, the tables under the Prospectus heading "Fees and
Expenses of the Fund" provide a summary of sales charges and expenses and an
example of the sales charges and expenses of the Fund applicable to each class
of shares offered herein.

CLASS A SHARES

SALES CHARGE SCHEDULE

No sales charge is imposed on Class A Shares received from reinvestment of
dividends or capital gain dividends.

12
<PAGE> 101

CLASS B SHARES

Class B Shares of the Fund are sold at net asset value and are subject to a
contingent deferred sales charge if redeemed within five years of purchase as
shown in the table as follows:

CLASS B SHARES

SALES CHARGE SCHEDULE

In determining whether a contingent deferred sales charge applies to a
redemption, it is assumed that the shares being redeemed first are any shares in
the shareholder's Fund account that are not subject to a contingent deferred
sales charge followed by shares held the longest in the shareholder's account.

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
contingent deferred sales charge of 1.00% of the dollar amount subject to charge
if redeemed within one year of purchase.

The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gain dividends. It
is presently the policy of the Distributor not to accept any order for Class C
Shares in an amount of $1 million or more because it ordinarily will be more
advantageous for an investor making such an investment to purchase Class A
Shares.

In determining whether a contingent deferred sales charge applies to a
redemption, it is assumed that the shares being redeemed first are any shares in
the shareholder's Fund account that are not subject to a contingent deferred
sales charge followed by shares held the longest in the shareholder's account.

CONVERSION FEATURE

13
<PAGE> 102

dividends or capital gain dividends constituting "preferential dividends" under
the federal income tax law and (ii) the conversion of shares does not constitute
a taxable event under federal income tax law. The conversion may be suspended if
such an opinion is no longer available and such shares might continue to be
subject to the higher aggregate fees applicable to such shares for an indefinite
period.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

QUANTITY DISCOUNTS

A person eligible for a reduced sales charge includes an individual, his or her
spouse and children under 21 years of age and any corporation, partnership or
sole proprietorship which is 100% owned, either alone or in combination, by any
of the foregoing; a trustee or other fiduciary purchasing for a single trust or
for a single fiduciary account, or a "company" as defined in Section 2(a)(8) of
the 1940 Act.

CUMULATIVE PURCHASE DISCOUNT. The size of investment shown in the Class A Shares
sales charge table may also be determined by combining the amount being invested
in shares of the Participating Funds plus the current offering price of all
shares of the Participating Funds currently owned.

14
<PAGE> 103

shares totaling 5% of the dollar amount of the Letter of Intent to be held by
Investor Services in the name of the shareholder. In the event the Letter of
Intent goal is not achieved within the specified period, the investor must pay
the difference between the sales charge applicable to the purchases made and the
reduced sales charges previously paid. Such payments may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient escrowed
shares to obtain the difference.

OTHER PURCHASE PROGRAMS

UNIT INVESTMENT TRUST REINVESTMENT PROGRAM. The Fund permits unitholders of unit
investment trusts to reinvest distributions from such trusts in Class A Shares
of the Fund at net asset value per share and with no minimum initial or
subsequent investment requirement, if the administrator of an investor's unit
investment trust program meets certain uniform criteria relating to cost savings
by the Fund and the Distributor. The total sales charge for all other
investments made from unit investment trust distributions will be 1.00% of the
offering price (1.01% of net asset value). Of this amount, the Distributor will
pay to the authorized dealer, if any, through which such participation in the
qualifying program was initiated 0.50% of the offering price as a dealer
concession or agency commission. Persons desiring more information with respect
to this program, including the terms and conditions that apply to the program,
should contact their authorized dealer or the Distributor.

NET ASSET VALUE PURCHASE OPTIONS. Class A Shares of the Fund may be purchased at
net asset value, generally upon written assurance that the purchase is made for
investment purposes and that the shares will not be resold except through
redemption by the Fund, by:

(1) Current or retired trustees or directors of funds advised by Morgan Stanley
Dean Witter & Co. and any of its subsidiaries and such persons' families and
their beneficial accounts.

(5) Trustees and other fiduciaries purchasing shares for retirement plans which
invest in multiple fund families through broker-dealer retirement plan
alliance programs that have entered into

15
<PAGE> 104

agreements with the Distributor and which are subject to certain minimum
size and operational requirements. Trustees and other fiduciaries should
refer to the Statement of Additional Information for further details with
respect to such alliance programs.

(7) Accounts as to which a bank or broker-dealer charges an account management
fee ("wrap accounts"), provided the bank or broker-dealer has a separate
agreement with the Distributor.

(8) Trusts created under pension, profit sharing or other employee benefit plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), or custodial accounts held by a bank created pursuant
to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code and assets held by an employer
or trustee in connection with an eligible deferred compensation plan under
Section 457 of the Code. Such plans will qualify for purchases at net asset
value provided that (1) the total plan assets are at least $1 million or (2)
such shares are purchased by an employer sponsored plan with more than 100
eligible employees. Section 403(b) and similar accounts for which Van Kampen
Trust Company serves as custodian will not be eligible for net asset value
purchases based on the aggregate investment made by the plan or the number
of eligible employees, except under certain uniform criteria established by
the Distributor from time to time. A commission will be paid to authorized
dealers who initiate and are responsible for such purchases within a rolling
twelve-month period as follows: 1.00% on sales to $2 million, plus 0.80% on
the next $1 million, plus 0.50% on the next $47 million, plus 0.25% on the
excess over $50 million.

The term "families" includes a person's spouse, children and grandchildren under
21 years of age, parents, and the parents of the person's spouse.

16
<PAGE> 105

REDEMPTION OF
SHARES

Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the redemption request and any other necessary
documents in proper form as described below. Such payment may be postponed or
the right of redemption suspended as provided by the rules of the SEC. Such
payment may, under certain circumstances, be paid wholly or in part by a
distribution-in-kind of portfolio securities. A distribution-in-kind may result
in recognition by the shareholder of a gain or loss for federal income tax
purposes when such securities are distributed, and the shareholder may have
brokerage costs and a gain or loss for federal income tax purposes upon the
shareholder's disposition of such securities. If the shares to be redeemed have
been recently purchased by check, Investor Services may delay the payment of
redemption proceeds until it confirms that the purchase check has cleared, which
may take up to 15 calendar days from the date of purchase. A taxable gain or
loss may be recognized by the shareholder upon redemption of shares.
Certificated shares must be properly endorsed for transfer and must accompany a
written redemption request.

WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor Services
Inc., PO Box 218256, Kansas City, MO 64121-8256. The request for redemption
should indicate the number of shares or dollar amount to be redeemed, the Fund
name and class designation of such shares and the shareholder's account number.
The redemption request must be signed by all persons in whose names the shares
are registered. Signatures must conform exactly to the account registration. If
the proceeds of the redemption exceed $100,000, or if the proceeds are not to be
paid to the record owner at the record address, or if the record address has
changed within the previous 15 calendar days, signature(s) must be guaranteed by
one of the following: a bank or trust company; a broker-dealer; a credit union;
a national securities exchange, registered securities association or clearing
agency; a savings and loan association; or a federal savings bank.

17
<PAGE> 106

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. A shareholder
automatically has telephone redemption privileges unless the shareholder
indicates otherwise by checking the applicable box on the account application
form. For accounts that are not established with telephone redemption
privileges, a shareholder may call the Fund at (800) 341-2911 to request that a
copy of the Telephone Redemption Authorization form be sent to the shareholder
for completion. To redeem shares, contact the telephone transaction line at
(800) 421-5684. Shares may also be redeemed by phone through FundInfo(R)
(automated telephone system) which is generally accessible 24 hours a day, seven
days a week at (800) 847-2424. Van Kampen Investments and its subsidiaries,
including Investor Services, and the Fund employ procedures considered by them
to be reasonable to confirm that instructions communicated by telephone are
genuine. Such procedures include requiring certain personal identification
information prior to acting upon telephone instructions, tape-recording
telephone communications and providing written confirmation of instructions
communicated by telephone. If reasonable procedures are employed, none of Van
Kampen Investments, Investor Services or the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. Telephone
redemptions may not be available if the shareholder cannot reach Investor
Services by telephone, whether because all telephone lines are busy or for any
other reason; in such case, a shareholder would have to use the Fund's other
redemption procedure previously described. Requests received by Investor
Services prior to 4:00 p.m., New York time, will be processed at the next
determined net asset value per share. These privileges are available for most
accounts other than retirement accounts or accounts with shares represented by
certificates. If an account has multiple owners, Investor Services may rely on
the instructions of any one owner.

For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check and amounts of at least
$1,000 up to $1 million may be redeemed daily if the proceeds are to be paid by
wire. The proceeds must be payable to the shareholder(s) of record and sent to
the address of record for the account or wired directly to their predesignated
bank account. This privilege is not available if the address of record has been
changed within 15 days prior to a telephone redemption request. Proceeds from
redemptions payable by wire transfer are expected to be wired on the next
business day following the date of redemption. The Fund reserves the right at
any time to terminate, limit or otherwise modify this redemption privilege.

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive distributions from the Fund of dividends and capital
gain dividends.

CAPITAL GAIN DIVIDENDS. The Fund may realize capital gains or losses when it
sells securities, depending on whether the sales prices for the securities are
higher

18
<PAGE> 107

or lower than purchase prices. The Fund distributes any net capital gains to
shareholders as capital gain dividends at least annually. As in the case of
dividends, capital gain dividends are automatically reinvested in additional
shares of the Fund at the next determined net asset value unless the shareholder
instructs otherwise.

SHAREHOLDER SERVICES

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gain dividends in shares of the
Fund. Such shares are acquired at net asset value per share (without sales
charge) on the applicable payable date of the dividend or capital gain dividend.
Unless the shareholder instructs otherwise, the reinvestment plan is automatic.
This instruction may be made by telephone by calling (800) 341-2911 ((800)
421-2833 for the hearing impaired) or by writing to Investor Services. The
investor may, on the account application form or prior to any declaration,
instruct that dividends and/or capital gain dividends be paid in cash, be
reinvested in the Fund at the next determined net asset value or be invested in
another Participating Fund at the next determined net asset value.

Exchanges of shares are sales of shares of one Participating Fund and purchases
of shares of another Participating Fund. The sale may result in a gain or

19
<PAGE> 108

loss for federal income tax purposes. If the shares sold have been held for less
than 91 days, the sales charge paid on such shares is carried over and included
in the tax basis of the shares acquired.

A shareholder wishing to make an exchange may do so by sending a written request
to Investor Services, by contacting the telephone transaction line at (800)
421-5684, through FundInfo(R) (automated telephone system) which is generally
accessible 24 hours a day, seven days a week at (800) 847-2424 or through the
internet at www.vankampen.com. A shareholder automatically has these telephone
exchange privileges unless the shareholder indicates otherwise by checking the
applicable box on the account application form. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions,
tape-recording telephone communications, and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services or the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine. If
the exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gain dividend options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privilege to such shareholders. For further information
on these restrictions, see the Fund's Statement of Additional Information. The
Fund may modify, restrict or terminate the exchange privilege at any time on 60
days' notice to its shareholders of any termination or material amendment.

FEDERAL INCOME TAXATION

20
<PAGE> 109

October, November or December, payable to shareholders of record on a specified
date in such month and paid during January of the following year will be treated
as having been distributed by the Fund and received by the shareholders on the
December 31st prior to the date of payment. The Fund will inform shareholders of
the source and tax status of all distributions promptly after the close of each
calendar year.

21
<PAGE> 110

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the period indicated. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Ernst & Young LLP, independent auditors, whose
report, along with the Fund's most recent financial statements, is included in
the Statement of Additional Information and may be obtained by shareholders
without charge by calling the telephone number on the back cover of this
prospectus. This information should be read in conjunction with the financial
statements and notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
March 28, 2000 March 28, 2000 March 28, 2000
(Commencement of (Commencement of (Commencement of
Investment Operations) Investment Operations) Investment Operations)
to August 31, 2000 to August 31, 2000 to August 31, 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................... $10.00 $10.00 $10.00
-------- ------- -------
Net Investment Income......... (0.01) (0.03) (0.03)
Net Realized and Unrealized
Loss........................ (0.30) (0.23) (0.24)
-------- ------- -------

Total from Investment
Operations.................... (0.31) (0.26) (0.27)
-------- ------- -------

Net Asset Value, End of the
Period........................ $ 9.69 $ 9.74 $ 9.73
======== ======= =======

Total Return.................... -3.20%(1)** -2.60%(2)** -2.80%(3)**
Net Assets at End of the Period
(In millions)................. $ 5.0 $ 4.5 $ 3.1
Ratio of Expenses to Average Net
Assets*....................... 1.55% 2.30% 2.30
Ratio of Net Investment Income
to Average Net Assets*........ -0.57% -1.32% -1.32%
Portfolio Turnover.............. 23%** 23%** 23%**
</TABLE>

* If certain expenses had not been waived by the Adviser, Total Return would
have been lower and the ratios would have been as follows:

<TABLE>
<S> <C> <C>
Ratio of Expenses to Average Net
Assets............................. 4.80% 5.55%
Ratio of Net Investment Loss to
Average Net Assets................. -3.82% -4.57%

<S> <C> <C>
Ratio of Expenses to Average Net
Assets............................. 5.54%
Ratio of Net Investment Loss to
Average Net Assets................. -4.56%
</TABLE>

** Non-Annualized

(1)Assumes reinvestment of all distributions for the period and does not include
payment of the maximum sales charge of 5.75% or contingent deferred sales
charge ("CDSC"). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within one year of purchase. If the sale
charges were included, total returns would be lower.

(2)Assumes reinvestment of all distributions for the period and does not include
payment of the maximum contingent deferred sales charge of 5%, charged on
certain redemptions made within one year of purchase and declining to 0%
after the fifth year. If the sales charge was included, total returns would
be lower.

(3)Assumes reinvestment of all distributions for the period and does not include
payment of the maximum contingent deferred sales charge of 1%, charged on
certain redemptions made within one year of purchase. If the sales charge was
included, total returns would be lower.

22
<PAGE> 111

BOARD OF TRUSTEES
AND OFFICERS

BOARD OF TRUSTEES

OFFICERS

Richard F. Powers, III*
President

Stephen L. Boyd*

Executive Vice President and Chief Investment Officer

A. Thomas Smith III*
Vice President and Secretary

John H. Zimmermann, III*

Vice President

Michael H. Santo*
Vice President

Richard A. Ciccarone*

Vice President

John R. Reynoldson*

Vice President

John L. Sullivan*

Vice President, Chief Financial Officer and Treasurer

* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.

+ Retiring effective December 31, 2000.

FOR MORE INFORMATION

EXISTING SHAREHOLDERS OR PROSPECTIVE INVESTORS
Call your broker or (800) 341-2911
7:00 a.m. to 7:00 p.m. Central time Monday through Friday

DEALERS
For dealer information, selling agreements, wire orders, or
redemptions, call the Distributor at (800) 421-5666

TELECOMMUNICATIONS DEVICE FOR THE DEAF
For shareholder and dealer inquiries through Telecommunications Device for the
Deaf (TDD), call (800) 421-2833

FUNDINFO(R)
For automated telephone services, call (800) 847-2424

WEB SITE
www.vankampen.com

VAN KAMPEN TAX MANAGED EQUITY GROWTH FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Subadviser
MORGAN STANLEY DEAN WITTER INVESTMENT
MANAGEMENT INC.
1221 Avenue of the Americas
New York, NY 10020

Distributor
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Transfer Agent
VAN KAMPEN INVESTOR SERVICES INC.
PO Box 218256
Kansas City, MO 64121-8256
Attn: Van Kampen Tax Managed Equity Growth Fund

Custodian
STATE STREET BANK AND TRUST COMPANY

225 Franklin Street, PO Box 1713

Boston, MA 02105-1713
Attn: Van Kampen Tax Managed Equity Growth Fund

Legal Counsel
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606

Independent Auditors

ERNST & YOUNG LLP

233 South Wacker Drive

Chicago, IL 60606

<PAGE> 112

VAN KAMPEN
TAX MANAGED EQUITY GROWTH FUND

Class A Shares

Class B Shares

Class C Shares

PROSPECTUS

DECEMBER 29, 2000

A Statement of Additional Information, which
contains more details about the Fund, is
incorporated by reference in its entirety into
this prospectus.

Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC's Public
Reference Room in Washington, DC or on the
EDGAR database on the SEC's internet site
(http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room
may be obtained by calling the SEC at
1-202-942-8090. You can also request copies of
these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-
mail address ([email protected]) or by
writing the Public Reference Section of the
SEC, Washington, DC 20549-0102.

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-9279 .
TMEG PRO 12/00

<PAGE> 113

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
TAX MANAGED EQUITY GROWTH FUND

Van Kampen Tax Managed Equity Growth Fund (the "Fund") is a mutual fund
with the investment objective to seek to provide long-term capital appreciation
on an after-tax basis. The Fund's investment adviser seeks to achieve the Fund's
investment objective by investing primarily in growth-oriented equity securities
while attempting to minimize the impact of federal income taxes on shareholder
returns.

The Fund is organized as a diversified series of the Van Kampen Equity
Trust II, an open-end management investment company (the "Trust").

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

TABLE OF CONTENTS
---------------------------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective, Policies and Risks.................... B-4
Investment Restrictions..................................... B-13
Trustees and Officers....................................... B-15
Investment Advisory Agreement............................... B-26
Other Agreements............................................ B-27
Distribution and Service.................................... B-28
Transfer Agent.............................................. B-32
Portfolio Transactions and Brokerage Allocation............. B-32
Shareholder Services........................................ B-34
Redemption of Shares........................................ B-37
Contingent Deferred Sales Charge-Class A.................... B-37
Waiver of Class B and Class C Contingent Deferred Sales
Charges................................................... B-38
Taxation.................................................... B-40
Fund Performance............................................ B-44
Other Information........................................... B-47
Report of Independent Auditors.............................. F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-12
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED DECEMBER 29, 2000.

TMEG SAI 12/00

<PAGE> 114

GENERAL INFORMATION

The Fund is organized as a separate series of the Trust. The Trust is an
unincorporated business trust established under the laws of the State of
Delaware by an Agreement and Declaration of Trust (the "Declaration of Trust")
dated as of April 1, 1999. The Declaration of Trust permits the Trustees to
create one or more separate investment portfolios and issue a series of shares
for each portfolio, such as the Fund. The Trustees may create one or more
classes of shares for each such series.

Van Kampen Investment Advisory Corp. (the "Adviser" or "Advisory Corp."),
Van Kampen Funds Inc. (the "Distributor") and Van Kampen Investor Services Inc.
("Investor Services") are wholly owned subsidiaries of Van Kampen Investments
Inc. ("Van Kampen Investments"), which is an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. ("Morgan Stanley Dean Witter"). The principal
office of the Trust, the Fund, the Adviser, the Distributor and Van Kampen
Investments is located at 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555. The principal office of Investor Services is located at 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153. Morgan Stanley Dean Witter
Investment Management Inc. ("MSDWIM" or the "Subadviser") is a wholly owned
subsidiary of Morgan Stanley Dean Witter. The principal office of the Subadviser
is located at 1221 Avenue of the Americas, New York, NY 10020.

B-2
<PAGE> 115

two-thirds of the shares then outstanding cast in person or by proxy at such
meeting. The Fund will assist such holders in communicating with other
shareholders of the Fund to the extent required by the Investment Company Act of
1940, as amended (the "1940 Act"), or rules or regulations promulgated by the
Securities and Exchange Commission ("SEC").

In the event of liquidation, each of the shares of the Fund is entitled to
its portion of all of the Fund's net assets after all debts and expenses of the
Fund have been paid. Since Class B Shares and Class C Shares have higher
distribution fees and transfer agency costs, the liquidation proceeds to holders
of Class B Shares and Class C Shares are likely to be less than the liquidation
proceeds to holders of Class A Shares.

<TABLE>
<CAPTION>
Amount of
Ownership at
December 1, Class Percentage
Name and Address of Holder 2000 of Shares Ownership
-------------------------- ------------ --------- ----------
<S> <C> <C> <C>
Van Kampen Funds 80,000 A 8.16%
Attn Dominick Cogliandro 60,000 B 7.77%
1 Chase Manhattan Plz Fl 37 60,000 C 9.54%
New York, NY 10005-1401
Edward Jones & Co. 319,968 A 32.63%
Attn Mutual Fund Shareholder Accounting 74,271 B 9.62%
201 Progress Pkwy 118,471 C 18.84%
Maryland Hts, MO 63043-3009
MLPF&S for the Sole Benefit of Its Customers 106,818 A 10.89%
Attn Fund Administration 97J79 200,740 B 26.00%
4800 Deer Lake Dr East, 2nd Floor 123,876 C 19.70%
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette Securities Corp. Inc. 54,530 A 5.56%
PO Box 2052 34,844 C 5.54%
Jersey City, NJ 07303-2052
Morgan Stanley & Co. FBO 53,476 A 5.45%
Philip W. Friedman
7 W 81st Street Apt 3C
New York, NY 10024-6049
</TABLE>

B-3
<PAGE> 116

INVESTMENT OBJECTIVE, POLICIES AND RISKS

CONVERTIBLE SECURITIES, RIGHTS AND WARRANTS

The Fund may invest in convertible securities, rights and warrants. A
convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock or other equity security of the same or a different issuer or into
cash within a particular period of time at a specified price or formula. A
convertible security generally entitles the holder to receive interest paid or
accrued on debt securities or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities generally have characteristics similar to
both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying equity security although the
market prices of convertible securities may be affected by any such dividend
changes or other changes in the underlying equity securities. Rights and
warrants are instruments giving holders the right, but not the obligation, to
buy shares of a company at a given price during a specified period. Rights
typically have a substantially shorter term than do warrants. Rights and
warrants may be considered more speculative and less liquid than certain other
types of investments in that they do not entitle a holder to dividends or voting
rights with respect to the underlying securities nor do they represent any
rights in the assets of the issuing company. Rights and warrants may lack a
secondary market. Equity-linked securities are convertible instruments whose
value is based upon the value of one or more underlying equity securities, a
reference rate or an index. Equity-linked securities come in many forms and may
include features, among others, such as the following: (i) may be issued by the
issuer of the underlying equity security or by a company other than the one to
which the instrument is linked (usually an investment bank), (ii) may convert
into equity securities, such as common stock, within a stated period from the
issue date or may be redeemed for cash or some combination of cash and the
linked security at a value based upon the value of the underlying equity
security within a stated period from the issue date, (iii) may have various
conversion features prior to maturity at the option of the holder or the issuer
or both, (iv) may limit the appreciation value with caps or collars of the value
of underlying equity security and (v) may have fixed, variable or no interest
payments during the life of the security which reflect the actual or a
structured return relative to the underlying dividends of the linked equity
security. Investments in equity-linked securities may subject the Fund to
additional risks not ordinarily associated with investments in other equity
securities. Because equity-linked securities are sometimes issued by a third
party other than the issuer of the linked security, the Fund is subject to risks
if the underlying stock underperforms and if the

B-4
<PAGE> 117

issuer defaults on the payment of the dividend or the common stock at maturity.
In addition, the trading market for particular equity-linked securities may be
less liquid, making it difficult for the Fund to dispose of a particular
security when necessary and reduced liquidity in the secondary market for any
such securities may make it more difficult to obtain market quotations for
valuing the Fund's portfolio.

DEPOSITARY RECEIPTS

The Fund may invest in American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs"), European Depositary Receipts ("EDRs") and other
depositary receipts, to the extent that such depositary receipts become
available. ADRs are securities, typically issued by a U.S. financial institution
(a "depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer (the "underlying issuer") and deposited
with the depositary. ADRs include American Depositary Shares and New York Shares
and may be "sponsored" or "unsponsored." Sponsored ADRs are established jointly
by a depositary and the underlying issuer, whereas unsponsored ADRs may be
established by a depositary without participation by the underlying issuer.
GDRs, EDRs and other types of depositary receipts are typically issued by
foreign depositaries, although they may also be issued by U.S. depositaries, and
evidence ownership interests in a security or pool of securities issued by
either a foreign or a U.S. corporation.

Holders of unsponsored depositary receipts generally bear all the costs
associated with establishing the unsponsored depositary receipt. The depositary
of an unsponsored depositary receipt is under no obligation to distribute
shareholder communications received from the underlying issuer or to pass
through to the holders of the unsponsored depositary receipt voting rights with
respect to the deposited securities or pool of securities. Depositary receipts
are not necessarily denominated in the same currency as the underlying
securities to which they may be connected. Generally, depositary receipts in
registered form are designed for use in the U.S. securities market and
depositary receipts in bearer form are designed for use in securities markets
outside the United States. For purposes of the Fund's investment policies, the
Fund's investments in depositary receipts will be deemed to be investments in
the underlying securities.

EURODOLLAR AND YANKEE OBLIGATIONS

Eurodollar bank obligations are dollar-denominated certificates of deposit
and time deposits issued outside the U.S. capital markets by foreign branches of
banks and by foreign banks. Yankee bank obligations are dollar-denominated
obligations issued in the U.S. capital markets by foreign banks.

Eurodollar and Yankee obligations are subject to the same risks that
pertain to domestic issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar (and to a limited extent, Yankee) obligations are
subject to certain sovereign risks. One such risk is the possibility that a
sovereign country might prevent capital, in the form of dollars, from flowing
across its borders. Other risks include: adverse political and economic
developments; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes, and the
expropriation or nationalization of foreign issuers.

B-5
<PAGE> 118

FOREIGN INVESTING

The Fund may invest in securities of foreign issuers. Securities of foreign
issuers may be denominated in U.S. dollars and in currencies other than U.S.
dollars. The percentage of assets invested in securities of a particular country
or denominated in a particular currency will vary in accordance with the
Adviser's assessment of the relative yield, appreciation potential and the
relationship of a country's currency to the U.S. dollar, which is based upon
such factors as fundamental economic strength, credit quality and interest rate
trends. Investments in foreign securities present certain risks not ordinarily
associated with investments in securities of U.S. issuers. These risks include
fluctuations in foreign currency exchange rates, political, economic or legal
developments (including war or other instability, expropriation of assets,
nationalization and confiscatory taxation), the imposition of foreign exchange
limitations (including currency blockage), withholding taxes on income or
capital transactions or other restrictions, higher transaction costs (including
higher brokerage, custodial and settlement costs and currency conversion costs)
and possible difficulty in enforcing contractual obligations or taking judicial
action. Foreign securities may not be as liquid and may be more volatile than
comparable domestic securities.

In addition, there often is less publicly available information about many
foreign issuers, and issuers of foreign securities are subject to different,
often less comprehensive, auditing, accounting, and financial reporting
disclosure requirements than domestic issuers. There is generally less
government regulation of stock exchanges, brokers and listed companies abroad
than in the United States, and, with respect to certain foreign countries, there
is a possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of foreign exchanges,
brokers and dealers than there is in the United States, the Fund may experience
settlement difficulties or delays not usually encountered in the United States.

Delays in making trades in foreign securities relating to volume
constraints, limitations or restrictions, clearance or settlement procedures, or
otherwise could impact yields and result in temporary periods when assets are
not fully invested or attractive investment opportunities are foregone.

In addition to the increased risks of investing in securities of foreign
issuers, there are often increased transaction costs associated with investing
in foreign securities including the costs incurred in connection with converting
currencies, higher foreign brokerage or dealer costs, and higher settlement
costs or custodial costs.

The governments of some countries have been engaged in programs of selling
part or all of their stakes in government owned or controlled enterprises
("privatization"). The Adviser believes that privatization may offer investors
opportunities for significant capital appreciation and intends to invest assets
of the Fund in privatization in appropriate circumstances. In certain countries,
the ability of foreign entities, such as the Fund, to participate in
privatization may be limited by local law, or the terms on which the Fund may be
permitted to participate may be less advantageous than those for local
investors. There can be no assurance that governments will continue to sell
companies currently owned or controlled by them or that any privatization
programs in which the Fund participates will be successful.

B-6
<PAGE> 119

Foreign Currency Exchange Risks. To the extent the Fund invests in
securities denominated or quoted in currencies other than the U.S. dollar, the
Fund will be affected by changes in foreign currency exchange rates (and
exchange control regulations) which affect the value of investments in the Fund
and the accrued income and appreciation or depreciation of the investments.
Changes in foreign currency exchange ratios relative to the U.S. dollar will
affect the U.S. dollar value of the Fund's assets denominated in that currency
and the Fund's yield on such assets as well as any temporary uninvested reserves
in bank deposits in foreign currencies. In addition, the Fund will incur costs
in connection with conversions between various currencies. The Fund does not
intend to invest in any security in a country where the currency is not freely
convertible to U.S. dollars, unless the Fund has obtained the necessary
governmental licensing to convert such currency or other appropriately licensed
or sanctioned contractual guarantee to protect such investment against loss of
that currency's external value, or the Fund has a reasonable expectation at the
time the investment is made that such governmental licensing or other
appropriately licensed or sanctioned guarantee would be obtained or that the
currency in which the security is quoted would be freely convertible at the time
of any proposed sale of the security by the Fund.

The Fund's foreign currency exchange transactions may be conducted on a
spot (i.e., cash) at the spot rate for purchasing or selling currency prevailing
in the foreign currency exchange market. The Fund also may enter into contracts
with banks, brokers or dealers to purchase or sell securities or foreign
currencies at a future date ("forward contracts"). A foreign currency forward
contract is a negotiated agreement between the contracting parties to exchange a
specified amount of currency at a specified future time at a specified rate. The
rate can be higher or lower than the spot rate between the currencies that are
the subject of the contract. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.

The Fund may attempt to protect against adverse changes in the value of the
U.S. dollar in relation to a foreign currency by entering into a forward
contract for the purchase or sale of the amount of foreign currency invested or
to be invested, or by buying or selling a foreign currency option or futures
contract for such amount. Such strategies may be employed before the Fund
purchases a foreign security traded in the currency which the Fund anticipates
acquiring or between the date the foreign security is purchased or sold and the
date on which payment therefor is made or received. Seeking to protect against a
change in the value of a foreign currency in the foregoing manner does not
eliminate fluctuations in the prices of portfolio securities or prevent losses
if the prices of such securities decline. Furthermore, such transactions reduce
or preclude the opportunity for gain if the value of the currency should move in
the direction opposite to the position taken. Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than if it had not
entered into such contracts. The Fund generally will not enter into a forward
contract with a term of greater than one year. At the maturity of a forward
contract, the Fund may either accept or make delivery of the currency specified
in the contract or, prior to maturity, enter into a closing purchase transaction
involving the purchase or sale of an offsetting contract. Closing purchase
transactions with respect to forward contracts are usually effected with the
currency trader who is a party to the original forward contract. The Fund will
only enter into such a forward contract if it is

B-7
<PAGE> 120

expected that there will be a liquid market in which to close out such contract.
There can, however, be no assurance that such a liquid market will exist in
which to close a forward contract, in which case the Fund may suffer a loss.

It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly, it
may be necessary for the Fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that the Fund is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. If the Fund engages in an offsetting transaction, the Fund
will incur a gain or a loss to the extent that there has been movement in
forward contract prices. Should forward prices decline during the period between
the Fund entering into a forward contract for the sale of a foreign currency and
the date it enters into an offsetting contract for the purchase of the foreign
currency, the Fund will realize a gain to the extent that the price of the
currency it has agreed to sell exceeds the price of the currency it has agreed
to purchase. Should forward prices increase, the Fund would suffer a loss to the
extent that the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.

The Fund is not required to enter into such transactions with regard to its
foreign currency-denominated securities. It also should be realized that this
method of protecting the value of portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which one can achieve
at some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.

In addition, the Fund may cross-hedge currencies by entering into a
transaction to purchase or sell one or more currencies that are expected to
decline in value relative to other currencies to which a portfolio has or
expects to have portfolio exposure. The Fund may also engage in proxy hedging,
which is defined as entering into positions in one currency to hedge investments
denominated in another currency, where two currencies are economically linked.
The Fund's entry into forward contracts, as well as any use of proxy or cross
hedging techniques, will generally require the Fund to hold liquid securities or
cash equal to the Fund's obligations in a segregated account throughout the
duration of the contract. The Fund may combine forward contracts with
investments in securities denominated in other currencies in order to achieve
desired security and currency exposures. Such combinations are generally
referred to as synthetic securities. For example, in lieu of purchasing a
foreign bond, the Fund may purchase a U.S. dollar-denominated security and at
the same time enter into a forward contract to exchange U.S. dollars for the
contract's underlying currency at a future date. By matching the amount of U.S.
dollars to be exchanged with the anticipated value of the U.S.
dollar-denominated security, the Fund may be able to lock in the foreign
currency value of the security and adopt a synthetic position reflecting the
credit quality of the U.S. dollar-denominated security.

To the extent required by the rules and regulations of the SEC, the Fund
will earmark or place cash or other liquid assets into a segregated account in
an amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency exchange contracts. If the value of the
securities placed in the segregated account

B-8
<PAGE> 121

declines, additional cash or liquid assets will be placed in the account on a
daily basis so that the value of the account will be at least equal to the
amount of the Fund's commitments with respect to such contracts. See also
"Strategic Transactions".

Investing in Emerging Market Countries. The risks of foreign investment are
heightened when the issuer is from an emerging market country. The extent of
economic development, political stability and market depth of such countries
varies widely and investments in the securities of issuers in such countries
typically involve greater potential gain or loss than investments in securities
of issuers in more developed countries. Emerging market countries tend to have
economic structures that are less diverse and mature and political systems that
are less stable than developed markets. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed markets and the financial condition of issuers in emerging
market countries may be more precarious than in other countries. Certain
countries depend to a larger degree upon international trade or development
assistance and, therefore, are vulnerable to changes in trade or assistance
which, in turn, may be affected by a variety of factors. The Fund may be
particularly sensitive to changes in the economies of certain countries
resulting from any reversal of economic liberalization, political unrest or the
imposition of sanctions by the United States or other countries.

The Fund's purchase and sale of portfolio securities in emerging market
countries may be constrained by limitations as to daily changes in the prices of
listed securities, periodic or sporadic trading or settlement or limitations on
aggregate holdings by foreign investors. Such limitations may be computed based
on the aggregate trading volume by or holdings of the Fund, the Fund's
investment adviser, its affiliates or their respective clients or other service
providers. The Fund may not be able to sell securities in circumstances where
price, trading or settlement volume limitations have been reached. Foreign
investment in the securities markets of certain emerging market countries is
restricted or controlled to varying degrees which may limit investment in such
countries or increase the administrative costs of such investments. For example,
certain countries may require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including price) than
securities of the issuer available for purchase by nationals. In addition,
certain countries may restrict or prohibit investment opportunities in issuers
or industries deemed important to national interests. Such restrictions may
affect the market price, liquidity and rights of securities that may be
purchased by the Fund. The repatriation of both investment income and capital
from certain emerging market countries is subject to restrictions such as the
need for governmental consents. Due to restrictions on direct investment in
securities in certain countries, it is anticipated that the Fund may invest in
such countries through other investment funds in such countries.

Many emerging market countries have experienced currency devaluations and
substantial (and, in some cases, extremely high) rates of inflation, which have
had a negative effect on the economies and securities markets of such countries.
Economies in emerging market countries generally are dependent heavily upon
commodity prices and international trade and, accordingly, have been and may
continue to be affected adversely by the economies of their trading partners,
trade barriers, exchange controls, managed

B-9
<PAGE> 122

adjustments in relative currency values and other protectionist measures or
negotiated by the countries with which they trade.

Many emerging market countries are subject to a substantial degree of
economic, political and social instability. Governments of some emerging
countries are authoritarian in nature or have been installed or removed as a
result of military coups, while governments in other emerging market countries
have periodically used force to suppress civil dissent. Disparities of wealth,
the pace and success of political reforms, and ethnic, religious and racial
disaffection, among other factors, have also led to social unrest, violence
and/or labor unrest in some emerging markets countries. Unanticipated political
or social developments may result in sudden and significant investment losses.

Settlement procedures in emerging market countries are frequently less
developed and reliable than those in developed markets. In addition, significant
delays are common in certain markets in registering the transfer of securities.
Settlement or registration problems may make it more difficult for the Fund to
value its portfolio securities and could cause the Fund to miss attractive
investment opportunities, to have a portion of its assets uninvested or to incur
losses due to the failure of a counterparty to pay for securities the Fund has
delivered or the Fund's inability to complete its contractual obligations. The
creditworthiness of the local securities firms used by the Fund in emerging
market countries may not be as sound as the creditworthiness of firms used in
more developed countries. As a result, the Fund may be subject to a greater risk
of loss if a securities firm defaults in the performance of its
responsibilities.

The small size and inexperience of the securities markets in certain
emerging market countries and the limited volume of trading in securities in
those countries may make the Fund's investments in such countries less liquid
and more volatile than investments in countries with more developed securities
markets. The Fund's investments in emerging market countries are subject to the
risk that the liquidity of a particular investment, or investments generally, in
such countries will shrink or disappear suddenly and without warning as a result
of adverse economic, market or political conditions or adverse investor
perceptions, whether or not accurate. Because of the lack of sufficient market
liquidity, the Fund may incur losses because it will be required to effect sales
at a disadvantageous time and only then at a substantial drop in price.
Investments in emerging market countries may be more difficult to price
precisely because of the characteristics discussed above and lower trading
volumes.

The Fund's use of foreign currency management techniques in emerging market
countries may be limited. Due to the limited market for these instruments in
emerging market countries, the Fund's investment adviser does not currently
anticipate that a significant portion of the Fund's currency exposure in
emerging market countries, if any, will be covered by such instruments.

ILLIQUID SECURITIES

The Fund may invest up to 15% its net assets in illiquid securities, which
includes securities that are not readily marketable, repurchase agreements which
have a maturity of longer than seven days and generally includes securities that
are restricted from sale to the public without registration under the Securities
Act of 1933, as amended (the "1933 Act"). The sale of such securities often
requires more time and results in higher brokerage

B-10
<PAGE> 123

charges or dealer discounts and other selling expenses than does the sale of
liquid securities trading on national securities exchanges or in the
over-the-counter markets. Restricted securities are often purchased at a
discount from the market price of unrestricted securities of the same issuer
reflecting the fact that such securities may not be readily marketable without
some time delay. Investments in securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Adviser in accordance with procedures approved by the Fund's Board of Trustees.
Ordinarily, the Fund would invest in restricted securities only when it receives
the issuer's commitment to register the securities without expense to the Fund.
However, registration and underwriting expenses (which typically range from 7%
to 15% of the gross proceeds of the securities sold) may be paid by the Fund.
Restricted securities which can be offered and sold to qualified institutional
buyers under Rule 144A under the 1933 Act ("144A Securities") and are determined
to be liquid under guidelines adopted by and subject to the supervision of the
Fund's Board of Trustees are not subject to the limitation on illiquid
securities. Such 144A Securities are subject to monitoring and may become
illiquid to the extent qualified institutional buyers become, for a time,
uninterested in purchasing such securities. Factors used to determine whether
144A Securities are liquid include, among other things, a security's trading
history, the availability of reliable pricing information, the number of dealers
making quotes or making a market in such security and the number of potential
purchasers in the market for such security. For the purposes hereof, investments
by the Fund in securities of other investment companies will not be considered
investments in restricted securities to the extent permitted by (i) the 1940
Act, as amended from time to time, (ii) the rules and regulations promulgated by
the SEC under the 1940 Act, as amended from time to time or (iii) an exemption
or other relief (such as "no action" letters issued by the staff of the SEC
interpreting or providing guidance on the 1940 Act or regulations thereunder)
from the provisions of the 1940 Act, as amended from time to time.

INVESTMENT COMPANY SECURITIES

The Fund may invest in securities of other open-end or closed-end
investment companies by purchase in the open market involving only customary
brokers' commissions or in connection with mergers, acquisitions of assets or
consolidations or as may otherwise be permitted by the 1940 Act.

Some emerging market countries have laws and regulations that currently
preclude direct foreign investment in the securities of their companies.
However, indirect foreign investment in the securities of companies listed and
traded on the stock exchanges in these countries is permitted by certain
emerging market countries through investment funds which have been specifically
authorized. The Fund may invest in these investment funds, including those
advised by the Adviser or its affiliates, subject to applicable provisions of
the 1940 Act, and other applicable laws.

If the Fund invests in such investment companies or investment funds, the
Fund's shareholders will bear not only their proportionate share of the expenses
of the Fund (including operating expenses and the fees of the Adviser), but also
will indirectly bear similar expenses of the underlying investment companies or
investment funds.

B-11
<PAGE> 124

REPURCHASE AGREEMENTS

SECURITIES LENDING

The Fund may lend investment securities to qualified broker-dealers, banks
or other institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, the Fund attempts to increase its net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would be for the account of the Fund. The Fund may lend its investment
securities to

B-12
<PAGE> 125

qualified brokers-dealers, domestic and foreign banks or other institutional
borrowers, so long as the terms, structure and the aggregate amount of such
loans are not inconsistent with the 1940 Act, or the rules and regulations or
interpretations of the SEC thereunder, which currently require that (a) the
borrower pledge and maintain with the Fund collateral consisting of cash, an
irrevocable letter of credit issued by a domestic U.S. bank, or liquid
securities having a value at all times not less than 100% of the value of the
securities loaned, including accrued interest, (b) the borrower add to such
collateral whenever the price of the securities loaned rises (i.e., the borrower
"marks to the market" on a daily basis), (c) the loan be made subject to
termination by the Fund at any time, and (d) the Fund receive reasonable
interest on the loan (which may include the Fund investing any cash collateral
in interest bearing short-term investments), any distributions on the loaned
securities and any increase in their market value. There may be risks of delay
in recovery of the securities or even loss of rights in the collateral should
the borrower of the securities fail financially. However, loans will only be
made to borrowers deemed by the Adviser to be of good standing and when, in the
judgment of the Adviser, the consideration which can be earned currently from
such securities loans justifies the attendant risk. All relevant facts and
circumstances, including the creditworthiness of the broker-dealer, bank or
institution, will be considered in making decisions with respect to the lending
of securities, subject to review by the Fund's Board of Trustees.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass with
the loaned securities, but if a material event will occur affecting an
investment on loan, the loan must be called and the securities voted.

PORTFOLIO TURNOVER

INVESTMENT RESTRICTIONS

1. Invest in a manner inconsistent with its classification as a
"diversified company" as provided by (i) the 1940 Act, as amended from
time to time, (ii) the rules and

B-13
<PAGE> 126

regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief applicable to the
Fund from the provisions of the 1940 Act, as amended from time to time.

2. Issue senior securities nor borrow money, except the Fund may issue
senior securities or borrow money to the extent permitted by (i) the
1940 Act, as amended from time to time, (ii) the rules and regulations
promulgated by the SEC under the 1940 Act, as amended from time to time,
or (iii) an exemption or other relief applicable to the Fund from the
provisions of the 1940 Act, as amended from time to time.

3. Act as an underwriter of securities issued by others, except to the
extent that, in connection with the disposition of portfolio securities,
it may be deemed to be an underwriter under applicable securities laws.

4. Invest in any security if, as a result, 25% or more of the value of the
Fund's total assets, taken at market value at the time of each
investment, are in the securities of issuers in any particular industry
except (a) securities issued or guaranteed by the U.S. government and
its agencies and instrumentalities or securities of state and municipal
governments or their political subdivisions, or (b) when the Fund has
taken a temporary defensive position, or (c) as otherwise provided by
(i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief applicable to the
Fund from the provisions of the 1940 Act, as amended from time to time.

5. Purchase or sell real estate except that the Fund may: (a) acquire or
lease office space for its own use, (b) invest in securities of issuers
that invest in real estate or interests therein or that are engaged in
or operate in the real estate industry, (c) invest in securities that
are secured by real estate or interests therein, (d) purchase and sell
mortgage-related securities, (e) hold and sell real estate acquired by
the Fund as a result of the ownership of securities and (f) as otherwise
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief
applicable to the Fund from the provisions of the 1940 Act, as amended
from time to time.

6. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided that this
restriction shall not prohibit the Fund from purchasing or selling
options, futures contracts and related options thereon, forward
contracts, swaps, caps, floors, collars and any other financial
instruments or from investing in securities or other instruments backed
by physical commodities or as otherwise permitted by (i) the 1940 Act,
as amended from time to time, (ii) the rules and regulations promulgated
by the SEC under the 1940 Act, as amended from time to time, or (iii) an
exemption or other relief applicable to the Fund from the provisions of
the 1940 Act, as amended from time to time.

7. Make loans of money or property to any person, except (a) to the extent
that securities or interests in which the Fund may invest are considered
to be loans, (b) through the loan of portfolio securities, (c) by
engaging in repurchase agreements or (d) as may otherwise be permitted
by (i) the 1940 Act, as amended

B-14
<PAGE> 127

from time to time, (ii) the rules and regulations promulgated by the SEC
under the 1940 Act, as amended from time to time, or (iii) an exemption
or other relief applicable to the Fund from the provisions of the 1940
Act, as amended from time to time.

The Fund has an operating policy not to borrow money except for temporary
purposes and then in an amount not in excess of 5% of the value of the total
assets of the Fund at the time the borrowing is made.

TRUSTEES AND OFFICERS

TRUSTEES

B-15
<PAGE> 128

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Linda Hutton Heagy........................ Managing Partner of Heidrick & Struggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
Age: 52 President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of Chicago
Hospitals Board, Vice Chair of the Board of
The YMCA of Metropolitan Chicago and a member
of the Women's Board of the University of
Chicago. Prior to 1996, Trustee of The
International House Board, a fellowship and
housing organization for international
graduate students.

B-16
<PAGE> 129

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Inc. and Executive Vice President of Morgan
Stanley Dean Witter Distributors Inc. April
1997-June 1998, Vice President of the Morgan
Stanley Dean Witter Funds May 1997-April
1999, and Executive Vice President of Dean
Witter, Discover & Co.

Jack E. Nelson............................ President and owner, Nelson Investment
423 Country Club Drive Planning Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser in
Date of Birth: 02/13/36 the State of Florida. President and owner,
Age: 64 Nelson Ivest Brokerage Services Inc., a
member of the National Association of
Securities Dealers, Inc. and Securities
Investors Protection Corp. Trustee/Director
of each of the funds in the Fund Complex.

B-17
<PAGE> 130

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Phillip B. Rooney......................... Vice Chairman (since April 1997) and Director
One ServiceMaster Way (since 1994) of The ServiceMaster Company, a
Downers Grove, IL 60515 business and consumer services company.
Date of Birth: 07/08/44 Director of Illinois Tool Works, Inc., a
Age: 56 manufacturing company and the Urban Shopping
Centers Inc., a retail mall management
company. Trustee, University of Notre Dame.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of
Stone Smurfit Container Corp., a paper
manufacturing company. From May 1996 through
February 1997 he was President, Chief
Executive Officer and Chief Operating Officer
of Waste Management, Inc., an environmental
services company, and from November 1984
through May 1996 he was President and Chief
Operating Officer of Waste Management, Inc.

Fernando Sisto+........................... Professor Emeritus. Prior to August 1996, a
155 Hickory Lane George M. Bond Chaired Professor with Stevens
Closter, NJ 07624 Institute of Technology, and prior to 1995,
Date of Birth: 08/02/24 Dean of the Graduate School, Stevens
Age: 76 Institute of Technology. Director, Dynalysis
of Princeton, a firm engaged in engineering
research. Trustee/Director of each of the
funds in the Fund Complex.

B-18
<PAGE> 131

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Suzanne H. Woolsey........................ Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution, since 1993. Director of
Date of Birth: 12/27/41 Neurogen Corporation, a pharmaceutical
Age: 59 company, since January 1998. Director of the
German Marshall Fund of the United States,
Trustee of Colorado College, and Vice Chair
of the Board of the Council for Excellence in
Government. Trustee/Director of each of the
funds in the Fund Complex. Prior to 1993,
Executive Director of the Commission on
Behavioral and Social Sciences and Education
at the National Academy of Sciences/National
Research Council. From 1980 through 1989,
Partner of Coopers & Lybrand.
</TABLE>

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

+Retiring effective December 31, 2000.

B-19
<PAGE> 132

OFFICERS

Messrs. Smith, Santo, Ciccarone, Reynoldson, Sullivan and Zimmermann are
located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555. Mr. Boyd is
located at 2800 Post Oak Blvd., Houston, TX 77056.

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>

A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Investments,
Age: 44 the Advisers, Van Kampen Advisors Inc., Van
Vice President and Secretary Kampen Management Inc., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary of each of the
funds in the Fund Complex and Vice President and
Secretary/Vice President, Principal Legal Officer
and Secretary of other investment companies
advised by the Advisers or their affiliates.
Prior to January 1999, Vice President and
Associate General Counsel to New York Life
Insurance Company ("New York Life"), and prior to
March 1997, Associate General Counsel of New York
Life. Prior to December 1993, Assistant General
Counsel of The Dreyfus Corporation. Prior to
August 1991, Senior Associate, Willkie Farr &
Gallagher. Prior to January 1989, Staff Attorney
at the Securities and Exchange Commission,
Division of Investment Management, Office of
Chief Counsel.

Michael H. Santo..................... Executive Vice President, Chief Administrative
Date of Birth: 10/22/55 Officer and Director of Van Kampen Investments,
Age: 45 the Advisers, the Distributor, Van Kampen
Vice President Advisors Inc., Van Kampen Management Inc. and Van
Kampen Investor Services Inc., and serves as a
Director or Officer of certain other subsidiaries
of Van Kampen Investments. Vice President of each
of the funds in the Fund Complex and certain
other investment companies advised by the
Advisers and their affiliates. Prior to 1998,
Senior Vice President and Senior Planning Officer
for Individual Asset Management of Morgan Stanley
Dean Witter and its predecessor since 1994. From
1990-1994, First Vice President and Assistant
Controller in Dean Witter's Controller's
Department.
</TABLE>

B-20
<PAGE> 133

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Stephen L. Boyd...................... Executive Vice President and Chief Investment
Date of Birth: 11/16/40 Officer of Van Kampen Investments, and President
Age: 60 and Chief Operating Officer of the Advisers.
Executive Vice President and Chief Executive Vice President and Chief Investment
Investment Officer Officer of each of the funds in the Fund Complex
and certain other investment companies advised by
the Advisers or their affiliates. Prior to April
2000, Executive Vice President and Chief
Investment Officer for Equity Investments of the
Advisers. Prior to October 1998, Vice President
and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior
Vice President and Portfolio Manager of Van
Kampen American Capital Asset Management, Inc.,
Van Kampen American Capital Investment Advisory
Corp. and Van Kampen American Capital Management,
Inc.

Richard A. Ciccarone................. Senior Vice President and Co-head of the Fixed
Date of Birth: 06/15/52 Income Department of the Advisers, Van Kampen
Age: 48 Management Inc. and Van Kampen Advisors Inc.
Vice President Prior to May 2000, he served as Co-head of
Municipal Investments and Director of Research of
the Advisers, Van Kampen Management Inc. and Van
Kampen Advisors Inc. Mr. Ciccarone first joined
the Adviser in June 1983, and worked for the
Adviser until May 1989, with his last position
being a Vice President. From June 1989 to April
1996, he worked at EVEREN Securities (formerly
known as Kemper Securities), with his last
position at EVEREN being an Executive Vice
President. Since April 1996, Mr. Ciccarone has
been a Senior Vice President of the Advisers, Van
Kampen Management Inc. and Van Kampen Advisors
Inc.

John R. Reynoldson................... Senior Vice President and Co-head of the Fixed
Date of Birth: 05/15/53 Income Department of the Advisers, Van Kampen
Age: 47 Management Inc. and Van Kampen Advisors Inc.
Vice President Prior to May 2000, he managed the investment
grade taxable group for the Adviser since July
1999. From July 1988 to June 1999, he managed the
government securities bond group for Asset
Management. Mr. Reynoldson has been with Asset
Management since April 1987, and has been a
Senior Vice President of Asset Management since
July 1988. He has been a Senior Vice President of
the Adviser and Van Kampen Management Inc. since
June 1995 and Senior Vice President of Van Kampen
Advisors Inc. since June 2000.
</TABLE>

B-21
<PAGE> 134

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
John L. Sullivan..................... Senior Vice President of Van Kampen Investments
Date of Birth: 08/20/55 and the Advisers. Vice President, Chief Financial
Age: 45 Officer and Treasurer of each of the funds in the
Vice President, Chief Financial Fund Complex and certain other investment
Officer and Treasurer companies advised by the Advisers or their
affiliates.

John H. Zimmermann, III.............. Senior Vice President and Director of Van Kampen
Date of Birth: 11/25/57 Investments, President and Director of the
Vice President Distributor, and President of Van Kampen
Age: 43 Insurance Agency of Illinois Inc. Vice President
of each of the funds in the Fund Complex. From
November 1992 to December 1997, Mr. Zimmermann
was Senior Vice President of the Distributor.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 61 operating funds in the Fund Complex. Each trustee/director who is not an
affiliated person of Van Kampen Investments, the Advisers or the Distributor
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees/directors to defer receipt of their compensation
and earn a return on such deferred amounts. Deferring compensation has the
economic effect as if the Non-Affiliated Trustee reinvested his or her
compensation into the funds. Each fund in the Fund Complex provides a retirement
plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.

The compensation of each Non-Affiliated Trustee includes an annual retainer
in an amount equal to $50,000 per calendar year, due in four quarterly
installments on the first business day of each quarter. Payment of the annual
retainer is allocated among the funds in the Fund Complex on the basis of the
relative net assets of each fund as of the last business day of the preceding
calendar quarter. The compensation of each Non-Affiliated Trustee includes a per
meeting fee from each fund in the Fund Complex in the amount of $200 per
quarterly or special meeting attended by the Non-Affiliated Trustee, due on the
date of the meeting, plus reasonable expenses incurred by the Non-Affiliated
Trustee in connection with his or her services as a trustee, provided that no
compensation will be paid in connection with certain telephonic special
meetings.

B-22
<PAGE> 135

obligations thereunder represent general unsecured claims against the general
assets of the Fund.

Additional information regarding compensation and benefits for trustees is
set forth below for the periods described in the notes accompanying the table.

COMPENSATION TABLE

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Choate and Ms. Woolsey became members of the Board of Trustees
for the Trust and other funds in the Fund Complex on May 26, 1999 and
therefore do not have a full year of information to report. Paul G. Yovovich
resigned as a member of the Board of Trustees for other funds in the Fund
Complex on April 14, 2000.

(2) The amounts shown in this column represent the aggregate compensation before
deferral from the operating series of the Trust during the fiscal year ended
August 31, 2000. The details of aggregate compensation before deferral for
each operating series of the Trust during the fiscal year ended August 31,
2000 are shown in Table A below. The details of compensation deferred for
each operating series of the Trust during the fiscal year ended August 31,
2000 are shown in Table B below. Amounts

B-23
<PAGE> 136

deferred are retained by the Fund and earn a rate of return determined by
reference to either the return on the common shares of the Fund or other
funds in the Fund Complex as selected by the respective Non-Affiliated
Trustee, with the same economic effect as if such Non-Affiliated Trustee had
invested in one or more funds in the Fund Complex. To the extent permitted
by the 1940 Act, each fund may invest in securities of those funds selected
by the Non-Affiliated Trustees in order to match the deferred compensation
obligation. The details of cumulative deferred compensation (including
interest) for each operating series of the Trust as of August 31, 2000 are
shown in Table C below. The deferred compensation plan is described above
the Compensation Table.

(3) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating funds in the Fund Complex for each of the
trustees for the funds' respective fiscal years ended in 1999. The
retirement plan is described above the Compensation Table.

(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
retirement plan is described above the Compensation Table. Each
Non-Affiliated Trustee of the Board of Trustees has served as a member of
the Board of Trustees since the year set forth in Table D below.

(5) The amounts shown in this column represent the aggregate compensation paid
by all funds in the Fund Complex as of December 31, 1999 before deferral by
the trustees under the deferred compensation plan. Because the funds in the
Fund Complex have different fiscal year ends, the amounts shown in this
column are presented on a calendar year basis. Certain trustees deferred all
or a portion of their aggregate compensation from the Fund Complex during
the calendar year ended December 31, 1999. The deferred compensation earns a
rate of return determined by reference to the return on the shares of the
funds in the Fund Complex as selected by the respective Non-Affiliated
Trustee, with the same economic effect as if such Non-Affiliated Trustee had
invested in one or more funds in the Fund Complex. To the extent permitted
by the 1940 Act, the Fund may invest in securities of those funds selected
by the Non-Affiliated Trustees in order to match the deferred compensation
obligation. The Advisers and their affiliates also serve as investment
adviser for other investment companies; however, with the exception of Mr.
Whalen, the Non-Affiliated Trustees were not trustees of such investment
companies. Combining the Fund Complex with other investment companies
advised by the Advisers and their affiliates, Mr. Whalen received Total
Compensation of $279,250 during the calendar year ended December 31, 1999.

The Fund, the Adviser, the Subadviser and the Distributor have adopted
Codes of Ethics (collectively, the "Code of Ethics") that set forth general and
specific standards relating to the securities trading activities of their
employees. The Code of Ethics does not prohibit employees from acquiring
securities that may be purchased or held by the Fund, but is intended to ensure
that all employees conduct their personal transactions in a manner that does not
interfere with the portfolio transactions of the Fund or other Van Kampen funds,
or that such employees take unfair advantage of their relationship with the
Fund. Among other things, the Code of Ethics prohibits certain types of
transactions absent prior approval, imposes various trading restrictions (such
as time

B-24
<PAGE> 137

periods during which personal transactions may or may not be made) and requires
quarterly reporting of securities transactions and other reporting matters. All
reportable securities transactions and other required reports are to be reviewed
by appropriate personnel for compliance with the Code of Ethics. Additional
restrictions apply to portfolio managers, traders, research analysts and others
who may have access to nonpublic information about the trading activities of the
Fund or other Van Kampen funds or who otherwise are involved in the investment
advisory process. Exceptions to these and other provisions of the Code of Ethics
may be granted in particular circumstances after review by appropriate
personnel.

TABLE A

2000 AGGREGATE COMPENSATION FROM

THE TRUST AND EACH SERIES

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

* The Tax Managed Equity Growth Fund commenced investment operations on March
28, 2000, and does not have a full year of information to report.

TABLE B

2000 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

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

* The Tax Managed Equity Growth Fund commenced investment operations on March
28, 2000, and does not have a full year of information to report.

B-25
<PAGE> 138

TABLE C

2000 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- -------- -------- ------ ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax Managed Equity Growth Fund*..... 8/31 $ 655 $ 681 $ 693 $ 501 $ 661 $ 704 $ 329 $ 677
Technology Fund..................... 8/31 2,717 2,974 2,566 1,708 2,814 3,172 1,388 2,776
------ ------ ------ ------ ------ ------ ------ ------
Trust Total....................... $3,372 $3,655 $3,259 $2,209 $3,475 $3,876 $1,717 $3,453
</TABLE>

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

*The Tax Managed Equity Growth Fund commenced investment operations on March 28,
2000, and does not have a full year of information to report.

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

As of December 1, 2000 the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

INVESTMENT ADVISORY AGREEMENT

The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. The Adviser obtains
and evaluates economic, statistical and financial information to formulate
strategy and implement the Fund's investment objective. The Adviser also
furnishes offices, necessary facilities and equipment, provides administrative
services to the Fund, renders periodic reports to the Fund's Board of Trustees,
and permits its officers and employees to serve without compensation as trustees
of the Trust or officers of the Fund if elected to such positions. The Fund
however, bears the cost of its day-to-day operations, including service fees,
distribution fees, custodian fees, legal and independent accountant fees, the
costs of reports and proxies to shareholders, compensation of trustees of the
Trust (other than those who are affiliated persons of the Adviser, Distributor
or Van Kampen Investments), and all other ordinary business expenses not
specifically assumed by the Adviser. The Advisory Agreement also provides that
the Adviser shall not be liable to the Fund for any errors of judgment or of
law, or for any loss suffered by the Fund in connection with the matters to
which the agreement relates, except loss resulting from willful malfeasance, 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 the Advisory Agreement.

The Advisory Agreement also provides that, in the event the expenses of the
Fund for any fiscal year exceed the most restrictive expense limitation
applicable in any jurisdiction

B-26
<PAGE> 139

where the Fund's shares are qualified for offer and sale, the compensation due
the Adviser will be reduced by the amount of such excess and that, if a
reduction in and refund of the advisory fee is insufficient, the Adviser will
pay the Fund monthly an amount sufficient to make up the deficiency, subject to
readjustment during the fiscal year.

MSDWIM is the investment Subadviser of the Fund. The Subadviser provides
investment advice and portfolio management services pursuant to investment
subadvisory agreements and, subject to the supervision of the Adviser and the
Fund's Board of Trustees, makes the Fund's investment decisions, arranges for
the execution of portfolio transactions and generally manages the Fund's
investments.

During the fiscal year ended August 31, 2000, the Adviser received
approximately $22,950 in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, supplementary to those provided by the custodian. Such services are
expected to enable the Fund to more closely monitor and maintain its accounts
and records. The Fund pays all costs and expenses related to such services,
including all salary and related benefits of accounting personnel, as well as
the overhead and expenses of office space and the equipment necessary to render
such services. The Fund shares together with the other Van Kampen funds in the
cost of providing such services with 25% of such costs shared proportionately
based on the respective number of classes of securities issued per fund and the
remaining 75% of such costs based proportionately on the respective net assets
per fund.

During the fiscal year ended August 31, 2000, Advisory Corp. received no
accounting services fees from the Fund.

Legal Services Agreement. The Fund and certain of the other Van Kampen
funds have entered into legal services agreements pursuant to which Van Kampen
Investments provides legal services, including without limitation: accurate
maintenance of each fund's minute books and records, preparation and oversight
of each fund's regulatory reports and other information provided to
shareholders, as well as responding to day-to-day legal issues on behalf of the
funds. Payment by the funds for such services is made on a cost basis for the
salary and salary-related benefits, including but not limited to bonuses, group
insurance and other regular wages for the employment of personnel, as well as
overhead and the expenses related to the office space and the equipment
necessary to render the legal services. Of the total costs for legal services
provided to funds, one half of such costs are

B-27
<PAGE> 140

allocated equally to each fund and the remaining one half of such costs are
allocated to specific funds based on monthly time records.

During the fiscal year ended August 31, 2000, Van Kampen Investments
received no legal services fees from the Fund.

DISTRIBUTION AND SERVICE

<TABLE>
<CAPTION>
Amounts
Total Retained by
Underwriting Distributor
Commissions- -----------
<S> <C> <C>
Fiscal year ended August 31, 2000....................... $104,137 $13,313
</TABLE>

With respect to sales of Class A Shares of the Fund, the total sales
charges and concessions reallowed to authorized dealers at the time of purchase
are as follows:

CLASS A SHARES SALES CHARGE TABLE

B-28
<PAGE> 141

(and not out of the Fund's assets) to authorized dealers who initiate and are
responsible for purchases of $1 million or more computed on a percentage of
the dollar value of such shares sold as follows: 1.00% on sales to $2 million,
plus 0.80% on the next $1 million and 0.50% on the excess over $3 million. For
single purchases of $20 million or more by an individual retail investor the
Distributor will pay, at the time of purchase and directly out of the
Distributor's assets (and not out of the Fund's assets), a commission or
transaction fee of 1.00% to authorized dealers who initiate and are
responsible for such purchases. The commission or transaction fee of 1.00%
will be computed on a percentage of the dollar value of such shares sold.

B-29
<PAGE> 142

The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan sometimes
are referred to herein as the "Plans". The Plans provide that the Fund may spend
a portion of the Fund's average daily net assets attributable to each class of
shares in connection with distribution of the respective class of shares and in
connection with the provision of ongoing services to shareholders of such class,
respectively. The Distribution Plan and the Service Plan are being implemented
through the Distribution and Service Agreement with the Distributor of each
class of the Fund's shares and sub-agreements between the Distributor and
members of the NASD who are acting as securities dealers and NASD members or
eligible non-members who are acting as brokers or agents and similar agreements
between the Fund and financial intermediaries who are acting as brokers
(collectively, "Selling Agreements") that may provide for their customers or
clients certain services or assistance, which may include, but not be limited
to, processing purchase and redemption transactions, establishing and
maintaining shareholder accounts regarding the Fund, and such other services as
may be agreed to from time to time and as may be permitted by applicable
statute, rule or regulation. Brokers, dealers and financial intermediaries that
have entered into sub-agreements with the Distributor and sell shares of the
Fund are referred to herein as "financial intermediaries."

B-30
<PAGE> 143

Distributor's actual net expenses in a given year exceed the plan fees for such
year, the Fund only pays the plan fees for such year. For Class A Shares, there
is no carryover of any unreimbursed actual net expenses to succeeding years.

The Plans for Class B Shares and Class C Shares are similar to the Plans
for Class A Shares, except that any actual net expenses which exceed plan fees
for a given year are carried forward and are eligible for payment in future
years by the Fund so long as the Plans remain in effect. Thus, for each of the
Class B Shares and Class C Shares, in any given year in which the Plans are in
effect, the Plans generally provide for the Fund to pay the Distributor the
lesser of (i) the applicable amount of the Distributor's actual net expenses
incurred during such year for such class of shares plus any actual net expenses
from prior years that are still unpaid by the Fund for such class of shares or
(ii) the applicable plan fees for such class of shares. Except as may be
mandated by applicable law, the Fund does not impose any limit with respect to
the number of years into the future that such unreimbursed actual net expenses
may be carried forward (on a Fund level basis). These unreimbursed actual net
expenses may or may not be recovered through plan fees or contingent deferred
sales charges in future years.

Because of fluctuation in net asset value, the plan fees with respect to a
particular Class B Share or Class C Share may be greater or less than the amount
of the initial commission (including carrying cost) paid by the Distributor with
respect to such share. In such circumstances, a shareholder of a share may be
deemed to incur expenses attributable to other shareholders of such class. As of
August 31, 2000, there were $103,565 and $20,238 of unreimbursed
distribution-related expenses with respect to Class B Shares and Class C Shares,
respectively, representing 2.05% and 0.45% of the Fund's net assets attributable
to Class B Shares and Class C Shares, respectively. If the Plans are terminated
or not continued, the Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund or recovered
through contingent deferred sales charges.

Because the Fund is a series of the Trust, amounts paid to the Distributor
as reimbursement for expenses of one series of the Trust may indirectly benefit
the other funds which are series of the Trust. The Distributor will endeavor to
allocate such expenses among such funds in an equitable manner. The Distributor
will not use the proceeds from the contingent deferred sales charge applicable
to a particular class of shares to defray distribution-related expenses
attributable to any other class of shares.

For the fiscal year ended August 31, 2000, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $1,324 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Class A
shareholders and for administering the Class A Share Plans. For the fiscal year
ended August 31, 2000, the Fund's aggregate expenses paid under the Plans for
Class B Shares were $8,479 or 1.00% of the Class B Shares' average daily net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $7,104 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B Shares of the Fund and $1,375 for
fees paid to financial intermediaries for servicing Class B shareholders and
administering the Class B Share Plans. For the fiscal year ended August 31,
2000, the Fund's aggregate expenses paid under the Plans for Class C Shares were
$6,575 or 1.00% of the Class C Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the

B-31
<PAGE> 144

following payments: $6,391 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class C Shares of the Fund and
$184 for fees paid to financial intermediaries for servicing Class C
shareholders and administering the Class C Share Plans.

From time to time, the Distributor may enter into agreements with
broker-dealers to offer the Fund through retirement plan alliance programs that
offer multiple fund families. These programs may have special investment
minimums and operational requirements. For more information, trustees and other
fiduciaries should contact the Distributor.

TRANSFER AGENT

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-32
<PAGE> 145

transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund.

Effective October 31, 1996, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") became an affiliate of the Adviser. Effective May 31, 1997, Dean
Witter Reynolds, Inc. ("Dean Witter") became an affiliate of the Adviser. The
Fund's Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the SEC under the 1940 Act which require that
the commissions paid to affiliates of the Fund must be reasonable and fair
compared to the commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time. The rule and procedures
also contain review requirements and require the Adviser to furnish reports to
the Trustees and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Trustees will consider from
time to time whether the advisory fee for the Fund will be reduced by all or a
portion of the brokerage commission given to affiliated brokers.

B-33
<PAGE> 146

The Fund paid the following commissions to all brokers and affiliated
brokers during the year shown:

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated Brokers
-------------------
All Morgan Dean
Brokers Stanley Witter
------- -------- --------
<S> <C> <C> <C>
Fiscal year ended August 31, 2000........................ $8,532 $ 1,117 $ 0
Fiscal year 2000 Percentages:
Commissions with affiliate to total commissions........ 13.09% 0%
Value of brokerage transactions with affiliate to total
transactions........................................ 2.32% 0%
</TABLE>

During the fiscal year ended August 31, 2000, the Fund paid $8,135 in
brokerage commissions on transactions totaling $9,308,314 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

acceptable to Investor Services. On the date the letter is received, Investor
Services will calculate the fee for replacing the lost certificate equal to no
more than 1.50% of the net asset value of the issued shares, and bill the party
to whom the replacement certificate was mailed.

RETIREMENT PLANS

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

DIVIDEND DIVERSIFICATION

A shareholder may, upon written request by completing the appropriate
section of the account application form or by calling (800) 341-2911 ((800)
421-2833 for the hearing impaired), elect to have all dividends and capital gain
dividends paid on a class of shares of the Fund invested into shares of the same
class of any Participating Fund so long as the investor has a pre-existing
account for such class of shares of the other fund. Both accounts must be of the
same type, either non-retirement or retirement. If the accounts are retirement
accounts, they must both be for the same class and of the same type of
retirement plan (e.g. IRA, 403(b)(7), 401(k), Money Purchase and Profit Sharing
Keogh) and for the benefit of the same individual. If a qualified, pre-existing
account does not exist, the shareholder must establish a new account subject to
minimum investment and other requirements of the fund into which distributions
would be invested. Distributions are invested into the selected fund, provided
that shares of such fund are available for sale, at its net asset value per
share as of the payable date of the distribution from the Fund.

B-35
<PAGE> 148

SYSTEMATIC WITHDRAWAL PLAN

A shareholder may establish a monthly, quarterly, semiannual or annual
withdrawal plan if the shareholder owns shares in a single account valued at
$10,000 or more at the next determined net asset value per share at the time the
plan is established. If the shareholder owns shares in a single account valued
at $5,000 or more at the next determined net asset value per share at the time
the plan is established, the shareholder may establish a quarterly, semiannual
or annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each payment
represents the proceeds of a redemption of shares on which any capital gain or
loss will be recognized. The planholder may arrange for periodic checks in any
amount, not less than $25. Such a systematic withdrawal plan may also be
maintained by an investor purchasing shares for a retirement plan which can be
established on a form made available by the Fund when Van Kampen Trust Company
serves as the plan custodian. See "Shareholder Services -- Retirement Plans."

EXCHANGE PRIVILEGE

All shareholders are limited to eight exchanges per fund during a rolling
365-day period.

This policy does not apply to money market funds, systematic exchange plans
or employer-sponsored retirement plans.

REINSTATEMENT PRIVILEGE

A Class A Shareholder or Class B Shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption
(and may include

B-36
<PAGE> 149

that amount necessary to acquire a fractional share to round off his or her
purchase to the next full share) in Class A Shares of the Fund. A Class C
Shareholder who has redeemed shares of the Fund may reinstate any portion or all
of the net proceeds of such redemption (and may include that amount necessary to
acquire a fractional share to round off his or her purchase to the next full
share) in Class C Shares of the Fund with credit given for any contingent
deferred sales charge paid upon such redemption, provided that such shareholder
has not previously exercised this reinvestment privilege with respect to Class C
Shares of the Fund. Shares acquired in this manner will be deemed to have the
original cost and purchase date of the redeemed shares for purposes of applying
the CDSC-Class C (defined below) to subsequent redemptions. Such reinstatement
is made at the net asset value per share (without sales charge) next determined
after the order is received, which must be made within 180 days after the date
of the redemption, provided that shares of the Fund are available for sale.
Reinstatement at net asset value per share is also offered to participants in
those eligible retirement plans held or administered by Van Kampen Trust Company
for repayment of principal (and interest) on their borrowings on such plans,
provided that shares of the Fund are available for sale.

REDEMPTION OF SHARES

In addition, if the Fund's Board of Trustees determines that payment wholly
or partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. A
distribution-in-kind may result in recognition by the shareholder of a gain or
loss for federal income tax purposes when such securities are distributed, and
the shareholder may have brokerage charges and a gain or loss for federal income
tax purposes upon the shareholder's disposition of such securities.

CONTINGENT DEFERRED SALES CHARGE-CLASS A

B-37
<PAGE> 150

CDSC-Class A is payable, it is assumed that shares being redeemed first are any
shares in the shareholder's account not subject to a contingent deferred sales
charge followed by shares held the longest in the shareholder's account. The
contingent deferred sales charge is assessed on an amount equal to the lesser of
the then current market value or the cost of the shares being redeemed.
Accordingly, no sales charge is imposed on increases in net asset value above
the initial purchase price. In addition, no sales charge is assessed on shares
derived from reinvestment of dividends or capital gain dividends.

WAIVER OF CLASS B AND CLASS C
CONTINGENT DEFERRED SALES CHARGES

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge ("CDSC-Class B and C"). The CDSC-Class B and C is waived on redemptions
of Class B Shares and Class C Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

B-38
<PAGE> 151

deferral amounts pursuant to Code Section 401(k)(8) or 402(g)(2), the financial
hardship of the employee pursuant to U.S. Treasury Regulation Section 1.
401(k)-1(d)(2), or from the death or disability of the employee (see Code
Section 72(m)(7) and 72(t)(2)(A)(ii)). In addition, the charge will be waived on
any minimum distribution required to be distributed in accordance with Code
Section 401(a)(9).

The Fund does not intend to waive the CDSC-Class B and C for any
distributions from IRAs or other retirement plans not specifically described
above.

REDEMPTION PURSUANT TO THE FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the systematic
withdrawal plan, a dollar amount of a participating shareholder's investment in
the Fund will be redeemed systematically by the Fund on a periodic basis, and
the proceeds sent to the designated payee of record. The amount to be redeemed
and frequency of the systematic withdrawals will be specified by the shareholder
upon his or her election to participate in the systematic withdrawal plan. The
CDSC-Class B and C will be waived on redemptions made under the systematic
withdrawal plan.

NO INITIAL COMMISSION OR TRANSACTION FEE

INVOLUNTARY REDEMPTIONS OF SHARES

REDEMPTION BY ADVISER

The Fund may waive the CDSC-Class B and C when a total or partial
redemption is made by the Adviser with respect to its investments in the Fund.

B-39
<PAGE> 152

TAXATION

FEDERAL INCOME TAXATION OF THE FUND

The Fund intends to elect and to qualify, and intends to continue to
qualify each year, to be treated as a regulated investment company under
Subchapter M of the Code. To qualify as a regulated investment company, the Fund
must comply with certain requirements of the Code relating to, among other
things, the source of its income and diversification of its assets.

If the Fund so qualifies and distributes each year to its shareholders at
least 90% of its investment company taxable income (generally, ordinary income
and net short-term capital gain, but not net capital gain, which is the excess
of net long-term capital gain over net short-term capital loss), and meets
certain other requirements, it will not be required to pay federal income taxes
on any income it distributes to shareholders. The Fund intends to distribute at
least the minimum amount of investment company taxable income necessary to
satisfy the 90% distribution requirement. The Fund will not be subject to
federal income tax on any net capital gain distributed to shareholders.

Some of the Fund's investment practices are subject to special provisions
of the Code that may, among other things, (i) disallow, suspend or otherwise
limit the allowance of certain losses or deductions, (ii) convert lower taxed
long-term capital gain into higher taxed short-term capital gain or ordinary
income, (iii) convert an ordinary loss or a deduction into a capital loss (the
deductibility of which is more limited) and/or (iv) cause the Fund to recognize
income or gain without a corresponding receipt of cash with which to make
distributions in amounts necessary to satisfy the 90% distribution requirement
and the distribution requirements for avoiding income and excise taxes. The Fund
will monitor its transactions and may make certain tax elections to mitigate the
effect of these rules and prevent disqualification of the Fund as a regulated
investment company.

B-40
<PAGE> 153

qualification as a regulated investment company and to avoid income and excise
taxes. To generate sufficient cash to make distributions necessary to satisfy
the 90% distribution requirement and to avoid income and excise taxes, the Fund
may have to dispose of securities that it would otherwise have continued to
hold.

DISTRIBUTIONS TO SHAREHOLDERS

B-41
<PAGE> 154

SALE OF SHARES

CAPITAL GAINS RATES

NON-U.S. SHAREHOLDERS

A shareholder who is not (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized under the laws of the
United States or any state thereof, (iii) an estate, the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a trust
whose administration is subject to the primary supervision of a U.S. court and
which has one or more U.S. fiduciaries who have the authority to control all
substantial decisions of the trust (a "Non-U.S. Shareholder") generally will be
subject to withholding of United States federal income tax at a 30% rate (or
lower applicable treaty rate) on dividends from the Fund (other than capital
gain

B-42
<PAGE> 155

dividends) that are not "effectively connected" with a U.S. trade or business
carried on by such shareholder.

If income from the Fund or gains realized from the sale of shares are
effectively connected with a Non-U.S. Shareholder's U.S. trade or business, then
such amounts will be subject to U.S. federal income tax on a net basis at the
tax rates applicable to United States citizens or domestic corporations.
Non-U.S. Shareholders that are corporations may also be subject to an additional
"branch profits tax" with respect to income from the Fund that is effectively
connected with a U.S. trade or business.

BACKUP WITHHOLDING

B-43
<PAGE> 156

INFORMATION REPORTING

GENERAL

FUND PERFORMANCE

From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one year, five-year and ten-year periods. Other total
return quotations, aggregate or average, over other time periods may also be
included.

B-44
<PAGE> 157

deferred sales charge. Because of the differences in sales charges and
distribution fees, the total returns for each class of shares will differ.

From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund. Distribution rate is a measure of the level of
income and short-term capital gain dividends, if any, distributed for a
specified period. Distribution rate differs from yield, which is a measure of
the income actually earned by the Fund's investments, and from total return
which is a measure of the income actually earned by the Fund's investments plus
the effect of any realized and unrealized appreciation or depreciation of such
investments during a stated period. Distribution rate is, therefore, not
intended to be a complete measure of the Fund's performance. Distribution rate
may sometimes be greater than yield since, for instance, it may not include the
effect of amortization of bond premiums, and may include non-recurring
short-term capital gains and premiums from futures transactions engaged in by
the Fund. Distribution rates will be computed separately for each class of the
Fund's shares.

From time to time marketing materials may provide a portfolio manager
update, an Adviser update and discuss general economic conditions and outlooks.
The Fund's marketing materials may also show the Fund's asset class
diversification, top sector holdings and largest holdings. Materials may also
mention how the Distributor believes the Fund compares relative to other Van
Kampen funds. Materials may also discuss the Dalbar Financial Services study
from 1984 to 1994 which studied investor cash flow into and out of all types of
mutual funds. The ten-year study found that investors who bought mutual fund
shares and held such shares outperformed investors who bought and sold. The
Dalbar study conclusions were consistent regardless of whether shareholders
purchased their fund shares in direct or sales force distribution channels. The
study showed that investors working with a professional representative have
tended over time to earn higher returns than those who invested directly. The
performance of the funds purchased by the investors in the Dalbar study and the
conclusions based thereon are not necessarily indicative of future performance
of such funds or conclusions that may result from similar studies in the future.
The Fund may also be marketed on the internet.

B-45
<PAGE> 158

Mutual Funds or similar independent services which monitor the performance of
mutual funds with the Consumer Price Index, the Dow Jones Industrial Average,
Standard & Poor's indices, NASDAQ Composite Index, other appropriate indices of
investment securities, or with investment or savings vehicles. The performance
information may also include evaluations of the Fund published by nationally
recognized ranking or rating services and by nationally recognized financial
publications. Such comparative performance information will be stated in the
same terms in which the comparative data or indices are stated. Such
advertisements and sales material may also include a yield quotation as of a
current period. In each case, such total return and yield information, if any,
will be calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. For these purposes, the
performance of the Fund, as well as the performance of other mutual funds or
indices, do not reflect sales charges, the inclusion of which would reduce the
Fund's performance. The Fund will include performance data for each class of
shares of the Fund in any advertisement or information including performance
data of the Fund.

The Fund may also utilize performance information in hypothetical
illustrations. For example, the Fund may, from time to time: (1) illustrate the
benefits of tax-deferral by comparing taxable investments to investments made
through tax-deferred retirement plans; (2) illustrate in graph or chart form, or
otherwise, the benefits of dollar cost averaging by comparing investments made
pursuant to a systematic investment plan to investments made in a rising market;
(3) illustrate allocations among different types of mutual funds for investors
at different stages of their lives; and (4) in reports or other communications
to shareholders or in advertising material, illustrate the benefits of
compounding at various assumed rates of return.

CLASS A SHARES

The Fund's average annual total return assuming payment of the maximum
sales charge, for Class A Shares of the Fund for the five-month period since
March 28, 2000, the commencement of distribution for Class A Shares of the Fund,
through August 31, 2000 was -8.77%.

The Fund's cumulative non-standardized total return, including payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to August 31, 2000 was -8.77%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to August 31, 2000 was -3.20%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for the five-month period
since March 28,

B-46
<PAGE> 159

2000, the commencement of distribution for Class B Shares of the Fund, through
August 31, 2000 was -7.47%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class B Shares from
March 28, 2000 (the commencement of distribution of Class B Shares) to August
31, 2000 was -7.47%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
March 28, 2000 (the commencement of distribution of Class B Shares) to August
31, 2000 was -2.60%.

CLASS C SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for the five-month period
since March 28, 2000, the commencement of distribution for Class C Shares of the
Fund, through August 31, 2000 was -3.77%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class C Shares from
March 28, 2000 (the commencement of distribution for Class C Shares) to August
31, 2000 was -3.77%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
March 28, 2000 (the commencement of distribution for Class C Shares) to August
31, 2000 was -2.80%.

OTHER INFORMATION

CUSTODY OF ASSETS

All securities owned by the Fund and all cash, including proceeds from the
sale of shares of the Fund and of securities in the Fund's investment portfolio,
are held by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as custodian. The Custodian also provides accounting
services to the Fund.

SHAREHOLDER REPORTS

Semiannual statements are furnished to shareholders, and annually such
statements are audited by the independent auditors.

INDEPENDENT AUDITORS

Independent auditors perform an annual audit of the Fund's financial
statements. The Fund's Board of Trustees has engaged Ernst & Young LLP, located
at 233 South Wacker Drive, Chicago, Illinois 60606, to be the independent
auditors.

B-47
<PAGE> 160

PricewaterhouseCoopers LLP, located at 200 East Randolph Drive, Chicago,
Illinois 60601 ("PWC"), ceased being the Fund's independent auditors effective
May 25, 2000. The cessation of the client-auditor relationship between the Fund
and PWC was based solely on a possible future business relationship by PWC with
an affiliate of the Fund's investment adviser. The change in independent
auditors was approved by the Fund's audit committee and the Fund's Board of
Trustees, including Trustees who are not "interested persons" of the Fund (as
defined in the 1940 Act).

LEGAL COUNSEL

Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom (Illinois).

B-48
<PAGE> 161

REPORT OF INDEPENDENT AUDITORS

To the Shareholders and Board of Trustees of Van Kampen Tax Managed Equity
Growth

We have audited the accompanying statement of assets and liabilities including
the portfolio of investments of the Van Kampen Tax Managed Equity Growth Fund
(the "Fund") as of August 31, 2000, and the related statements of operation,
changes in net assets and the financial highlights from March 28, 2000
(commencement of investment operations) through August 31, 2000. These financial
statements and financial highlights are the responsibility of the Funds'
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 auditing standards generally
accepted in the United States. 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 investments
owned as of August 31, 2000, by correspondence with the custodian and brokers.
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 audit provides 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 the
Fund at August 31, 2000, the results of its operations, the changes in its net
assets, and the financial highlights for the period then ended, in conformity
with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

October 10, 2000

F-1
<PAGE> 162

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

August 31, 2000
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON AND PREFERRED STOCKS 90.7%
CONSUMER DISTRIBUTION 5.3%
Dollar Tree Stores, Inc. (a)................................ 700 $ 28,394
Home Depot, Inc. ........................................... 6,250 300,391
Limited, Inc. .............................................. 3,900 78,439
Safeway, Inc. (a)........................................... 1,700 83,831
Tiffany & Co. .............................................. 1,750 72,844
Wal-Mart Stores, Inc. ...................................... 2,200 104,362
-----------
668,261
-----------
CONSUMER NON-DURABLES 3.0%
Anheuser-Busch Cos., Inc. .................................. 1,500 118,219
Keebler Foods Co. .......................................... 750 34,359
PepsiCo, Inc. .............................................. 2,550 108,694
Procter & Gamble Co. ....................................... 950 58,722
Quaker Oats Co. ............................................ 950 64,540
-----------
384,534
-----------
CONSUMER SERVICES 5.6%
AT&T Corp.--Liberty Media Corp., Class A (a)................ 7,800 166,725
Brinker International, Inc. (a)............................. 600 19,050
Clear Channel Communications, Inc. (a)...................... 2,250 162,844
Comcast Corp., Class A...................................... 3,400 126,650
Gemstar-TV Guide International, Inc. (a).................... 494 44,583
News Corp., Ltd.--Preferred--ADR (Australia)................ 850 37,613
Omnicom Group, Inc. ........................................ 700 58,406
Time Warner, Inc. .......................................... 100 8,593
Viacom, Inc., Class B (a)................................... 1,329 89,458
-----------
713,922
-----------
FINANCE 7.9%
American Express Co. ....................................... 1,950 115,294
American International Group, Inc. ......................... 1,500 133,688
Bank of New York Co., Inc. ................................. 3,850 201,884
Chase Manhattan Corp. ...................................... 1,050 58,669
Citigroup, Inc. ............................................ 4,533 264,633
FleetBoston Financial Corp. ................................ 2,300 98,181
Freddie Mac................................................. 2,550 107,419
Pinnacle Holdings, Inc. (a)................................. 600 24,150
-----------
1,003,918
-----------
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 163

YOUR FUND'S INVESTMENTS

August 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
HEALTHCARE 11.7%
Abbott Laboratories......................................... 1,200 $ 52,500
American Home Products Corp. ............................... 2,450 132,759
Amgen, Inc. (a)............................................. 700 53,069
Bristol-Myers Squibb Co. ................................... 1,800 95,400
Bruker Daltonics, Inc. (a).................................. 300 15,075
Eli Lilly & Co. ............................................ 600 43,800
HCA--The Healthcare Co. .................................... 1,150 39,675
Johnson & Johnson........................................... 1,200 110,325
MedImmune, Inc. (a)......................................... 500 42,063
Merck & Co., Inc. .......................................... 1,650 115,294
PE Corp.--PE Biosystems Group............................... 500 49,187
Pfizer, Inc. ............................................... 11,925 515,756
Pharmacia Corp. ............................................ 2,707 158,529
Schering-Plough Corp. ...................................... 1,050 42,131
Tularik, Inc. (a)........................................... 650 21,694
-----------
1,487,257
-----------
PRODUCER MANUFACTURING 14.5%
ASM Lithography Holding NV (Netherlands) (a)................ 750 28,594
Corning, Inc. .............................................. 400 131,175
General Electric Co. ....................................... 9,350 548,728
Textron, Inc. .............................................. 1,600 89,700
Tyco International, Ltd. (Bermuda).......................... 11,850 675,450
United Technologies Corp. .................................. 5,900 368,381
-----------
1,842,028
-----------
TECHNOLOGY 38.5%
America Online, Inc. (a).................................... 4,200 246,225
American Tower Corp., Class A............................... 2,850 103,491
Analog Devices, Inc. (a).................................... 200 20,100
Applied Materials, Inc. (a)................................. 2,550 220,097
Broadcom Corp., Class A (a)................................. 250 62,500
CIENA Corp. (a)............................................. 400 88,675
Cisco Systems, Inc. (a)..................................... 8,650 593,606
EMC Corp. (a)............................................... 1,700 166,600
Exfo Electro-Optical Engineering, Inc. (a).................. 200 11,350
General Dynamics Corp. ..................................... 2,750 173,078
General Motors Corp., Class H (a)........................... 4,250 140,781
Hewlett-Packard Co. ........................................ 750 90,562
Infineon Technologies AG--ADR (Germany) (a)................. 600 39,562
Inktomi Corp. (a)........................................... 200 26,075
Intel Corp. ................................................ 7,800 584,025
International Business Machines Corp. ...................... 1,000 132,000
Intersil Holding Corp., Class A (a)......................... 950 51,300
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 164

YOUR FUND'S INVESTMENTS

August 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
TECHNOLOGY (CONTINUED)
JDS Uniphase Corp. (a)...................................... 950 $ 118,260
Juniper Networks, Inc. (a).................................. 400 85,500
Lucent Technologies, Inc. .................................. 2,550 106,622
Maxim Integrated Products, Inc. (a)......................... 2,100 184,144
McDATA Corp. (a)............................................ 200 21,512
Microsoft Corp. (a)......................................... 3,750 261,797
Motorola, Inc. ............................................. 3,150 113,597
Nortel Networks Corp. ...................................... 4,300 350,719
Oracle Corp. (a)............................................ 2,350 213,703
PMC Sierra, Inc. (a)........................................ 200 47,200
RealNetworks, Inc. (a)...................................... 350 17,041
Seagate Technology, Inc. (a)................................ 850 50,469
Spectrasite Holdings, Inc. (a).............................. 1,400 32,812
StorageNetworks, Inc. (a)................................... 300 30,450
Sun Microsystems, Inc. (a).................................. 1,650 209,447
Texas Instruments, Inc. .................................... 2,850 190,772
TyCom, Ltd. (Bermuda) (a)................................... 650 27,056
VeriSign, Inc. (a).......................................... 100 19,888
Yahoo!, Inc. (a)............................................ 400 48,600
-----------
4,879,616
-----------
UTILITIES 4.2%
AT&T Corp. ................................................. 1,950 61,425
AT&T Wireless Group (a)..................................... 850 22,259
Crown Castle International Corp. (a)........................ 2,400 83,250
Global Crossing, Ltd. (Bermuda) (a)......................... 1,023 30,754
Nextel Communications, Inc., Class A (a).................... 750 41,578
SBA Communications Corp. (a)................................ 300 13,388
</TABLE>

See Notes to Financial Statements

F-4
<PAGE> 165

YOUR FUND'S INVESTMENTS

August 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
UTILITIES (CONTINUED)
Verizon Communications...................................... 4,400 $ 191,950
Worldcom, Inc. (a).......................................... 2,250 82,125
-----------
526,729
-----------

TOTAL LONG-TERM INVESTMENTS 90.7%
(Cost $10,715,144)................................................ 11,506,265
-----------

REPURCHASE AGREEMENT 6.7%
State Street Bank & Trust Co., (collateralized by U.S. Government
obligations in a pooled cash account, dated 08/31/00, to be sold
on 09/01/00 at $850,124)
(Cost $850,000)................................................... 850,000
-----------

TOTAL INVESTMENTS 97.4%
(Cost $11,565,144)................................................ 12,356,265
OTHER ASSETS IN EXCESS OF LIABILITIES 2.6%......................... 332,770
-----------

NET ASSETS 100.0%.................................................. $12,689,035
===========
</TABLE>

(a) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

F-5
<PAGE> 166

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
August 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $11,565,144)........................ $12,356,265
Cash........................................................ 7,867
Receivables:
Fund Shares Sold.......................................... 652,743
Investments Sold.......................................... 74,007
Dividends................................................. 6,007
Interest.................................................. 124
-----------
Total Assets............................................ 13,097,013
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 347,129
Distributor and Affiliates................................ 10,500
Accrued Expenses............................................ 42,022
Trustees' Deferred Compensation and Retirement Plans........ 8,327
-----------
Total Liabilities....................................... 407,978
-----------
NET ASSETS.................................................. $12,689,035
===========
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $12,199,036
Net Unrealized Appreciation................................. 791,121
Accumulated Net Investment Loss............................. (8,327)
Accumulated Net Realized Loss............................... (292,795)
-----------
NET ASSETS.................................................. $12,689,035
===========
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $5,049,565 and 521,271 shares of
beneficial interest issued and outstanding)............. $ 9.69
Maximum sales charge (5.75%* of offering price)......... .59
-----------
Maximum offering price to public........................ $ 10.28
===========
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $4,491,584 and 460,961 shares of
beneficial interest issued and outstanding)............. $ 9.74
===========
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $3,147,886 and 323,559 shares of
beneficial interest issued and outstanding)............. $ 9.73
===========
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

F-6
<PAGE> 167

Statement of Operations
For the Period March 28, 2000 (Commencement of Investment Operations) to August
31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 18,253
Interest.................................................... 9,923
---------
Total Income............................................ 28,176
---------
EXPENSES:
Shareholders Report......................................... 27,631
Audit....................................................... 25,006
Investment Advisory Fee..................................... 22,950
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $2,819, $10,136 and $7,179, respectively)... 20,134
Custody..................................................... 13,960
Registration Fee............................................ 11,243
Trustees' Fees and Related Expenses......................... 9,950
Accounting.................................................. 8,260
Shareholder Services........................................ 7,255
Legal....................................................... 1,088
Other....................................................... 3,666
---------
Total Expenses.......................................... 151,143
Expense Reduction ($22,950 Investment Advisory Fee and
$70,698 Other)........................................ 93,648
---------
Net Expenses............................................ 57,495
---------
NET INVESTMENT LOSS......................................... $ (29,319)
=========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $(292,795)
---------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... -0-
End of the Period......................................... 791,121
---------
Net Unrealized Appreciation During the Period............... 791,121
---------
NET REALIZED AND UNREALIZED GAIN............................ $ 498,326
=========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 469,007
=========
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 168

Statement of Changes in Net Assets
For the Period March 28, 2000 (Commencement of Investment Operations)
to August 31, 2000

<TABLE>
<CAPTION>
PERIOD ENDED
AUGUST 31, 2000
---------------
<S> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss......................................... $ (29,319)
Net Realized Loss........................................... (292,795)
Net Unrealized Appreciation During the Period............... 791,121
-----------

NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES......... 469,007
-----------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................... 10,577,092
Cost of Shares Repurchased.................................. (357,064)
-----------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS.......... 10,220,028
-----------
TOTAL INCREASE IN NET ASSETS................................ 10,689,035
NET ASSETS:
Beginning of the Period..................................... 2,000,000
-----------
End of the Period (Including accumulated net investment loss
of $8,327)................................................ $12,689,035
===========
</TABLE>

See Notes to Financial Statements

F-8
<PAGE> 169

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
MARCH 28, 2000
(COMMENCEMENT OF
CLASS A SHARES INVESTMENT OPERATIONS) TO
AUGUST 31, 2000
-------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $10.00
------
Net Investment Loss....................................... (0.01)
Net Realized and Unrealized Loss.......................... (0.30)
------
Total from Investment Operations............................ (0.31)
------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.69
======

Total Return (a)............................................ -3.20%**
Net Assets at End of the Period (In millions)............... $ 5.0
Ratio of Expenses to Average Net Assets*.................... 1.55%
Ratio of Net Investment Loss to Average Net Assets*......... -0.57%
Portfolio Turnover.......................................... 23%**
* 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................. 4.80%
Ratio of Net Investment Loss to Average Net Assets...... -3.82%
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a CDSC of 1% may
be imposed on certain redemptions made within one year of purchase. If the
sales charges were included, total returns would be lower.

See Notes to Financial Statements

F-9
<PAGE> 170

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
MARCH 28, 2000
(COMMENCEMENT OF
CLASS B SHARES INVESTMENT OPERATIONS) TO
AUGUST 31, 2000
-------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $10.00
------
Net Investment Loss....................................... (0.03)
Net Realized and Unrealized Loss.......................... (0.23)
------
Total from Investment Operations............................ (0.26)
------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.74
======

Total Return (a)............................................ -2.60%**
Net Assets at End of the Period (In millions)............... $ 4.5
Ratio of Expenses to Average Net Assets*.................... 2.30%
Ratio of Net Investment Loss to Average Net Assets*......... -1.32%
Portfolio Turnover.......................................... 23**
* 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................. 5.55%
Ratio of Net Investment Loss to Average Net Assets...... -4.57%
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 5%,
charged on certain redemptions made within one year of purchase and
declining to 0% after the fifth year. If the sales charge was included,
total returns would be lower.

See Notes to Financial Statements

F-10
<PAGE> 171

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
MARCH 28, 2000
(COMMENCEMENT OF
CLASS C SHARES INVESTMENT OPERATIONS) TO
AUGUST 31, 2000
-------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $ 10.00
-------
Net Investment Loss....................................... (0.03)
Net Realized and Unrealized Loss.......................... (0.24)
-------
Total from Investment Operations............................ (0.27)
-------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.73
=======

Total Return (a)............................................ -2.80%**
Net Assets at End of the Period (In millions)............... $ 3.1
Ratio of Expenses to Average Net Assets*.................... 2.30%
Ratio of Net Investment Loss to Average Net Assets*......... -1.32%
Portfolio Turnover.......................................... 23%**
* 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................. 5.54%
Ratio of Net Investment Loss to Average Net Assets...... -4.56%
</TABLE>

** Non-Annualized

See Notes to Financial Statements

F-11
<PAGE> 172

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Tax Managed Equity Growth Fund (the "Fund") is organized as a series
of Van Kampen Equity Trust II (the "Trust"), a Delaware business trust, and is
registered as a diversified open-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek to provide long-term capital appreciation on an after tax basis, by
investing primarily in a portfolio of growth-oriented equity securities while
attempting to minimize the impact of federal income taxes on shareholder
returns. The Fund commenced investment operations on March 28, 2000, with three
classes of common shares, Class A, Class B and Class C shares.

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

The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Investment Advisory Corp. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to

F-12
<PAGE> 173

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.

C. INCOME AND EXPENSES Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts are accreted over the
expected life of each applicable security. Income and expenses of the Fund are
allocated on a pro rata basis to each class of shares, except for distribution
and service fees and transfer agency costs which are unique to each class of
shares.

At August 31, 2000, for federal income tax purposes the cost of long- and
short-term investments is $11,655,191, the aggregate gross unrealized
appreciation is $1,018,586 and the aggregate gross unrealized depreciation is
$317,512, resulting in net unrealized appreciation on long- and short-term
investments of $701,074.

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At August 31, 2000, the Fund had an accumulated capital loss carryforward
for tax purposes of $202,748 which will expire on August 31, 2008. Net realized
gains or losses may differ for financial and tax reporting purposes primarily as
a result of the deferral of losses for tax purposes resulting from wash sales.

E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually.

Due to inherent differences in the recognition of income, expenses and
realized gains/losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between financial and tax basis reporting have been identified and appropriately
reclassified. A permanent difference relating to a net operating loss totaling
$4,897 and a permanent difference relating to nondeductible expenses totaling
$16,095 have been reclassified from accumulated net investment loss to capital.

F-13
<PAGE> 174

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

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 DAILY NET ASSETS % PER ANNUM
<S> <C>
First $500 million.......................................... .80 of 1%
Next $500 million........................................... .75 of 1%
Over $1 billion............................................. .70 of 1%
</TABLE>

The Adviser has entered into a subadvisory agreement with Morgan Stanley
Dean Witter Investment Management Inc. (the "Subadviser"), to provide advisory
services to the Fund and the Adviser with respect to the Fund's investments. The
Adviser pays 50% of its investment advisory fee to the Subadviser.

For the period ended August 31, 2000, the Adviser voluntarily waived $22,950
of its investment advisory fees and assumed $70,698 of the Fund's other
expenses. This waiver is voluntary and can be discontinued at the Adviser's
discretion.

For the period ended August 31, 2000, the Fund recognized expenses of
approximately $1,100 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.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the period ended August 31,
2000, the Fund recognized expenses of approximately $6,800. 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.

At August 31, 2000, Van Kampen owned 80,000 shares of Class A, 60,000 shares
of Class B, and 60,000 shares of Class C.

F-14
<PAGE> 175

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

3. CAPITAL TRANSACTIONS

At August 31, 2000, capital aggregated $4,846,956, $4,313,110 and $3,038,970 for
Classes A, B and C, respectively. For the period ended August 31, 2000,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A.................................................. 444,767 $ 4,087,399
Class B.................................................. 402,198 3,731,548
Class C.................................................. 296,965 2,758,145
--------- -----------
Total Sales................................................ 1,143,930 $10,577,092
========= ===========
Repurchases:
Class A.................................................. (3,496) $ (32,090)
Class B.................................................. (1,237) (11,007)
Class C.................................................. (33,406) (313,967)
--------- -----------
Total Repurchases.......................................... (38,139) $ (357,064)
========= ===========
</TABLE>

Class B Shares, including Class B Shares received from reinvestment of
dividends through the dividend reinvestment plan, automatically convert to Class
A Shares eight years after the end of the calendar month in which the shares
were purchased. Class B and C Shares are offered without a front end sales
charge, but are subject to a contingent deferred sales charge (CDSC). The CDSC
will be imposed on most redemptions made within five years of the purchase for
Class B Shares and one year of the purchase for Class C Shares as detailed in
the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF DOLLAR
AMOUNT
SUBJECT TO CHARGE
--------------------------
YEAR SINCE PURCHASE CLASS B CLASS C
<S> <C> <C>
First...................................................... 5.00% 1.00%
Second..................................................... 4.00% None
Third...................................................... 3.00% None
Fourth..................................................... 2.50% None
Fifth...................................................... 1.50% None
Sixth and Thereafter....................................... None None
</TABLE>

F-15
<PAGE> 176

NOTES TO
FINANCIAL STATEMENTS

August 31, 2000

For the period ended August 31, 2000, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A Shares of
approximately $11,900 and CDSC on redeemed shares of approximately $20. Sales
charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $12,480,108 and $1,472,169, respectively.

5. DISTRIBUTION AND SERVICE PLANS

The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, and a service plan
(collectively the "Plans"). The Plans govern payments for the distribution of
the Fund's shares, ongoing shareholder services and maintenance of shareholder
accounts.

Annual fees under the Plans of up to .25% for Class A net assets and 1.00%
each for Class B and Class C net assets are accrued daily. Included in these
fees for the period ended August 31, 2000, are payments retained by Van Kampen
of approximately $13,500.

F-16
<PAGE> 177

PART C: OTHER INFORMATION

ITEM 23. EXHIBITS.

<TABLE>
<C> <C> <S>
(a)(1) -- Declaration of Trust(1)
(2) -- Certificate of Designation for:
(i) Van Kampen Technology Fund (1)
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(b) -- Bylaws(1)
(c) -- Specimen Share Certificates for:
(i) Van Kampen Technology Fund (2)
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(d)(1) -- Investment Advisory Agreement for:
(i) Van Kampen Technology Fund (2)
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(2) -- Investment Subadvisory Agreement for Van Kampen Tax Managed
Equity Growth Fund (4)
(e)(1) -- Distribution and Service Agreement for:
(i) Van Kampen Technology Fund (2)
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(2) -- Form of Dealer Agreement(2)
(3) -- Form of Broker Fully Disclosed Selling Agreement(2)
(4) -- Form of Bank Fully Disclosed Selling Agreement(2)
(f)(1) -- Form of Trustee Deferred Compensation Plan(3)
(2) -- Form of Trustee Retirement Plan(3)
(g)(1) -- Custodian Contract(2)
(2) -- Transfer Agency and Service Agreement(2)
(h)(1) -- Data Access Services Agreement(2)
(2) -- Fund Accounting Agreement (4)
(3) -- Amended and Restated Legal Services Agreement (4)
(i)(1) -- Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois)
for:
--
(i) Van Kampen Technology Fund(2)
--
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(2) -- Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)+
(j)(1) -- Consent of Ernst & Young LLP with respect to Van Kampen
Technology Fund and
Van Kampen Tax Managed Equity Growth Fund+
(2) -- Consent of PricewaterhouseCoopers LLP for:
(i) Van Kampen Technology Fund+
(ii) Van Kampen Tax Managed Equity Growth Fund+
(k) -- Not applicable
(l) -- Investment Letter(2)
(m)(1) -- Plan of Distribution pursuant to Rule 12b-1 for:
(i) Van Kampen Technology Fund (2)
(ii) Van Kampen Tax Managed Equity Growth Fund(4)
(2) -- Form of Shareholder Assistance Agreement(2)
(3) -- Form of Administrative Services Agreement(2)
(4) -- Service Plan for:
(i) Van Kampen Technology Fund (2)
(ii) Van Kampen Tax Managed Equity Growth Fund (4)
(n) -- Amended Multi-Class Plan(2)
(p)(1) -- Code of Ethics of the Funds, Investment Adviser and
Distributor+
(2) -- Code of Ethics of Subadviser for Van Kampen Tax Managed
Equity Growth Fund (4)
(q) -- Power of Attorney+
(z)(1) -- List of certain investment companies in response to Item
27(a)+
(2) -- List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)+
</TABLE>

-------------------------
(1) Incorporated herein by reference to the Registrant's initial
Registration Statement on Form N-1A, File No. 333-75493, filed April 1,
1999.

(2) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, File No. 333-75493,
filed June 4, 1999.

C-1
<PAGE> 178

(3) Incorporated herein by reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, File No. 333-75493,
filed December 23, 1999.

(4)Incorporated herein by reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A, File No. 333-75493,
filed March 7, 2000.

+ Filed herewith.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

See the Statement of Additional Information.

ITEM 25. INDEMNIFICATION.

Pursuant to Del. Code Ann. Title 12 Section 3817, a Delaware business trust
may provide in its governing instrument for the indemnification of its officers
and trustees from and against any and all claims and demands whatsoever.

Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust. Article 8, Section 8.4 of the Agreement and
Declaration of Trust provides that each officer and trustee of the Registrant
shall be indemnified by the Registrant against all liabilities incurred in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which the officer or trustee may be or
may have been involved by reason of being or having been an officer or trustee,
except that such indemnity shall not protect any such person against a liability
to the Registrant or any shareholder thereof to which such person would
otherwise be subject by reason of (i) not acting in good faith in the reasonable
belief that such person's actions were not in the best interests of the Trust,
(ii) willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office or (iii) for a criminal
proceeding, not having a reasonable cause to believe that such conduct was
unlawful (collectively, "Disabling Conduct"). Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of Disabling Conduct in the conduct of his or her office, the decision by
the Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent trustees, after
review of the facts, that such officer or trustee is not guilty of Disabling
Conduct in the conduct of his or her office.

The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officer or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.

Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides a security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by the trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds Inc. (the
"Distributor") and each of its trustees and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the Act against
any loss, liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees) arising by reason of any person acquiring
any shares, based upon the ground that the registration statement, prospectus,
shareholder reports or other information filed or made public by the Registrant
(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. The

C-2
<PAGE> 179

Registrant does not agree to indemnify the Distributor or hold it harmless to
the extent that the statement or omission was made in reliance upon, and in
conformity with, information furnished to the Registrant by or on behalf of the
Distributor. In no case is the indemnity of the Registrant in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor or
any person against any liability to the Fund or its security holders to which
the Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under the
agreement.

Pursuant to the agreement by which Van Kampen Investor Services Inc.
("Investor Services") is appointed transfer agent of the Fund, the Registrant
agrees to indemnify and hold Investor Services harmless against any losses,
damages, costs, charges, payments, liabilities and expenses (including
reasonable counsel fees) arising out of or attributable to:

(1) the performance of Investor Services under the agreement provided
that Investor Services acted in good faith with due diligence and without
negligence or willful misconduct.

(2) reliance by Investor Services on, or reasonable use by, Investor
Services of information, records and documents which have been prepared on
behalf of, or have been furnished by, the Fund, or the carrying out by
Investor Services of any instructions or requests of the Fund.

(3) the offer or sale of the Fund's shares in violation of any federal
or state law or regulation or ruling by any federal agency unless such
violation results from any failure by Investor Services to comply with
written instructions from the Fund that such offers or sales were not
permitted under such law, rule or regulation.

(4) the refusal of the Fund to comply with terms of the agreement, or
the Fund's lack of good faith, negligence or willful misconduct or breach
of any representation or warranty made by the Fund under the agreement
provided that if the reason for such failure is attributable to any action
of the Fund's investment adviser or distributor or any person providing
accounting or legal services to the Fund, Investor Services only will be
entitled to indemnification if such entity is otherwise entitled to the
indemnification from the Fund.

See also "Investment Advisory Agreement" in the Statement of Additional
Information.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

See "Investment Advisory Services" in the Prospectus and "Investment
Advisory Agreement," "Other Agreements" and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Investment Advisory Corp. (the "Adviser"). For information as to the
business, profession, vocation and employment of a substantial nature of
directors and officers of the Adviser, reference is made to the Adviser's
current Form ADV (File No. 801-1669) filed under the Investment Advisers Act of
1940, as amended, incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) The sole principal underwriter is Van Kampen Funds Inc., (the
"Distributor") which acts as principal underwriter for certain
investment companies and unit investment trusts. See Exhibit (z)(1).

(b) Van Kampen Funds Inc. is an affiliated person of the Registrant and is
the only principal underwriter for the Registrant. The name, principal
business address and position and office with Van Kampen Funds Inc. of
each of its directors and officers are disclosed in Exhibit (z)(2).
Except as disclosed under the heading, "Trustees and Officers" in Part
B of this Registration Statement, none of such persons has any
position or office with Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents of the Registrant required by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder to be maintained (i) by the Registrant will be maintained at its
offices, located at 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555 or
at Van Kampen Investor Services Inc., 7501 Tiffany Springs Parkway, Kansas City,
Missouri 64153 or at the State Street Bank and Trust Company, 1776 Heritage
Drive, North Quincy, Massachusetts 02171; (ii) by the Adviser will be maintained
at its offices, located at 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555; and (iii) by Van Kampen Funds Inc., the principal underwriter, will
be maintained at its offices located at 1 Parkview Plaza, Oakbrook Terrace,
Illinois 60181-5555.

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-3
<PAGE> 180

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN EQUITY TRUST II, certifies that it meets all of the requirements for
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the 1933 Act and has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakbrook Terrace and State of Illinois, on the 22nd
day of December, 2000.

VAN KAMPEN EQUITY TRUST II

By: /s/ A. THOMAS SMITH III
------------------------------------

A. Thomas Smith III, Secretary

Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed on December 22, 2000 by the following
persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLES
---------- ------
<C> <S>
Principal Executive Officer:
/s/ RICHARD F. POWERS, III* Trustee and President
-----------------------------------------------------
Richard F. Powers, III

Principal Financial Officer:

/s/ JOHN L. SULLIVAN* Vice President, Chief Financial Officer and
----------------------------------------------------- Treasurer
John L. Sullivan

Trustees:

/s/ J. MILES BRANAGAN* Trustee
-----------------------------------------------------
J. Miles Branagan

/s/ JERRY D. CHOATE* Trustee
-----------------------------------------------------
Jerry D. Choate

/s/ LINDA HUTTON HEAGY* Trustee
-----------------------------------------------------
Linda Hutton Heagy

/s/ R. CRAIG KENNEDY* Trustee
-----------------------------------------------------
R. Craig Kennedy

/s/ MITCHELL M. MERIN* Trustee
-----------------------------------------------------
Mitchell M. Merin

/s/ JACK E. NELSON* Trustee
-----------------------------------------------------
Jack E. Nelson

/s/ PHILLIP B. ROONEY* Trustee
-----------------------------------------------------
Phillip B. Rooney

/s/ FERNANDO SISTO* Trustee
-----------------------------------------------------
Fernando Sisto

/s/ WAYNE W. WHALEN* Trustee
-----------------------------------------------------
Wayne W. Whalen

/s/ SUZANNE H. WOOLSEY* Trustee
-----------------------------------------------------
Suzanne H. Woolsey
---------------
* Signed by A. Thomas Smith III pursuant to a power of attorney filed herein.
/s/ A. THOMAS SMITH III
-----------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact December 22, 2000
</TABLE>

<PAGE> 181

SCHEDULE OF EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 4 TO FORM N-1A

AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<S> <C> <C>
(i) (2) -- Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(j) (1) -- Consent of Ernst & Young LLP with respect to Van Kampen
Technology Fund and
Van Kampen Tax Managed Equity Growth Fund
(2) -- Consent of PricewaterhouseCoopers LLP
(i) Van Kampen Technology Fund
(ii) Van Kampen Tax Managed Equity Growth Fund
(p)(1) -- Code of Ethics of Funds, Investment Adviser and Distributor
(q) -- Power of Attorney
(z) (1) -- List of certain investment companies in response to Item
27(a)
(2) -- List of officers and directors of Van Kampen Funds Inc. in
response to Item 27(b)
</TABLE>