VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST, 485BPOS, 1999-12-23

VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
485BPOS, 1999-12-23

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1999

REGISTRATION NOS. 2-62115
811-2851
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

<TABLE>
<S> <C> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 43 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 38 [X]
</TABLE>

VAN KAMPEN
HIGH INCOME CORPORATE BOND FUND

(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, 1999 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
HIGH INCOME
CORPORATE BOND FUND

Van Kampen High Income Corporate Bond Fund is
a mutual fund with a primary investment
objective of seeking to maximize current
income. Capital appreciation is a secondary
objective which is sought only when consistent
with the Fund's primary investment objective.
The Fund's investment adviser seeks to achieve
the Fund's investment objectives by investing
primarily in a portfolio of high-yielding,
high-risk bonds and other income securities,
such as convertible securities and preferred
stock.

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, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary............................... 3
Fees and Expenses of the Fund..................... 6
Investment Objectives, Policies and Risks......... 7
Investment Advisory Services...................... 14
Purchase of Shares................................ 15
Redemption of Shares.............................. 21
Distributions from the Fund....................... 23
Shareholder Services.............................. 24
Federal Income Taxation........................... 26
Financial Highlights.............................. 27
Appendix--Description of Securities Ratings....... A-1
</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 OBJECTIVES

The Fund is a mutual fund with a primary investment objective of seeking to
maximize current income. Capital appreciation is a secondary objective which is
sought only when consistent with the Fund's primary investment objective.

INVESTMENT STRATEGIES

The Fund's investment adviser seeks to achieve the Fund's investment objectives
by investing primarily in a portfolio of high-yielding, high-risk bonds and
other income securities, such as convertible securities and preferred stock.
Under normal market conditions, the Fund's investment adviser invests at least
80% of the Fund's total assets in a portfolio of medium- and lower-grade income
securities. Lower-grade securities are commonly referred to as "junk bonds" (see
sidebar for an explanation of quality ratings). The Fund buys and sells
securities with a view towards seeking a high level of current income and
capital appreciation over the long-term. The Fund invests in a broad range of
income securities represented by various companies and industries and traded on
various markets. In selecting securities for investment, the Fund's investment
adviser seeks to identify securities which entail reasonable credit risk
considered in relation to the Fund's investment policies. The Fund's investment
adviser uses an investment strategy of fundamental credit analysis and
emphasizes issuers that it believes will remain financially sound and perform
well in a range of market conditions. Portfolio securities are typically sold
when the investment adviser's fundamental assessment of an issuer materially
changes.

Under normal market conditions, the Fund invests at least 65% of its total
assets in corporate bonds and other income securities with maturities greater
than one year. The Fund may invest up to 35% of its total assets in securities
of issued by foreign governments or foreign corporations. The Fund may purchase
or sell certain derivatives (such as options, futures and options on futures)
for various portfolio management purposes.

INVESTMENT RISKS

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

CREDIT RISK. Credit risk refers to an issuer's ability to make timely payments
of interest and principal. Because the Fund invests primarily in medium- and
lower-grade securities, the Fund is subject to a high level of credit risk than
a fund that invests solely in investment grade securities. The credit quality of
"noninvestment-grade" securities is considered speculative by recognized rating
agencies with respect to the issuer's continuing ability to pay interest and
principal. Lower-grade securities may have less liquidity and a higher incidence
of default than higher-grade securities. The Fund may incur higher expenditures
to protect the Fund's interests in such securities. The credit risks and market
prices of lower-grade securities generally are more sensitive to negative issuer
developments, such as reduced revenues or increased expenditures, or adverse
economic conditions, such as a recession, than are higher-grade securities.

UNDERSTANDING

QUALITY RATINGS

Income securities ratings are based on the issuer's ability to pay interest
and repay the principal. Income securities with ratings above the line are
considered "investment grade," while those with ratings below the line are
regarded as "noninvestment grade." A detailed explanation of these ratings
can be found in the appendix to this prospectus.

<TABLE>
<CAPTION>
Moody's S&P Meaning
- ------------------------------------------------------
<C> <S> <C>
Aaa
......................................................
AAA Highest quality
Aa AA High quality
......................................................
A A Above-average quality
......................................................
Baa BBB Average quality
- ------------------------------------------------------
Ba BB Below-average quality
......................................................
B B Marginal quality
......................................................
Caa CCC Poor quality
......................................................
Ca CC Highly speculative
......................................................
C C Lowest quality
......................................................
-- D In default
......................................................
</TABLE>

3
<PAGE> 5

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. The prices of income securities tend to fall as
interest rates rise, and such declines tend to be greater among securities with
longer maturities. Although the Fund has no policy limiting the maturities of
its investments, the Fund's investment adviser seeks to maintain a portfolio
duration of two to six years. This means that the Fund will be subject to
greater market risk than a fund investing solely in shorter-term securities (see
sidebar for an explanation of maturities and durations). Medium- and lower-grade
securities, especially those with longer maturities or those that do not make
regular interest payments, may be more volatile and may decline more in price in
response to negative issuer developments or general economic news than higher-
grade securities.

Market risk is often greater among certain types of income securities, such as
zero-coupon bonds or pay-in-kind securities. As interest rates change, these
securities often fluctuate more in price than traditional income securities and
may subject the Fund to greater market risk than a fund that does not own these
types of securities.

INCOME RISK. The income you receive from the Fund is based primarily on interest
rates and credit risk, which can vary widely over the short- and long-term. If
interest rates drop, your income from the Fund may drop as well.

CALL RISK. If interest rates fall, it is possible that issuers of income
securities with high interest rates will prepay or "call" their securities
before their maturity dates. In this event, the proceeds from the called
securities most likely would be reinvested by the Fund in securities bearing the
new, lower interest rates, resulting in a possible decline in the Fund's income
and distributions to shareholders.

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.

RISKS OF USING DERIVATIVE INVESTMENTS. In general terms, a derivative investment
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 derivatives. Derivative investments involve risks different from
direct investment 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; risks that the transactions may not be liquid; and manager
risk.

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.

UNDERSTANDING
MATURITIES

An income security can be categorized according to its maturity, which is
the length of time before the issuer must repay the principal.

<TABLE>
<CAPTION>
Term Maturity Level
-------------------------------------------------
<C> <S>
1-3 years
.................................................
Short
4-10 years Intermediate
.................................................
More than 10 years Long
.................................................
</TABLE>

UNDERSTANDING
DURATION

Duration provides an alternative approach to assessing a security's market
risk. Duration measures the expected life of a security by incorporating the
security's yield, coupon interest payments, final maturity and call features
into one measure. Whereas maturity focuses only on the final principal
repayment date of a security, duration looks at the timing and present value
of all of a security's principal, interest or other payments. Typically, a
bond with interest payments due prior to maturity has a duration less than
maturity. A zero-coupon bond, which does not make interest payments prior to
maturity, would have the same duration and maturity.

4
<PAGE> 6

INVESTOR PROFILE

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

- - Seek a high level of current income

- - Are willing to take on the substantially increased risks of medium- and
lower-grade securities in exchange for potentially higher income

- - Wish to add to their investment portfolio a Fund that invests primarily in
medium- and lower-grade income securities

An investment in the Fund is not a deposit of any bank or other insured
depository institution. Your investment 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.

ANNUAL PERFORMANCE

One way to measure the risks of investing in the Fund is to look at how its
performance has varied from year-to-year. The following chart shows the annual
returns of the Fund's Class A Shares over the ten calendar years prior to the
date of this prospectus. Sales loads are not reflected in this chart. If these
sales loads had been included, the returns shown below would have been lower.
Remember that the past performance of the Fund is not indicative of its future
performance.

The Fund's return for the nine month period ended September 30, 1999 was 1.81%.

The annual return variability of the Fund's Class B Shares and Class C Shares
would be substantially similar to that shown for the Class A Shares because all
of the Fund's shares are invested in the same portfolio of securities; however,
the actual annual returns of the Class B Shares and Class C Shares would be
lower than the annual returns shown for the Fund's Class A Shares because of
differences in the expenses borne by each class of shares.

During the ten-year period shown in the bar chart, the highest quarterly return
was 15.00% (for the quarter ended March 31, 1991) and the lowest quarterly
return was -9.72% (for the quarter ended September 30, 1990).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Credit Suisse First Boston
High Yield Index*, a broad-based market index that the Fund's investment adviser
believes is an appropriate benchmark for the Fund, and the Lipper High Yield
Bond Fund Index, an index of funds with similar investment objectives. The
Fund's performance figures include the maximum sales charges paid by investors.
The indices' performance figures do not include any commissions or sales charges
that would be paid by investors purchasing the securities represented by the
indices. Average annual total returns are shown for the periods ended December
31, 1998 (the most recently completed calendar year prior to the date of this
prospectus).

5
<PAGE> 7

Remember that the past performance of the Fund is not indicative of its future
performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns Past
for the 10 Years
Periods Ended Past Past or Since
December 31, 1998 1 Year 5 Years Inception
- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Van Kampen High
Income Corporate Bond
Fund
-- Class A Shares (4.36%) 6.99% 7.45%

Credit Suisse First
Boston High Yield
Index 0.58% 8.16% 10.74%

Lipper High Yield
Bond Fund Index (0.07%) 7.63% 9.52%
...........................................................
Van Kampen High
Income Corporate Bond
Fund
-- Class B Shares (4.08%) 6.95% 8.59%(1)
Credit Suisse First
Boston High Yield
Index 0.58% 8.16% 9.95%(2)

Lipper High Yield
Bond Fund Index (0.07%) 7.63% 9.65%(2)
...........................................................
Van Kampen High
Income Corporate Bond
Fund
-- Class C Shares (1.36%) 7.16% 7.23%(3)

Credit Suisse First
Boston High Yield
Index 0.58% 8.16% 8.72%(4)

Lipper High Yield
Bond Fund Index (0.07%) 7.63% 8.32%(4)
...........................................................
</TABLE>

Inception dates: (1) 7/2/92, (2) 6/30/92, (3) 7/6/93, (4) 6/30/93.

* The Credit Suisse First Boston High Yield Index is an unmanaged, broad-based
index that reflects the general performance of a wide range of selected bonds
within the public high-yield debt market.

** The "Since Inception" performance for Class B Shares reflects the conversion
of such shares into Class A Shares six years after purchase. Class B Shares
purchased on or after June 1, 1996 will convert to Class A Shares eight years
after purchase. See "Purchase of Shares".

The current yield for the thirty-day period ended August 31, 1999 is 10.54% for
Class A Shares, 10.25% for Class B Shares and 10.32% for Class C Shares.
Investors can obtain the current yield of the Fund for each class of shares by
calling (800) 341-2911.

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 4.75%(1) None None
price)
...............................................................
Maximum deferred sales
charge (load)(as a
percentage of the lesser
of original purchase
price or redemption
proceeds) None(2) 4.00%(3) 1.00%(4)
...............................................................
Maximum sales charge
(load) imposed on
reinvested dividends
None None None
...............................................................
Redemption fees 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 0.53% 0.53% 0.53%
...............................................................
Distribution and/or
service
(12b-1) fees(5)
0.23% 1.00%(2) 1.00%(6)
...............................................................
Other expenses 0.27% 0.26% 0.26%
...............................................................
Total annual fund
operating expenses
1.03% 1.79% 1.79%
...............................................................
</TABLE>

(1) Reduced for purchases of $100,000 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 4.00% in the first and second year
after purchase, declining thereafter as follows:

Year 1-4.00%

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 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.

6
<PAGE> 8

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 $575 $787 $1,017 $1,675
..............................................................
Class B Shares $582 $863 $1,120 $1,905
..............................................................
Class C Shares $282 $563 $ 970 $2,105
..............................................................
</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 $575 $787 $1,017 $1,675
.............................................................
Class B Shares $182 $563 $ 970 $1,905*
.............................................................
Class C Shares $182 $563 $ 970 $2,105
.............................................................
</TABLE>

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

INVESTMENT OBJECTIVES,

POLICIES AND RISKS

The Fund's primary investment objective is seeking to maximize current income.
Capital appreciation is a secondary objective that the Fund will seek only when
consistent with the Fund's primary investment objective. The Fund's investment
objectives may be changed by the Fund's Board of Trustees without shareholder
approval, but no change is anticipated. If there is a change in investment
objectives of the Fund, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial positions and
needs. There are risks inherent in all investments in securities; accordingly,
there can be no assurance that the Fund will achieve its investment objectives.

The Fund's investment adviser seeks to achieve the Fund's investment objectives
by investing primarily in a portfolio of high-yielding, high-risk bonds and
other income securities, including convertible securities and preferred stock.
Under normal market conditions, the Fund's investment adviser invests at least
80% of the Fund's total assets in medium- and lower-grade income securities,
which includes securities rated at the time of purchase BBB or lower by Standard
& Poor's ("S&P") or rated Baa or lower by Moody's Investors Service, Inc.
("Moody's") and unrated securities determined by the Fund's investment adviser
to be of comparable quality at the time of purchase. With respect to such
investments, the Fund has not established any limit on the percentage of its
portfolio which may be invested in securities in any one rating category.
Securities rated BB or lower by S&P or rated Ba or lower by Moody's and unrated
securities of comparable quality are commonly referred to as "junk bonds," and
involve special risks as compared to investments in higher-grade securities.
Investors should carefully consider the section below entitled "Risks of
Investing in Medium- and Lower-Grade Securities." Under normal market
conditions, the Fund invests at least 65% of its total assets in corporate bonds
and other income securities with maturities greater than one year. Certain types
of income securities are subject to additional risks, see "Additional
Information Regarding Certain Income Securities" below.

The Fund buys and sells securities with a view towards seeking a high level of
current income and capital appreciation over the long-term. The Fund invests in
a broad range of income securities represented by various companies and
industries and traded on various markets. The Fund's investment adviser uses an
investment strategy of in-depth, fundamental credit analysis and emphasizes
issuers that it believes will remain financially sound and perform well in a
range of market conditions. In its effort to enhance value and diversify the
Fund's portfolio, the Fund's investment adviser may seek investments in cyclical
issues or out-of-favor areas of the market to contribute to the Fund's
performance.

7
<PAGE> 9

The higher income and potential for capital appreciation sought by the Fund are
generally obtainable from securities in the medium- and lower-credit quality
range. Such securities tend to offer higher yields than higher-grade securities
with the same maturities because the historical conditions of the issuers of
such securities may not have been as strong as those of other issuers. These
securities may be issued in connection with corporate restructurings such as
leveraged buyouts, mergers, acquisitions, debt recapitalization or similar
events. These securities are often issued by smaller, less creditworthy
companies or companies with substantial debt and may include financially
troubled companies or companies in default or in restructuring.

Such securities often are subordinated to the prior claims of banks and other
senior lenders. Lower-grade securities are regarded by the rating agencies as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. The ratings of S&P and Moody's represent
their opinions of the quality of the income securities they undertake to rate,
but not the market risk of such securities. It should be emphasized however,
that ratings are general and are not absolute standards of quality.

The Fund's investment adviser seeks to minimize the risks involved in investing
in medium- and lower-grade securities through diversification and a focus on
in-depth research and fundamental credit analysis. In selecting securities for
investment, the Fund's investment adviser considers, among other things, the
security's current income potential, the rating assigned to the security, the
issuer's experience and managerial strength, the financial soundness of the
issuer and the outlook of its industry, changing financial condition, borrowing
requirements or debt maturity schedules, regulatory concerns, and responsiveness
to changes in business conditions and interest rates. The Fund's investment
adviser also may consider relative values based on anticipated cash flow,
interest or dividend coverage, balance sheet analysis, and earnings prospects.
The investment adviser evaluates each individual income security for credit
quality and value and attempts to identify higher-yielding securities of
companies whose financial condition has improved since the issuance of such
securities or is anticipated to improve in the future. Because of the number of
investment considerations involved in investing in medium- and lower-grade
securities, achievement of the Fund's investment objectives may be more
dependent upon the investment adviser's credit analysis than is the case with
investing in higher-grade securities.

The value of income securities generally varies inversely with changes in
prevailing interest rates. If interest rates rise, income security prices
generally fall; if interest rates fall, income security prices generally rise.
Shorter-term securities are generally less sensitive to interest rate changes
than longer-term securities; thus, for a given change in interest rates, the
market prices of shorter-maturity securities generally fluctuate less than the
market prices of longer-maturity securities. Income securities with shorter
maturities generally offer lower yields than income securities with longer
maturities assuming all other factors, including credit quality, are equal.
While the Fund has no policy limiting the maturities of the debt securities in
which it may invest, the Fund's investment adviser seeks to moderate risk by
normally maintaining a portfolio duration of two to six years. Duration is a
measure of the expected life of a debt security that was developed as a more
precise alternative to the concept of "term to maturity." Duration incorporates
a debt security's yield, coupon interest payments, final maturity and call
features into one measurement. A duration calculation looks at the present value
of a security's entire payment stream, whereas term to maturity is based solely
on the date of a security's final principal repayment.

RISK OF INVESTING IN MEDIUM- AND LOWER-GRADE INCOME SECURITIES

Securities which are in the medium- or lower-grade categories generally offer
higher yields than are offered by higher-grade securities of similar maturities,
but they also generally involve greater risks, such as greater credit risk,
greater market risk and volatility, greater liquidity concerns and potentially
greater manager risk. Investors should carefully consider the risks of owning
shares of a portfolio which invests in medium- or lower-grade securities before
investing in the Fund.

Credit risk relates to the issuer's ability to make timely payment of interest
and principal when due. Medium- and lower-grade securities are considered more
susceptible to nonpayment of interest and principal or default than higher-grade
securities. Increases in interest rates or changes in the economy may
significantly affect the ability of issuers of medium- or lower-grade income
securities to pay interest and to repay principal, to meet projected

8
<PAGE> 10

financial goals or to obtain additional financing. In the event that an issuer
of securities held by the Fund experiences difficulties in the timely payment of
principal and interest and such issuer seeks to restructure the terms of its
borrowings, the Fund may incur additional expenses and may determine to invest
additional assets with respect to such issuer or the project or projects to
which the Fund's securities relate. Further, the Fund may incur additional
expenses to the extent that it is required to seek recovery upon a default in
the payment of interest or the repayment of principal on its portfolio holdings,
and the Fund may be unable to obtain full recovery on such amounts.

Market risk relates to changes in market value of a security that occur as a
result of variation in the level of prevailing interest rates and yield
relationships in the income securities market and as a result of real or
perceived changes in credit risk. The value of the Fund's investments can be
expected to fluctuate over time. When interest rates decline, the value of a
portfolio invested in fixed income securities generally can be expected to rise.
Conversely, when interest rates rise, the value of a portfolio invested in fixed
income securities generally can be expected to decline. Income securities with
longer maturities, which may have higher yields, may increase or decrease in
value more than income securities with shorter maturities. While the Fund has no
fundamental policy limiting the maturities of the individual income securities
in which it may invest, the Fund's investment adviser seeks to maintain a
portfolio duration of two to six years. However, the secondary market prices of
medium- or lower-grade income securities generally are less sensitive to changes
in interest rate and are more sensitive to general adverse economic changes or
specific developments with respect to the particular issuers than are the
secondary market prices of higher-grade income securities. A significant
increase in interest rates or a general economic downturn could severely disrupt
the market for medium- or lower-grade securities and adversely affect the market
value of such securities. Such events also could lead to a higher incidence of
default by issuers of medium- or lower-grade securities as compared with
higher-grade securities. In addition, changes in credit risks, interest rates,
the credit markets or periods of general economic uncertainty can be expected to
result in increased volatility in the market price of the medium- or lower-grade
securities in the Fund and thus in the net asset value of the Fund. Adverse
publicity and investor perceptions, whether or not based on rational analysis,
may affect the value, volatility and liquidity of medium- or lower-grade
securities.

The markets for medium- or lower-grade securities may be less liquid than the
markets for higher-grade securities. Liquidity relates to the ability of a fund
to sell a security in a timely manner at a price which reflects the value of
that security. To the extent that there is no established retail market for some
of the medium- or lower-grade securities in which the Fund may invest, trading
in such securities may be relatively inactive. Prices of medium- or lower-grade
securities may decline rapidly in the event a significant number of holders
decide to sell. Changes in expectations regarding an individual issuer of
medium- or lower-grade securities generally could reduce market liquidity for
such securities and make their sale by the Fund more difficult, at least in the
absence of price concessions. The effects of adverse publicity and investor
perceptions may be more pronounced for securities for which no established
retail market exists as compared with the effects on securities for which such a
market does exist. An economic downturn or an increase in interest rates could
severely disrupt the market for such securities and adversely affect the value
of outstanding securities or the ability of the issuers to repay principal and
interest. Further, the Fund may have more difficulty selling such securities in
a timely manner and at their stated value than would be the case for securities
for which an established retail market does exist.

The Fund's investment adviser is responsible for determining the net asset value
of the Fund, subject to the supervision of the Fund's Board of Trustees. During
periods of reduced market liquidity or in the absence of readily available
market quotations for medium- or lower-grade securities held in the Fund's
portfolio, the ability of the Fund's investment adviser to value the Fund's
securities becomes more difficult and the judgment of the Fund's investment
adviser may play a greater role in the valuation of the Fund's securities due to
the reduced availability of reliable objective data.

The Fund may invest in securities not producing immediate cash income, including
securities in default, zero-coupon securities or pay-in-kind securities, when
their effective yield over comparable instruments producing cash income make
these investments attractive. Prices on non-cash-paying instruments may be more
sensitive to changes in the issuer's financial condition, fluctuation in
interest

9
<PAGE> 11

rates and market demand/supply imbalances than cash-paying securities with
similar credit ratings, and thus may be more speculative. In addition, the
accrued interest income earned on such instruments is included in investment
company taxable income, thereby increasing the required minimum distributions to
shareholders without providing the corresponding cash flow with which to pay
such distributions. The Fund's investment adviser will weigh these concerns
against the expected total returns from such instruments. See "Additional
Information Regarding Certain Income Securities" below.

The Fund may invest in securities rated below B by both Moody's and S&P, common
stocks or other equity securities and income securities on which interest or
dividends are not being paid when such investments are consistent with the
Fund's investment objectives or are acquired as part of a unit consisting of a
combination of income or equity securities. Equity securities as referred to
herein do not include preferred stocks (which the Fund considers income
securities). The Fund will not purchase any such securities which will cause
more than 20% of its total assets to be so invested or which would cause more
than 10% of its total assets to be invested in common stocks, warrants and
options on equity securities. This limitation does not require the Fund to sell
a portfolio security because its rating has been changed.

The Fund's investments may include securities with the lowest-grade assigned by
recognized rating organizations and unrated securities of comparable quality.
Securities assigned the lowest grade ratings include those of companies that are
in default or are in bankruptcy or reorganization. Securities of such companies
are regarded by the rating agencies as having extremely poor prospects of ever
attaining any real investment standing and are usually available at deep
discounts from the face values of the instruments. A security purchased at a
deep discount may currently pay a very high effective yield. In addition, if the
financial condition of the issuer improves, the underlying value of the security
may increase, resulting in capital appreciation. If the company defaults on its
obligations or remains in default, or if the plan of reorganization does not
provide sufficient payments for debtholders, the deep discount securities may
stop generating income and lose value or become worthless. The Fund's investment
adviser will balance the benefits of deep discount securities with their risks.
While a diversified portfolio may reduce the overall impact of a deep discount
security that is in default or loses its value, the risk cannot be eliminated.

Many medium- and lower-grade income securities are not listed for trading on any
national securities exchange, and many issuers of medium- and lower-grade income
securities choose not to have a rating assigned to their obligations by any
nationally recognized statistical rating organization. As a result, the Fund's
portfolio may consist of a higher portion of unlisted or unrated securities as
compared with an investment company that invests primarily in higher-grade
securities. Unrated securities are usually not as attractive to as many buyers
as are rated securities, a factor which may make unrated securities less
marketable. These factors may have the effect of limiting the availability of
the securities for purchase by the Fund and may also limit the ability of the
Fund to sell such securities at their fair value either to meet redemption
requests or in response to changes in the economy or the financial markets.
Further, to the extent the Fund owns or may acquire illiquid or restricted
medium- or lower-grade securities, these securities may involve special
registration responsibilities, liabilities and costs, and liquidity and
valuation difficulties.

The Fund will rely on its investment adviser's judgment, analysis and experience
in evaluating the creditworthiness of an issue. The amount of available
information about the financial condition of certain medium- or lower-grade
issuers may be less extensive than other issuers. In its analysis, the Fund's
investment adviser may consider the credit ratings of recognized rating
organizations in evaluating securities although the investment adviser does not
rely primarily on these ratings. Ratings evaluate only the safety of principal
and interest payments, not the market value risk. In addition, ratings are
general and not absolute standards of quality, and credit ratings are subject to
the risk that the creditworthiness of an issuer may change and the rating
agencies may fail to change such ratings in a timely fashion. A rating downgrade
does not require the Fund to dispose of a security. The Fund's investment
adviser continuously monitors the issuers of securities held in the Fund.
Additionally, since most foreign income securities are not rated, the Fund will
invest in such securities based on the Fund's investment adviser's analysis
without any guidance from published ratings. Because of the number of investment
considerations involved in investing in medium- or lower-grade securities and
foreign income securities, achievement of the Fund's investment objectives may
be more dependent upon

10
<PAGE> 12

the investment adviser's credit analysis than is the case with investing in
higher-grade securities.

New or proposed laws may have an impact on the market for medium- or lower-grade
securities. The Fund's investment adviser is unable at this time to predict what
effect, if any, legislation may have on the market for medium- or lower-grade
securities.

Special tax considerations are associated with investing in certain medium- or
lower-grade securities, such as zero-coupon or pay-in-kind securities. The Fund
accrues income on these securities prior to the receipt of cash payments. The
Fund must distribute substantially all of its income to its shareholders to
qualify for pass-through treatment under federal income tax law and may,
therefore, have to dispose of its portfolio securities to satisfy distribution
requirements.

The table below sets forth the percentage of the Fund's assets during the fiscal
year ended August 31, 1999 invested in the various rating categories (based on
the higher of the S&P or Moody's ratings), and unrated debt securities
determined by the Fund's investment adviser to be of comparable quality. The
percentages are based on the dollar-weighted average of credit ratings of all
debt securities held by the Fund during the fiscal year computed on a monthly
basis.

<TABLE>
<CAPTION>
Unrated Securities of
Rated Securities Comparable Quality
(As a Percentage of (As a Percentage of
Category Portfolio Value) Portfolio Value)
- -----------------------------------------------------
<S> <C> <C> <C> <C>
AAA/Aaa --% --%
....................................................................
AA/Aa --% --%
....................................................................
A/A --% --%
....................................................................
BBB/Baa 1.08% --%
....................................................................
BB/Ba 8.36% 1.35%
....................................................................
B/B 76.89% 4.92%
....................................................................
CCC/Caa 6.57% 0.71%
....................................................................
CC/Ca 0.06% --%
....................................................................
C/C 0.07% --%
....................................................................
D --% --%
....................................................................
Percentage
of Rated
and
Unrated
Debt
Securities 93.03% 6.97%
....................................................................
</TABLE>

The percentage of the Fund's assets invested in securities of various grades may
vary from time to time from those listed above.

ADDITIONAL INFORMATION REGARDING

CERTAIN INCOME SECURITIES

Zero-coupon securities are income securities that do not entitle the holder to
any periodic payment of interest prior to maturity or a specified date when the
securities begin paying current interest. They are issued and traded at a
discount from their face amounts or par value, which discount varies depending
on the time remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer.
Because such securities do not entitle the holder to any periodic payments of
interest prior to maturity, this prevents any reinvestment of interest payments
at prevailing interest rates if prevailing interest rates rise. On the other
hand, because there are no periodic interest payments to be reinvested prior to
maturity, "zero-coupon" securities eliminate the reinvestment risk and may lock
in a favorable rate of return to maturity if interest rates drop.

Payment-in-kind securities are income securities that pay interest through the
issuance of additional securities. Prices on such non-cash-paying instruments
may be more sensitive to changes in the issuer's financial condition,
fluctuations in interest rates and market demand/supply imbalances than
cash-paying securities with similar credit ratings, and thus may be more
speculative than are securities that pay interest periodically in cash.

The amount of non-cash interest income earned on zero-coupon securities and
payment-in-kind securities is included, for federal income tax purposes, in the
Fund's calculation of income that is required to be distributed to shareholders
for the Fund to maintain its desired federal income tax status (even though such
non-cash paying securities do not provide the Fund with the cash flow with which
to pay such distributions). Accordingly, the Fund may be required to borrow or
to liquidate portfolio securities at a time that it otherwise would not have
done so in order to make such distributions. The Fund's investment adviser will
weigh these concerns against the expected total returns from such instruments.

11
<PAGE> 13

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 35% of its total assets in securities issued by
foreign governments and other foreign issuers which are similar in quality to
the securities described above. Securities of foreign issuers may be denominated
in U.S. dollars or in currencies other than U.S. dollars. The Fund's investment
adviser believes that in certain instances such foreign income securities may
provide higher yields than securities of domestic issuers which have similar
maturities.

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 dividend or
interest payments 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. Also, 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, financial reporting and
disclosure requirements than domestic issuers. There is generally less
government regulation of stock exchanges, brokers and listed companies abroad
than in the U.S., 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 exchanges, brokers and
dealers than there is in the U.S., the Fund may experience settlement
difficulties or delays not usually encountered in the U.S.

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.

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

In addition to the increased risks of investing in foreign issuers, there are
often increased transactions 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.

Since 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 unrealized 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. In
addition, the Fund will incur costs in connection with conversions between
various currencies.

The risks of foreign investments should be considered carefully by an investor
in the Fund.

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, depending upon
the status of the Fund's portfolio and the Fund's investment adviser's
expectations concerning the securities markets. Although the Fund's investment
adviser seeks to use the practices to further the Fund's investment objectives,
no assurance can be given that the use of these practices will achieve this
result.

The Fund can engage in options transactions on securities, indices or 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

12
<PAGE> 14

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 enter into contracts for the purchase or sale for future delivery
of fixed-income securities or contracts based on financial indices including any
index of U.S. government securities or foreign government securities (futures
contracts) and may purchase and write put and call options to buy or sell
futures contracts (options on futures contracts). A sale of a futures contract
means the acquisition of a contractual obligation to deliver the securities
called for by the contract at a specified price on a specified date. A purchase
of a futures contract means the incurring of a contractual obligation to acquire
the securities called for by the contract at a specified price on a specified
date. The purchaser of a futures contract on an index agrees to take delivery of
an amount of cash equal to the difference between a specified multiple of the
value of the index on the expiration date of the contract and the price at which
the contract was originally struck. No physical delivery of the fixed-income
securities underlying the index is made. These investment techniques generally
are used to protect against anticipated future changes in interest or exchange
rates which otherwise might either adversely affect the value of the Fund's
portfolio securities or adversely affect the price of securities which the Fund
intends to purchase at a later date.

In certain cases, the options and futures markets provide investment or risk
management opportunities that are not available from direct investments in
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 or currencies. 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 risks of such
instruments include 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 contracts and
related options and their risks is contained in the Fund's Statement of
Additional Information which 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 in order to earn a return
on temporarily available cash. Such transactions are subject to the risk of
default by the other party.

The Fund may lend its portfolio securities in an amount up to 10% of the Fund's
total assets to broker-dealers, banks and 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 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 may sell securities without regard to the length of time they have been
held in order to take advantage of new investment opportunities, or yield
differentials, or for other reasons. The Fund's portfolio turnover is shown
under the heading "Financial Highlights." The portfolio turnover rate

13
<PAGE> 15

may be expected to vary from year to year. A high portfolio turnover rate (100%
or more) increases the Fund's transactions costs (including brokerage
commissions or dealer costs) and a high portfolio turnover rate may result in
the realization of more short-term capital gains than if the Fund had a lower
portfolio turnover rate. Increases in the Fund's transaction costs would
adversely impact the Fund's performance. 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 invest on a temporary basis 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, repurchase agreements and short-term money market
instruments. Under normal market conditions, the yield on these securities will
tend to be lower than the yield on other securities that may be owned by the
Fund. In taking such a defensive position, the Fund would not be pursuing and
may not achieve its investment objectives.

YEAR 2000 RISKS. Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Fund's investment adviser and other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Fund's investment adviser is taking steps that it believes are
reasonably designed to address the Year 2000 Problem with respect to computer
systems that it uses and to obtain reasonable assurances that comparable steps
are being taken by the Fund's other major service providers. At this time, there
can be no assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of shares of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Efforts in foreign countries to
remediate the potential Year 2000 Problem may not be as extensive as those in
the U.S. As a result, the operations of foreign markets and issuers may be
disrupted by the Year 2000 Problem. Accordingly, the Fund's investments may be
adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which may limit the legal rights
regarding the use of such statements in the case of a dispute.

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 with more than two million
retail investor accounts, extensive capabilities for managing institutional
portfolios, and more than $79 billion under management or supervision as of
September 30, 1999. Van Kampen Investments' more than 50 open-end and 39
closed-end funds and more than 2,500 unit investment trusts are professionally
distributed by leading 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,
PO Box 5555, 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

14
<PAGE> 16

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>
0.625 of
First $150 million 1.00%
..........................................................
0.550 of
Next $150 million 1.00%
..........................................................
0.500 of
Over $300 million 1.00%
..........................................................
</TABLE>

Applying this fee schedule, the effective advisory fee rate was of 0.53% of the
Fund's average daily net assets for the Fund's fiscal year ended August 31,
1999.

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, custodial 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.

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 and the Adviser have adopted Codes of
Ethics designed to recognize the fiduciary relationship between the Fund and the
Adviser and its 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 portfolio managers headed by Robert
J. Hickey, a Vice President of the Adviser. Mr. Hickey joined Advisory Corp. in
1988 and became Assistant Vice President of Advisory Corp. in January 1993. Mr.
Hickey has been a Vice President of the Adviser and Advisory Corp. since June
1995. Mr. Hickey has managed the Fund's portfolio since June 1999. Peter Ehret,
a Vice President of the Adviser, has assisted in the Fund's portfolio management
since June 1999. Mr. Ehret has been working for Advisory Corp. since July 1992,
and he became an Assistant Vice President of Advisory Corp. in 1994 and the
Adviser in January 1999. Mr. Ehret became a Vice President of the Adviser and
Advisory Corp. in February 1999.

PURCHASE OF SHARES

GENERAL

The Fund offers three classes of shares designated as Class A Shares, Class B
Shares and Class C Shares. By offering three classes of shares, the Fund permits
each investor to choose the class of shares that is most beneficial given the
amount to be invested and the length of time the investor expects to hold the
shares.

Initial investments must be at least $1,000 for each class of shares, and
subsequent investments must be at least $25 for each class of shares. Both
minimums may be waived by the Distributor for plans involving periodic
investments.

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 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) generally, each
class of shares has exclusive voting rights with respect to approvals of the
Rule 12b-1 distribution plan and service plan (each as described below) under
which its distribution fee and/or 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

15
<PAGE> 17

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 based thereon 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. Portfolio
securities listed or traded on a national securities exchange are valued at the
last reported sales prices on the exchanges where principally traded. Unlisted
securities and listed securities for which the last sales price is not available
are valued at the mean between the last reported bid price and asked price. The
value of any other securities or other assets is 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 are valued in the manner
described in the notes to the financial statements included in the Fund's
Statement of Additional Information.

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 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 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 class.

The amount of distribution 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 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 other expenses of the Fund associated with such class of
shares. To assist investors in comparing classes of shares, the tables under the
heading "Fees and Expenses of the Fund" provide a summary of sales charges and
expenses and an example of the sales charges and expenses applicable to each
class of shares.

The shares are offered to the public on a continuous basis through the
Distributor as principal underwriter, which is located at 1 Parkview Plaza, PO
Box 5555, Oakbrook Terrace, Illinois 60181-5555. Shares also are offered 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 application
accompanying this prospectus and forwarding the application, 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, investors must specify
whether the purchase is for Class A Shares, Class B Shares or Class C Shares.
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

16
<PAGE> 18

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 computed 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 at (800) 341-2911 or
by writing to the Fund, c/o Van Kampen Investors Services Inc., PO Box 218256,
Kansas City, MO 64121-8256.

CLASS A SHARES

Class A Shares of the Fund are sold at net asset value plus an initial maximum
sales charge of up to 4.75% of the offering price (or 4.99% of the net amount
invested), reduced on investments of $100,000 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 $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 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 the
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 the Class A Shares for the ongoing provision of services to Class A
shareholders by the Distributor and by brokers, dealers or financial
intermediaries and for the maintenance of such shareholders' accounts.

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 4.00%
........................................................
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

17
<PAGE> 19

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 the 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 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 the 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 the Class B Shares for the
ongoing provision of services to Class B shareholders by the Distributor and by
brokers, dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.

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.

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 the 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 the Class C Shares for the
ongoing provision of services to Class C shareholders by the Distributor and by
brokers, dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.

CONVERSION FEATURE

Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment
plan Class B Shares received on such shares, automatically convert to Class A
Shares eight years after the end of the calendar month in which the shares were
purchased. Class B Shares purchased before June 1, 1996, and any dividend
reinvestment plan Class B Shares received on such shares, automatically convert
to Class A Shares six years after the end of the calendar month in which the
shares were purchased. Class C Shares purchased before January 1, 1997, and any
dividend reinvestment plan Class C Shares received on such shares, automatically
convert to Class A Shares ten years after the end of the calendar month in which
such 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.

18
<PAGE> 20

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
involuntary liquidation by the Fund of a shareholder's account as described
under the 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 reinvestment is made within 180 days after the redemption. 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 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 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 back-dating 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 for the shareholder
with the applicable sales charge. 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 period, the investor must pay the difference between the
sales charge applicable to the purchases made and the 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.

19
<PAGE> 21

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.

In order to obtain these special benefits, all dividends and other distributions
by the Fund must be reinvested in additional shares and there cannot 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, 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

20
<PAGE> 22

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 non-profit 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 $1,000,000 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.
For purchases on February 1, 1997 and thereafter, a commission will be paid
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 under 21 years of age
and grandchildren, parents, and a person's spouse's parents.

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 heading "Purchase of Shares," redemptions of Class B Shares
and Class C Shares may be subject to a contingent deferred sales charge. In

21
<PAGE> 23

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 of a
retirement plan account may involve additional fees charged by the dealer or
custodian.

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 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 which may result in brokerage costs and a gain or loss
for federal income tax purposes when such securities are sold. If the shares to
be redeemed have been recently purchased by check, Investor Services may delay
the payment of redemption proceeds until it confirms the purchase check has
cleared, which may take up to 15 days. A taxable gain or loss will be recognized
by the shareholder upon redemption of shares.

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 to be redeemed, the 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 $50,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the record address has changed within the previous 30
days, signature(s) must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national securities exchange,
registered securities association or clearing agency; a savings and loan
association; or a federal savings bank.

Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption to be in proper form. In some
cases, however, additional documents may be necessary. In the case of
shareholders holding certificates, the certificates for the shares being
redeemed must be properly endorsed for transfer and must accompany the
redemption request. In the event the redemption is requested by a corporation,
partnership, trust, fiduciary, executor or administrator, and the name and title
of the individual(s) authorizing such redemption is not shown in the account
registration, a copy of the corporate resolution or other legal documentation
appointing the authorized signer and certified within the prior 120 days must
accompany the redemption request. IRA redemption requests should be sent to the
IRA custodian to be forwarded to Investor Services. Contact the IRA custodian
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. Orders sent through authorized dealers
must be at least $500 (unless transmitted by your authorized dealer via the
FUNDSERV network). 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 application form
accompanying the prospectus. 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. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be

22
<PAGE> 24

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 all
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 30 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. Interest earned from investments is the Fund's main source of income.
The Fund's present policy, which may be changed at any time by the Fund's Board
of Trustees, is to declare daily and to distribute monthly all, or substantially
all of this income less expenses, 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. Net capital gain represents the total
profits from sales of securities minus total losses from sales of securities
(including any losses carried forward from prior years), other than net
short-term capital gain from sales of securities held for one year or less. The
Fund distributes any taxable net capital gain 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.

23
<PAGE> 25

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 Statement of Additional Information or contact your
authorized dealer.

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 initial application or prior to any declaration, instruct
that dividends be paid in cash and capital gain dividends be reinvested at net
asset value, or that both dividends and capital gain dividends be paid in cash.

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

CHECK WRITING PRIVILEGE. A Class A shareholder holding shares of the Fund for
which certificates have not been issued and which are not in escrow may appoint
Investor Services as agent by completing the Authorization for Redemption by
Check form and the appropriate section of the application and returning the form
and the application to Investor Services. Once the form is properly completed,
signed and returned to the agent, a supply of checks drawn on State Street Bank
and Trust Company (the "Bank") will be sent to the Class A shareholder. These
checks may be made payable by the Class A shareholder to the order of any person
in any amount of $100 or more.

When a check is presented to the Bank for payment, full and fractional Class A
Shares required to cover the amount of the check are redeemed from the
shareholder's Class A Shares account by Investor Services at the next determined
net asset value per share. Check writing redemptions represent the sale of Class
A Shares. Any gain or loss realized on the redemption of shares is a taxable
event.

Checks will not be honored for redemption of Class A Shares held less than 15
calendar days, unless such Class A Shares have been paid for by bank wire. Any
Class A Shares for which there are outstanding certificates may not be redeemed
by check. If the amount of the check is greater than the proceeds of all
uncertificated shares held in the shareholder's Class A account, the check will
be returned and the shareholder may be subject to additional charges. A Class A
shareholder may not liquidate the entire account by means of a check. The check
writing privilege may be terminated or suspended at any time by the Fund or by
the Bank. Retirement plans and accounts that are subject to backup withholding
are not eligible for the privilege.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next computed 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; however, during periods of suspension of sales, shares of a
Participating Fund may be available for sale only to existing shareholders of a
Participating Fund. 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 any 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

24
<PAGE> 26

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. A shareholder automatically has telephone exchange privileges unless
the shareholder indicates otherwise by checking the applicable box on the
application form accompanying the prospectus. 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 privileges to such shareholders. For further
information on these restrictions see the 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.

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 shares of the funds
involved in the request are priced will be processed on the next business day in
the manner described herein.

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 instruction. 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.

25
<PAGE> 27

FEDERAL INCOME TAXATION

Distributions of the Fund's net investment income (consisting generally of
taxable income and net short-term capital gain) are taxable to shareholders as
ordinary income. 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 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 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). 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 is a taxable transaction for federal income tax
purposes. Shareholders who sell their shares 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 such shares are held as a capital
asset, the gain or loss will be a capital gain or loss. Any capital gains may be
taxed at different rates depending on how long the shareholder held it 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 net investment 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 such undistributed amounts.

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, as well as the effects of state, local and foreign tax law and any
proposed tax law changes.

26
<PAGE> 28

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years. 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 PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's 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
Year Ended August 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period...................... $6.060 $6.548 $6.298 $6.15 $6.12
------ ------ ------ ------ ------
Net Investment Income......... .626 .614 .604 .607 .55
Net Realized and Unrealized
Gain/Loss................... (.370) (.479) .267 .139 .0515
------ ------ ------ ------ ------

Total from Investment
Operations.................... .256 .135 .871 .746 .6015

Less Distributions from and in
Excess of Net Investment
Income........................ .640 .623 .621 .598 .5715
------ ------ ------ ------ ------

Net Asset Value, End of the
Period........................ $5.676 $6.060 $6.548 $6.298 $6.15
====== ====== ====== ====== ======

Total Return (a)................ 4.41% 1.66% 14.44% 12.66% 10.48%
Net Assets at End of the Period
(In millions)................. $492.4 $499.3 $468.6 $421.4 $411.9
Ratio of Expenses to Average Net
Assets (b).................... 1.03% 1.00% 1.08% 1.08% 1.12%
Ratio of Net Investment Income
to Average Net Assets (b)..... 10.65% 9.33% 9.37% 9.65% 9.23%
Portfolio Turnover.............. 51% 90% 75% 76% 49%

<CAPTION>
Class B Shares
Year Ended August 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period...................... $6.064 $6.558 $6.310 $6.16 $6.14
------ ------ ------ ------ -----
Net Investment Income......... .584 .571 .559 .559 .51
Net Realized and Unrealized
Gain/Loss................... (.373) (.490) .262 .141 .0335
------ ------ ------ ------ -----
Total from Investment
Operations.................... .211 .081 .821 .700 .5435
Less Distributions from and in
Excess of Net Investment
Income........................ .592 .575 .573 .550 .5235
------ ------ ------ ------ -----
Net Asset Value, End of the
Period........................ $5.683 $6.064 $6.558 $6.310 $6.16
====== ====== ====== ====== =====
Total Return (a)................ 3.57% 0.77% 13.58% 11.78% 9.41%
Net Assets at End of the Period
(In millions)................. $318.2 $283.1 $198.0 $114.6 $89.9
Ratio of Expenses to Average Net
Assets (b).................... 1.79% 1.79% 1.86% 1.87% 1.93%
Ratio of Net Investment Income
to Average Net Assets (b)..... 9.88% 8.52% 8.60% 8.86% 8.42%
Portfolio Turnover.............. 51% 90% 75% 76% 49%

<CAPTION>
Class C Shares
Year Ended August 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period...................... $6.035 $6.528 $6.284 $6.14 $6.11
------ ------ ------ ------ -----
Net Investment Income......... .582 .570 .561 .557 .51
Net Realized and Unrealized
Gain/Loss................... (.374) (.488) .256 .137 .0435
------ ------ ------ ------ -----
Total from Investment
Operations.................... .208 .082 .817 .694 .5535
Less Distributions from and in
Excess of Net Investment
Income........................ .592 .575 .573 .550 .5235
------ ------ ------ ------ -----
Net Asset Value, End of the
Period........................ $5.651 $6.035 $6.528 $6.284 $6.14
====== ====== ====== ====== =====
Total Return (a)................ 3.42% 0.93% 13.64% 11.66% 9.63%
Net Assets at End of the Period
(In millions)................. $67.3 $55.8 $30.8 $17.5 $15.7
Ratio of Expenses to Average Net
Assets (b).................... 1.79% 1.79% 1.86% 1.87% 1.93%
Ratio of Net Investment Income
to Average Net Assets (b)..... 9.87% 8.49% 8.57% 8.86% 8.42%
Portfolio Turnover.............. 51% 90% 75% 76% 49%
</TABLE>

(a) Total return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) For the years ended August 31, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to the
Adviser's reimbursement of certain expenses was less than 0.01%.

27
<PAGE> 29

APPENDIX -- DESCRIPTION
OF SECURITIES RATINGS

STANDARD & POOR'S -- A brief description of the

applicable Standard & Poor's (S&P) rating symbols

and their meanings (as published by S&P) follow:

A S&P corporate or municipal debt rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial obligation.
This assessment may take into consideration obligors such as guarantors,
insurers, or lessees.

The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.

The ratings are based on current information furnished by the obligor or
obtained by S&P from other sources it considers reliable. S&P does not perform
an audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of payment -- capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;

2. Nature of and provisions of the obligation; and

3. Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.

LONG-TERM DEBT -- INVESTMENT GRADE

AAA: Debt rated "AAA" has the highest rating assigned by S&P. Capacity to meet
its financial commitment on the obligation is extremely strong.

AA: Debt rated "AA" differs from the highest rated issues only in small degree.
Capacity to meet its financial commitment on the obligation is very strong.

A: Debt rated "A" is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rated
categories. Capacity to meet its financial commitment on the obligation is still
strong.

BBB: Debt rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.

SPECULATIVE GRADE

BB, B, CCC, CC, C: Debts rated "BB", "B", "CCC", "CC" and "C" are regarded as
having significant speculative characteristics. "BB" indicates the least degree
of speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated "BB" is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B: Debt rated "B" is more vulnerable to nonpayment than obligations rated "BB",
but the obligor currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its financial commitment on
the obligation.

CCC: Debt rated "CCC" is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC: Debt rated "CC" is currently highly vulnerable to nonpayment.

A- 1

<PAGE> 30

C: The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued.

D: Debt rated "D" is in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. The "D" rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

r: This symbol highlights derivative, hybrid and certain other obligations that
S&P believes may experience high volatility or high variability in expected
returns as a result of noncredit risks. Examples include: obligations linked or
indexed to equities, currencies, or commodities; certain swaps and options; and
interest-only and principal-only mortgage securities. The absence of an "r"
symbol should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.

DEBT OBLIGATIONS OF ISSUERS OUTSIDE THE UNITED STATES AND ITS TERRITORIES are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

BOND INVESTMENT QUALITY STANDARDS: Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories ("AAA", "AA", "A", "BBB", commonly known as "investment-grade"
ratings) are generally regarded as eligible for bank investment. In addition,
the laws of various states governing legal investments impose certain ratings or
other standards for obligations eligible for investment by savings banks, trust
companies, insurance companies and fiduciaries generally.

COMMERCIAL PAPER

A S&P commercial paper rating is a current opinion of the likelihood of timely
payment of debt considered short-term in the relevant market.

Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. These categories are as follows:

A-1: The highest category indicates that the obligor's capacity to meet its
financial commitment on the obligations is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus sign (+)
designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the obligor is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher ratings category degree of safety is not as high as for issues designated
"A-1".

A-3: Issues carrying this designation exhibit adequate protection parameters.
However adverse economic conditions or changing circumstances are more likely to
lead to a weakening capacity of the obligor to meet its financial commitment on
the obligation.

B: Issues rated "B" are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C: This rating is assigned to short-term debt obligations currently vulnerable
to nonpayment and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation.

D: Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

A- 2
<PAGE> 31

A commercial paper rating is not a recommendation to purchase, sell or hold a
financial obligation inasmuch as it does not comment as to market price or
suitability for a particular investor. The ratings are based on current
information furnished to S&P by the issuer or obtained from other sources it
considers reliable. S&P does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended or withdrawn as a result of changes in, or unavailability
of, such information, or based on other circumstances.

MOODY'S INVESTORS SERVICE -- A brief description of the applicable Moody's
Investors Service (Moody's) rating symbols and their meanings (as published by
Moody's Investor Service) follows:

LONG-TERM DEBT

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than the Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa: Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payment
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other market shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the issue
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that are not rated as a
matter of policy.

A- 3

<PAGE> 32

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not published in
Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.

SHORT-TERM DEBT

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year unless explicitly noted.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

Issuers rated Prime-1 (or supporting institutions) have a superior ability for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics:

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or supporting institutions) have an acceptable ability
for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating categories.

PREFERRED STOCK

Preferred stock rating symbols and their definitions are as follows:

aaa: An issue which is rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.

aa: An issue which is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is a reasonable assurance the earnings and
asset protection will remain relatively well maintained in the foreseeable
future.

a: An issue which is rated "a" is considered to be an upper-medium-grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protections are, nevertheless,
expected to be maintained at adequate levels.

baa: An issue which is rated "baa" is considered to be a medium-grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.

ba: An issue which is rated "ba" is considered to have speculative elements and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.

b: An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.

caa: An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.

A- 4
<PAGE> 33

ca: An issue which is rated "ca" is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.

c: This is the lowest rated class of preferred or preference stock. Issues so
rated can thus be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers 1, 2 and 3 in each rating classification.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category, the modifier 2 indicates a mid-range ranking, and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.

A- 5
<PAGE> 34

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 Paul G. Yovovich
</TABLE>

OFFICERS

Richard F. Powers, III*

President

Dennis J. McDonnell*

Executive Vice President & Chief Investment Officer

A. Thomas Smith III*

Vice President and Secretary

Edward C. Wood III*

Vice President

Michael H. Santo*

Vice President

Peter W. Hegel*

Vice President

Stephen L. Boyd*

Vice President

John L. Sullivan*

Vice President, Chief Financial Officer & Treasurer

Curtis W. Morell*

Vice President & Chief Accounting Officer

Tanya M. Loden*

Controller

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

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 HIGH INCOME CORPORATE BOND 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 High Income Corporate Bond Fund

Custodian
STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO Box 1713
Boston, MA 02105-1713

Attn: Van Kampen High Income Corporate Bond Fund

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

Independent Accountants
PRICEWATERHOUSECOOPERS LLP
200 East Randolph Drive
Chicago, IL 60601
<PAGE> 35

VAN KAMPEN
HIGH INCOME
CORPORATE BOND FUND

PROSPECTUS

DECEMBER 29, 1999

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]

The Fund's Investment Company Act
File No. is 811-2851.
HYI PRO 12/99
<PAGE> 36

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
HIGH INCOME CORPORATE BOND FUND

Van Kampen High Income Corporate Bond Fund (the "Fund") is a mutual fund
with a primary investment objective of seeking to maximize current income.
Capital appreciation is a secondary objective which is sought only when
consistent with the Fund's primary investment objective. The Fund's investment
adviser seeks to achieve the Fund's investment objectives by investing primarily
in a portfolio of high-yielding, high-risk bonds and other income securities,
such as convertible securities and preferred stock.

The Fund is organized as a diversified series of the Van Kampen High Income
Corporate Bond Fund, an open-end management 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) 421-4833
for the hearing impaired).

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information......................................... B-2
Investment Objectives, Policies and Risks................... B-3
Options, Futures Contracts and Related Options.............. B-8
Investment Restrictions..................................... B-12
Trustees and Officers....................................... B-14
Investment Advisory Agreement............................... B-21
Other Agreements............................................ B-22
Distribution and Service.................................... B-22
Transfer Agent.............................................. B-25
Portfolio Transactions and Brokerage Allocation............. B-25
Shareholder Services........................................ B-27
Redemption of Shares........................................ B-29
Contingent Deferred Sales Charge-Class A.................... B-29
Waiver of Class B and Class C Contingent Deferred Sales
Charges................................................... B-30
Taxation.................................................... B-31
Fund Performance............................................ B-34
Other Information........................................... B-37
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-19
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED DECEMBER 29, 1999.

<PAGE> 37

GENERAL INFORMATION

The Fund was originally incorporated in Texas on July 11, 1978 organized
under the name American Capital High Yield Investments, Inc. The Fund was
reincorporated by merger into a Maryland corporation on July 2, 1992, under the
name American Capital High Income Corporate Bond Fund, Inc. As of August 5,
1995, the Fund was reorganized as a series of the Trust, under the name Van
Kampen American Capital High Income Corporate Bond Fund. The Trust is a business
trust organized under the laws of the State of Delaware. On July 14, 1998, the
Fund and the Trust adopted their present names.

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 an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co.("Morgan Stanley Dean Witter"). The principal
office of the Fund, the Adviser, the Distributor and Van Kampen Investments is
located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555.

Morgan Stanley Dean Witter and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Dean Witter Investment Management Inc.,
an investment adviser, Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International, are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; credit services; asset management;
trading of futures, options, foreign exchange, commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate advice,
financing and investing; and securities lending.

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 are 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 a majority 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 to holders of
Class A Shares.

B-2
<PAGE> 38

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
present at a meeting of shareholders (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, 1999, 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
NAME AND ADDRESS DECEMBER 1, CLASS PERCENTAGE
OF HOLDER 1999 OF SHARES OWNERSHIP
---------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Trust Company................................. 18,956,528 A 20.73%
2800 Post Oak Blvd. 5,954,840 B 10.79%
Houston, TX 77056 871,637 C 7.44%
Edward Jones & Co. ...................................... 5,481,581 A 5.99%
Attn Mutual Fund 933,693 C 7.97%
Shareholder Accounting
201 Progress Pkwy
Maryland Hts, MO 63043-3009
Merrill Lynch Pierce Fenner & Smith Inc. ................ 3,329,328 B 6.03%
For the Sole Benefit of its Customers
Attn: Fund Administration 971J4
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246-6484
MLPF&S For the Sole Benefit of Its Customers............. 1,229,471 C 10.50%
Attn Fund Administration 97BY5
9800 Dear Lake Dr. E 2nd Fl
Jacksonville, FL 32246-6484
</TABLE>

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

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

INVESTMENT OBJECTIVES, POLICIES AND RISKS

The following disclosures supplement disclosures set forth under the same
caption in the Prospectus and do 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.

CONVERTIBLE SECURITIES

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

B-3
<PAGE> 39

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 such dividend
changes or other changes in the underlying equity securities.

Equity-linked securities are 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 the 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 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.

PREFERRED STOCKS

Preferred stock generally has a preference as to dividends and upon
liquidation over an issuer's common stock but ranks junior to other income
securities in an issuer's capital structure. Preferred stock generally pays
dividends in cash (or additional shares of preferred stock) at a defined rate
but, unlike interest payments on income securities, preferred stock dividends
are payable only if declared by the issuer's board of directors. Dividends on
preferred stock may be cumulative, meaning that, in the event the issuer fails
to make one or more dividend payments on the preferred stock, no dividends may
be paid on the issuer's common stock until all unpaid preferred stock dividends
have been paid. Preferred stock also may provide that, in the event the issuer
fails to make a specified number of dividend payments, the holders of the
preferred stock will have the right to elect a specified number of directors to
the issuer's board. Preferred stock also may be subject to optional or mandatory
redemption provisions.

DURATION

Duration is a measure of the expected life of an income security that was
developed as an alternative to the concept of "term to maturity." Duration
incorporates an income security's yield, coupon interest payments, final
maturity and call features into one measure. Traditionally an income security's
"term to maturity" has been used as a proxy for the sensitivity of the
security's price to changes in interest rates. However, "term to maturity"
measures only the time an income security provides its final payment taking no
account of the pattern of the security's payments of interest or principal prior
to maturity. Duration is a measure of the expected life of an income security on
a present value basis expressed in years. It measures the length of the time
interval between the present and the time when the interest and principal
payments are scheduled (or in the case of a callable bond, expected to be
received), weighing them by the present value of the cash to be received at each
future point in time. For any debt security with interest payments occurring

B-4
<PAGE> 40

prior to the payment of principal, duration is always less than maturity, and
for zero-coupon issues, duration and term to maturity are equal. In general, the
lower the coupon rate of interest or the longer the maturity, or the lower the
yield-to-maturity of an income security, the longer its duration; conversely,
the higher the coupon rate of interest, the shorter the maturity or the higher
the yield-to-maturity of an income security, the shorter its duration. There are
some situations where even the standard duration calculation does not properly
reflect the interest rate exposure of a security. For example, floating and
variable rate securities often have final maturities of ten or more years;
however, their interest rate exposure corresponds to the frequency of the coupon
reset. Another example where the interest rate exposure is not properly captured
by the duration is the case of mortgage pass-through securities. The stated
final maturity of such securities is generally 30 years, but current prepayment
rates are more critical in determining the securities' interest rate exposure.
In these and other similar situations, the Adviser will use more sophisticated
analytical techniques that incorporate the economic life of a security into the
determination of its interest rate exposure.

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 is
available in the United States about an unsponsored ADR than about 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 depositories which evidence a similar ownership arrangement.

BRADY BONDS

Brady Bonds are created through the exchange of existing commercial bank
loans to foreign entities for new obligations in connection with debt
restructuring under a plan introduced by former U.S. Secretary of the Treasury
Nicholas F. Brady (the "Brady Plan"). Brady Bonds may be collateralized or
uncollateralized and issued in various currencies (although most are U.S.
dollar-denominated) and they are actively traded in the over-the-counter
secondary market. The Fund may purchase Brady Bonds either in the primary or
secondary markets. The price and yield of Brady Bonds purchased in the secondary
market will reflect the market conditions at the time of purchase, regardless of
the stated face amount and the stated interest rate. With respect to Brady Bonds
with no or limited collateralization, the Fund will rely for payment of interest
and principal primarily on the willingness and ability of the issuing government
to make payment in accordance with the terms of the bonds.

U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are generally collateralized in
full as to principal due at maturity by U.S. Treasury zero coupon obligations
which have the same maturity as the Brady Bonds. Interest payments on these
Brady Bonds generally are collateralized by cash or securities in an amount
that, in the case of fixed rate bonds, is equal to at least one year of rolling
interest payments or, in the case of floating rate bonds, initially is equal to
at least one year's rolling interest payments based on the applicable interest
rate at that time and is adjusted at regular intervals thereafter. Certain Brady
Bonds are entitled to "value recovery payments" in certain circumstances, which
in effect constitute supplemental interest payments but generally are not
collateralized. Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final maturity;
(ii) the collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of principal at maturity
(these uncollateralized amounts

B-5
<PAGE> 41

constitute the "residual risk"). In the event of a default with respect to
collateralized Brady Bonds as a result of which the payment obligations of the
issuer are accelerated, the U.S. Treasury zero coupon obligations held as
collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The collateral
will be held to the scheduled maturity of the defaulted Brady Bonds by the
collateral agent, at which time the face amount of the collateral will equal the
principal payments which would have then been due on the Brady Bonds in the
normal course. In addition, in light of the residual risk of the Brady Bonds
and, among other factors, the history of defaults with respect to commercial
bank loans by public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds should be viewed as speculative.

LENDING OF SECURITIES

Consistent with applicable legal and regulatory requirements, the Fund may
lend its portfolio securities, in an amount up to 10% of the Fund's total
assets, to broker-dealers, banks and other recognized institutional borrowers of
securities provided that such loans are at all times secured by cash collateral
that is at least equal to the market value, determined daily, of the loaned
securities and are callable at any time by the Fund. The advantage of such loans
is that the Fund continues to receive the interest or dividends on the loaned
securities, while at the same time earning interest on the collateral which is
invested in short-term obligations. The Fund may pay reasonable finders,
administrative and custodial fees in connection with loans of its securities.
There is no assurance as to the extent to which securities loans can be
effected.

If the borrower fails to maintain the requisite amount of collateral, the
loan automatically terminates, and the Fund could use the collateral to replace
the securities while holding the borrower liable for any excess of replacement
cost over collateral. As with any extensions of credit, there are risks of delay
in recovery and in some cases even loss of rights in the collateral should the
borrower of the securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed by the Fund's Adviser to be
creditworthy and when the consideration which can be earned from such loans is
believed to justify the attendant risks. On termination of the loan, the
borrower is required to return the securities to the Fund; any gain or loss in
the market price during the loan would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan.

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 banks or broker-dealers deemed to be creditworthy by the Adviser
under guidelines approved by the 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 below. The Fund does not bear
the risk of a decline in 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

B-6
<PAGE> 42

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.

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. The
Fund's portfolio turnover rate is the lesser of the value of the securities
purchased or securities sold divided by the average value of the securities held
in the Fund's portfolio excluding all securities whose maturities at acquisition
were one year or less. A high portfolio turnover rate (100% or more) increases
the Fund's transaction costs, including brokerage commissions, and may result in
the realization of more short-term capital gains than if the Fund had a lower
portfolio turnover rate. The turnover rate will not be a limiting factor,
however, if the Adviser deems portfolio changes appropriate.

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities which 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").
However, the Fund shall not invest in such securities in excess of 10% of its
net assets without prior approval of the Fund's Board of Trustees. 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 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 may 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 from the provisions of the 1940 Act, as amended from time to
time.

B-7
<PAGE> 43

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.

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 with the Fund's custodian 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 times during the option period, the
Fund would maintain in a segregated account with its custodian 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.

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.

B-8
<PAGE> 44

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.

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.

OVER THE COUNTER OPTIONS

The Fund is authorized to purchase and sell over-the-counter options ("OTC
Options"). OTC Options are purchased from or sold to securities dealers,
financial institutions of other parties ("Counterparties") through direct
bilateral agreement with the Counterparty. The Fund will sell only OTC Options
(other than OTC currency options) that are subject to a buy-back provision
permitting the Fund to require to the Counterparty to sell the option back to
the Fund at a formula price within seven days. The staff of the SEC currently
takes the position that, in general, OTC Options on securities other than U.S.
Government securities purchased by the Fund, and portfolio securities covering
OTC Options sold by the Fund, are illiquid securities subject to the Fund's
limitation on illiquid securities.

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."

An interest rate futures contract is an agreement pursuant to which a party
agrees to take or make delivery of a specified debt security (such as U.S.
Treasury bonds or notes) to take or make delivery of cash based upon the changes
in value of a basket or index of securities at a specified future time and at a
specified price.

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 with its custodian in an
account in the broker's name an amount of cash or liquid securities equal to a
percentage (which will normally range between 2% and 10%) of the contract
amount. 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 broker, 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 from the broker a variation margin payment

B-9
<PAGE> 45

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 to the broker.

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.

Special Risks Associated with Futures Transactions. There are several
risks connected with the use of futures contracts as a hedging device. 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 illiquidity risk; 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
B-10
<PAGE> 46

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 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 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

B-11
<PAGE> 47

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 and/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.

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 voting securities present at the 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. Borrow money, except that the Fund may borrow for temporary purposes in
amounts not exceeding 5% of the market or other fair value (taken at
the lower of cost or current value) of its total assets (not including
the amount borrowed). Secured temporary borrowings may take the form of
reverse repurchase agreements, pursuant to which the Fund would sell
portfolio securities for cash and simultaneously agree to repurchase
such securities at a specified date for the same amount of cash plus an
interest component. Pledge its assets or assign or otherwise encumber
them in excess of 3.25% of its net assets (taken at market value at the
time of pledging) and then only to secure borrowings effected within
the limitations set forth in the preceding sentence. Notwithstanding
the foregoing, the Fund may engage in transactions in options, futures
contracts and related options and make margin deposits and payments in
connection therewith.

2. Engage in the underwriting of securities except insofar as the Fund may
be deemed an underwriter under the 1933 Act in disposing of a portfolio
security.

3. Make short sales of securities, but it may engage in transactions in
options, futures contracts, and related options.

4. Purchase securities on margin, except for such short-term credits as
may be necessary for the clearance of purchases and sales of portfolio
securities, and it may engage in transactions in options, futures
contracts and related options and make margin deposits and payments in
connection therewith.

5. Purchase or sell real estate, although it may purchase securities of
issuers which engage in real estate operations, securities which are
secured by interests in real estate, or securities representing
interests in real estate.
B-12
<PAGE> 48

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

7. Make loans of money or securities, except (a) by the purchase of debt
obligations in which the Fund may invest consistent with its investment
objectives and policies; (b) by investment in repurchase agreements or
(c) by lending its portfolio securities, subject to limitations
described elsewhere in this Statement of Additional Information.

8. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which invest in or sponsor such
programs.

9. 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.

10. Invest for the purpose of exercising control or management of another
company, 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.

11. Invest in securities of any company if, to the knowledge of the Fund,
any officer or director of the Fund or of the Adviser owns more than
1/2 of 1% of the outstanding securities of such company, and such
officers and directors who own more than 1/2 of 1% own in the aggregate
more than 5% of the outstanding securities of such company.

12. Invest more than 5% of the market or other fair value of its assets in
warrants, or more than 2% of such value in warrants which are not
listed on the New York or American Stock Exchanges. Warrants attached
to other securities are not subject to these limitations.

13. Invest more than 15% of its net assets (determined at the time of
investment) in illiquid securities and repurchase agreements which have
a maturity of longer than seven days.

14. With respect to 75% of its assets, invest more than 5% of its assets in
the securities of any one issuer (except the U.S. government) or
purchase more than 10% 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.

15. Invest more than 25% of the value of its total assets in securities of
issuers in any particular industry (except obligations of the U.S.
government).

16. Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (i) making
and collateralizing any permitted borrowings, (ii) making any permitted
loans of its portfolio securities, or (iii) entering into repurchase
agreements, utilizing options, futures contracts, options on futures
contracts and other investment strategies and instruments that would be
considered "senior securities" but for the maintenance by the Fund of a
segregated account with its custodian or some other form of "cover".

B-13
<PAGE> 49

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 the funds
1632 Morning Mountain Road in the Fund Complex. Co-founder, and prior to August
Raleigh, NC 27614 1996, Chairman, Chief Executive Officer and President,
Date of Birth: 07/14/32 MDT 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 company.
Barrington Place, Building 4 Trustee/ Director of each of the funds in the Fund
18 E. Dundee Road, Suite 101 Complex. Prior to January 1999, Chairman and Chief
Barrington, IL 60010 Executive Officer of The Allstate Corporation
Date of Birth: 09/16/38 ("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 & Stuggles, an executive
Sears Tower search firm. Trustee/Director of each of the funds in the
233 South Wacker Drive Fund Complex. Prior to 1997, Partner, Ray & Berndtson,
Suite 7000 Inc., an executive recruiting and management consulting
Chicago, IL 60606 firm. Formerly, Executive Vice President of ABN AMRO,
Date of Birth: 06/03/48 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.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States, an independent U.S. foundation created to
Washington, D.C. 20016 deepen understanding, promote collaboration and stimulate
Date of Birth: 02/29/52 exchanges 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.
</TABLE>

B-14
<PAGE> 50

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Mitchell M. Merin*........................ President and Chief Operating Officer of Asset Management
Two World Trade Center of Morgan Stanley Dean Witter since December 1998.
66th Floor President and Director since April 1997 and Chief
New York, NY 10048 Executive Officer since June 1998 of Morgan Stanley Dean
Date of Birth: 08/13/53 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 and
Discover Brokerage Index Series since May 1999. Trustee
of each of the funds in the Fund Complex, and Vice
President of other investment companies advised by the
Advisers and their affiliates. 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 and Discover
Brokerage Index Series May 1997-April 1999, and Executive
Vice President of Dean Witter, Discover & Co.
Jack E. Nelson............................ President and owner, Nelson Investment Planning Services,
423 Country Club Drive Inc., a financial planning company and registered
Winter Park, FL 32789 investment adviser in the State of Florida. President and
Date of Birth: 02/13/36 owner, 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 Officer of Van
1 Parkview Plaza Kampen Investments. Chairman, Director and Chief
P.O. Box 5555 Executive Officer of the Advisers, the Distributor, Van
Oakbrook Terrace, IL 60181-5555 Kampen Advisors Inc. and Van Kampen Management Inc.
Date of Birth: 02/02/46 Director and officer of certain other subsidiaries of Van
Kampen Investments. Trustee 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.
</TABLE>

B-15
<PAGE> 51

<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 (since
One ServiceMaster Way 1994) of The ServiceMaster Company, a business and
Downers Grove, IL 60515 consumer services company. Director of Illinois Tool
Date of Birth: 07/08/44 Works, Inc., a 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 George M.
155 Hickory Lane Bond Chaired Professor with Stevens Institute of
Closter, NJ 07624 Technology, and prior to 1995, Dean of the Graduate
Date of Birth: 08/02/24 School, Stevens 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, Slate, Meagher
333 West Wacker Drive & Flom (Illinois), legal counsel to the funds in the Fund
Chicago, IL 60606 Complex, and other investment companies advised by the
Date of Birth: 08/22/39 Advisers or Van Kampen Management Inc. Trustee/Director
of each of the funds in the Fund Complex, and
Trustee/Managing General Partner of other investment
companies advised by the Advisers or Van Kampen
Management Inc.

Suzanne H. Woolsey........................ Chief Operating Officer of the National Academy of
2101 Constitution Ave., N.W. Sciences/ National Research Council, an independent,
Room 206 federally chartered policy institution, since 1993.
Washington, D.C. 20418 Director of Neurogen Corporation, a pharmaceutical
Date of Birth: 12/27/41 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.

Paul G. Yovovich.......................... Private investor. Director of 3Com Corporation, which
Sears Tower provides information access products and network system
233 South Wacker Drive solutions, COMARCO, Inc., a wireless communications
Suite 9700 products company and APAC Customer Services, Inc., a
Chicago, IL 60606 provider of outsourced customer contact services.
Date of Birth: 10/29/53 Trustee/Director of each of the funds in the Fund
Complex. Prior to May 1996, President of Advance Ross
Corporation, an international transaction services and
pollution control equipment manufacturing company.
</TABLE>

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

* 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 the Fund by reason of
his firm currently acting as legal counsel to the Fund. Messrs. Merin and
Powers are interested persons of the Fund and the Advisers by reason of their
positions with Morgan Stanley Dean Witter or its affiliates.

B-16
<PAGE> 52

OFFICERS

Messrs. McDonnell, Smith, Santo, Hegel, Sullivan, and Wood are located at 1
Parkview Plaza, PO Box 5555, Oakbrook Terrace, IL 60181-5555. The Fund's other
officers are 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>
Dennis J. McDonnell.................. Currently Executive Vice President and Director of Van
Date of Birth: 05/20/42 Kampen Investments, and employed by Van Kampen Investments
Executive Vice President and Chief since March 1983. President, Chief Operating Officer and
Investment Officer Director of the Advisers, Van Kampen Advisors Inc., and Van
Kampen Management Inc. Executive Vice President and Chief
Investment Officer of each of the funds in the Fund Complex,
since 1998. Chief Investment Officer, Executive Vice
President and Trustee/Managing General Partner of other
investment companies advised by the Advisers or Van Kampen
Management Inc. ("Management Inc.") since the inception of
funds advised by Advisory Corp. and Management Inc. and
since 1998 for funds advised by Asset Management. Director
of Global Decisions Group LLC, a financial research firm,
and its affiliates MCM Asia Pacific and MCM Europe. Prior to
1998, President, Chief Operating Officer and a Director of
the Advisers, Van Kampen American Capital Management, Inc.;
Director of Van Kampen American Capital, Inc.; and
President, Chief Executive Officer and Trustee of each of
the funds advised by Advisory Corp. Prior to July 1998,
Director and Executive Vice President of VK/AC Holding, Inc.
(predecessor of Van Kampen Investments). Prior to April
1998, President and Director of Van Kampen Merritt Equity
Advisors Corp. Prior to April 1997, Director of Van Kampen
Merritt Equity Holdings Corp. Prior to September 1996, Chief
Executive Officer and Director of MCM Group, Inc. and
McCarthy, Crisanti & Maffei, Inc., a financial research
firm, and Chairman of MCM Asia Pacific Company, Limited and
MCM (Europe) Limited. Prior to December 1991, Senior Vice
President of Van Kampen Merritt Inc.

A. Thomas Smith III.................. Executive Vice President, General Counsel, Secretary and
Date of Birth: 12/14/56 Director of Van Kampen Investments, the Advisers, Van Kampen
Vice President and Secretary Advisors Inc., Van 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/Vice President, Principal Legal Officer and
Secretary of other investment companies advised by the
Advisers or their affiliates. Vice President and Secretary
of each of the funds in the Fund Complex. 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, a Staff
Attorney at the Securities and Exchange Commission, Division
of Investment Management, Office of Chief Counsel.
</TABLE>

B-17
<PAGE> 53

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Michael H. Santo..................... Executive Vice President, Chief Administrative Officer and
Date of Birth: 10/22/55 Director of Van Kampen Investments, the Advisers, the
Vice President Distributor, Van Kampen 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.

Peter W. Hegel....................... Executive Vice President of the Advisers, Van Kampen
Date of Birth: 06/25/56 Management Inc. and Van Kampen Advisors Inc. Vice President
Vice President of each of the funds in the Fund Complex and certain other
investment companies advised by the Advisers or their
affiliates. Prior to September 1996, Director of McCarthy,
Crisanti & Maffei, Inc, a financial research company.

Stephen L. Boyd...................... Vice President and Chief Investment Officer for Equity
Date of Birth: 11/16/40 Investments of the Advisers. Vice President of each of the
Vice President funds in the Fund Complex and certain other investment
companies advised by the Advisers or their affiliates. Prior
to October 1998, Vice President and Senior Portfolio Manager
with AIM Capital Management, Inc. Prior to February 1998,
Senior Vice President of Van Kampen American Capital Asset
Management, Inc., Van Kampen American Capital Investment
Advisory Corp. and Van Kampen American Capital Management,
Inc.

John L. Sullivan..................... Senior Vice President of Van Kampen Investments and the
Date of Birth: 08/20/55 Advisers. Vice President, Chief Financial Officer and
Vice President, Chief Financial Treasurer of each of the funds in the Fund Complex and
Officer and Treasurer certain other investment companies advised by the Advisers
or their affiliates.

Curtis W. Morell..................... Senior Vice President of the Advisers, Vice President and
Date of Birth: 08/04/46 Chief Accounting Officer of each of the funds in the Fund
Vice President and Chief Accounting Complex and certain other investment companies advised by
Officer the Advisers or their affiliates.

Edward C. Wood III................... Senior Vice President of the Advisers, Van Kampen
Date of Birth: 01/11/56 Investments and Van Kampen Management Inc. Senior Vice
Vice President President and Chief Operating Officer of the Distributor.
Vice President of each of the funds in the Fund Complex and
certain other investment companies advised by the Advisers
or their affiliates.

Tanya M. Loden....................... Vice President of Van Kampen Investments and the Advisers.
Date of Birth: 11/19/59 Controller of each of the funds in the Fund Complex and
Controller other investment companies advised by the Advisers or their
affiliates.
</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 65 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

B-18
<PAGE> 54

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.

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 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.

B-19
<PAGE> 55

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 AGGREGATE TOTAL
YEAR FIRST PENSION OR ESTIMATED MAXIMUM COMPENSATION
APPOINTED OR AGGREGATE COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS BEFORE DEFERRAL
ELECTED TO THE BEFORE DEFERRAL FROM THE ACCRUED AS PART OF FROM THE FUND UPON FROM FUND
NAME(1) BOARD FUND(2) EXPENSES(3) RETIREMENT(4) COMPLEX(5)
------- -------------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan 1991 $2,457 $35,691 $60,000 $125,200
Jerry D. Choate(1) 1999 1,019 0 60,000 0
Linda Hutton Heagy 1995 2,457 3,861 60,000 112,800
R. Craig Kennedy 1995 2,457 2,652 60,000 125,200
Jack E. Nelson 1995 2,457 18,385 60,000 125,200
Phillip B. Rooney 1997 2,457 6,002 60,000 125,200
Fernando Sisto 1979 2,457 68,615 60,000 125,200
Wayne W. Whalen 1995 2,457 12,658 60,000 125,200
Suzanne H. Woolsey(1) 1999 1,019 0 60,000 0
Paul G. Yovovich(1) 1998 2,257 0 60,000 25,300
</TABLE>

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Yovovich became a member of the Board of Trustees for the Fund
and other funds in the Fund Complex on October 22, 1998 and therefore does
not have a full year of information to report. Mr. Choate and Ms. Woolsey
became members of the Board of Trustees for the Fund and other funds in the
Fund Complex on May 26, 1999 and therefore do not have a full year of
information to report.

(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral with respect to the Fund's fiscal year ended August 31, 1999. The
following trustees deferred compensation from the Fund during the fiscal
year ended August 31, 1999: Mr. Branagan, $2,457; Mr. Choate, $492; Ms.
Heagy, $2,457; Mr. Kennedy, $1,229; Mr. Nelson, $2,457; Mr. Rooney, $2,257;
Mr. Sisto, $1,229; Mr. Whalen, $2,457 and Mr. Yovovich, $1,735. 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 cumulative deferred compensation (including interest)
accrued with respect to each trustee, including former trustees, from the
Fund as of August 31, 1999 is as follows: Mr. Branagan, $7,960; Mr. Caruso,
$2,537; Mr. Choate, $492; Mr. Gaughan, $188; Ms. Heagy, $8,992; Mr. Kennedy,
$5,969; Mr. Miller, $2,596; Mr. Nelson, $13,087; Mr. Rees, $30,187; Mr.
Robinson, $5,258; Mr. Rooney, $5,743; Mr. Sisto, $26,421; Mr. Whalen,
$10,729; and Mr. Yovovich, $1,829. 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 investment companies in the Fund Complex
for each of the trustees for the funds' respective fiscal years ended in
1998. 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.

(5) The amounts shown in this column represent the aggregate compensation paid
by all operating investment companies in the Fund Complex as of December 31,
1998 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

B-20
<PAGE> 56

portion of their aggregate compensation from the Fund Complex during the
calendar year ended December 31, 1998. 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 investment
companies 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 $285,825 during the calendar year
ended December 31, 1998.

As of December 1, 1999, 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 objectives. The Adviser also
furnishes offices, necessary facilities and equipment, provides administrative
services to the Fund, renders periodic reports to the 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 auditing fees, the costs of
reports 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 actions or omissions if it acted without willful
misfeasance, bad faith, negligence or reckless disregard of its obligations.

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable 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>
First $150 million.......................................... 0.625 of 1.00%
Next $150 million........................................... 0.550 of 1.00%
Over $300 million........................................... 0.500 of 1.00%
</TABLE>

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 fee payable to the Adviser will be reduced by any commissions, tender
solicitation and other fees, brokerage or similar payments received by the
Adviser or any other direct or indirect majority owned subsidiary of Van Kampen
Investments in connection with the purchase and sale of portfolio investments
less any direct expenses incurred by such subsidiary of Van Kampen Investments,
in connection with obtaining such commissions, fees, brokerage or similar
payments. The Adviser agrees to use its best efforts to recapture tender
solicitation fees and exchange offer fees for the Fund's benefit and to advise
the Trustees of the Fund of any other commissions, fees, brokerage or similar
payments which may be possible for the Adviser or any other direct or indirect
majority owned subsidiary of Van Kampen Investments to receive in connection
with the Fund's portfolio transactions or other arrangements which may benefit
the Fund.

B-21
<PAGE> 57

The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Fund for any fiscal year exceed the most restrictive
expense limitation applicable in the states where the Fund's shares are
qualified for sale, the 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 year. Ordinary
business expenses include the investment advisory fee and other operating costs
paid by the Fund except (1) interest and taxes, (2) brokerage commissions, (3)
certain litigation and indemnification expenses as described in the Advisory
Agreement and (4) payments made by the Fund pursuant to the distribution plans.

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

During the fiscal years ended August 31, 1999, 1998 and 1997, the Adviser
received approximately $4,751,400, $4,358,630 and $3,377,516, 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 proportionally on their respective net assets
per fund.

During the fiscal years ended August 31, 1999, 1998 and 1997, Advisory
Corp. received approximately $216,800, $201,962 and $98,686, respectively, in
accounting services 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
Trustees or (ii) by a vote of a majority of the Fund's outstanding voting
securities and (b) by the affirmative 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'

B-22
<PAGE> 58

written notice. Total underwriting commissions on the sale of shares of the Fund
for the last three fiscal periods are shown in the chart below.

<TABLE>
<CAPTION>
AMOUNTS
TOTAL UNDERWRITING RETAINED
COMMISSIONS BY DISTRIBUTOR
------------------ --------------
<S> <C> <C>
Fiscal Year Ended August 31, 1999........................... $1,782,740 $213,923
Fiscal Year Ended August 31, 1998........................... $1,996,112 $252,193
Fiscal Year Ended August 31, 1997........................... $1,248,686 $131,363
</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 TO DEALERS
OFFERING NET AMOUNT AS A % OF
SIZE OF INVESTMENT PRICE INVESTED OFFERING PRICE)
------------------ -------- ---------- ---------------
<S> <C> <C> <C>
Less than $100,000................................... 4.75% 4.99% 4.25%
$100,000 but less than $250,000...................... 3.75% 3.90% 3.25%
$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 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.

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.
Other programs provide, among other things and subject to certain conditions,
for certain favorable distribution arrangements for shares of the Fund. 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

B-23
<PAGE> 59

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 sales of shares and increases in assets
under management. 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 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."

Certain financial intermediaries may be prohibited under law from providing
certain underwriting or distribution services. If a financial intermediary was
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.

The Plans generally provide for the Fund to reimburse the lesser of (i) the
distribution and service fees at the rates specified in the prospectus or (ii)
the amount of the Distributor's actual expenses incurred less any deferred sales
charges it received. For Class A Shares, to the extent the Distributor is not
fully reimbursed in a given year, there is no carryover of such unreimbursed
amounts to succeeding years. For each of the Class B Shares and Class C Shares,
to the extent the Distributor is not fully reimbursed in a given year, any
unreimbursed expenses for such class will be carried forward and paid by the
Fund in future years so long as such Plans are in effect. Except as mandated by
applicable law, the Fund does not impose any limit with respect to the number of
years into the future that such unreimbursed expenses may be carried forward (on
a Fund level basis). Because such expenses are accounted on a Fund level basis,
in periods of extreme net asset value fluctuation such amounts with respect to a
particular Class B Share or Class C Share may be greater or

B-24
<PAGE> 60

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, 1999, there were $12,552,149 and $710,381 of
unreimbursed distribution-related expenses with respect to Class B Shares and
Class C Shares, respectively, representing 4.01% and 1.11% 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 year ended August 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $1,223,715 or 0.23% 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, 1999, the Fund's aggregate expenses paid under the Plans for
Class B Shares were $3,120,977 or 1.00% of the Class B Shares' average daily net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $2,335,469 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B Shares of the Fund and $785,508
for fees paid to financial intermediaries for servicing Class B shareholders and
administering the Class B Shares Plans. For the fiscal year ended August 31,
1999, the Fund's aggregate expenses paid under the Plans for Class C Shares were
$634,559 or 1.00% of the Class C Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments: $372,164 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C Shares of the Fund and $262,395 for fees paid to financial
intermediaries for servicing Class C shareholders and administering the Class C
Plans.

The Distributor has entered into agreements with (i) The Prudential
Insurance Company of America ("Prudential") under which the Fund shall be
offered pursuant to the PruArray Programs and (ii) Merrill Lynch ("Merrill")
under which the Fund shall be offered pursuant to the Merrill Program. Trustees
and other fiduciaries of retirement plans seeking to invest in multiple fund
families through broker-dealer retirement plan alliance programs should contact
Prudential or Merrill for further information concerning the PruArray and
Merrill Programs including, but not limited to, minimum investment and
operational requirements.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and dividend
disbursing agent is Van Kampen Investor Services Inc., PO Box 218256, Kansas
City, MO 64121-8256. 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 Trustees of the Fund.

As most transactions made by the Fund are principal transactions at net
prices, the Fund generally incurs little or no brokerage costs. The portfolio
securities in which the Fund invests are normally purchased directly from the
issuer or in the over-the-counter market from an underwriter or market maker for
the securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers include a spread or markup to the dealer
between the bid and asked price. Sales to dealers are effected at bid prices.
The Fund may also purchase certain money market instruments directly from an
issuer, in which case no commissions or discounts are paid, or may purchase and
sell listed bonds on a exchange, which are effected through brokers who charge a
commission for their services.

B-25
<PAGE> 61

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. 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 or to a firm
participating in the distribution of the Fund's shares.

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. Discover & Co. ("Dean Witter") became an affiliate of the
Adviser. The Trustees have 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-26
<PAGE> 62

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

Commissions Paid:

<TABLE>
<CAPTION>
AFFILIATED BROKERS
------------------
ALL MORGAN DEAN
BROKERS STANLEY WITTER
------- ------- ------
<S> <C> <C> <C>
Commissions paid:
Fiscal year ended August 31, 1999......................... $13,052 -- --
Fiscal year ended August 31, 1998......................... $ 1,000 -- --
Fiscal year ended August 31, 1997......................... $ 1,625 -- --
-------
Fiscal year 1999 Percentages:
Commissions with affiliate to total commissions........... -0- -- --
Value of brokerage transactions with affiliate to total
transactions........................................... -0- -- --
</TABLE>

During the fiscal year end August 31, 1999, the Fund paid no brokerage
commissions 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
Participating Funds (as defined in the prospectus) 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 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 2.00% 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; Section 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,

B-27
<PAGE> 63

403(b)(7) and Keogh plans. Details regarding fees, as well as full plan
administration for profit sharing, pension and 401(k) plans, are available from
the Distributor.

AUTOMATED CLEARING HOUSE ("ACH") DEPOSITS

Holders of Class A Shares 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. 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.

DIVIDEND DIVERSIFICATION

A shareholder may upon written request, by completing the appropriate
section of the application form accompanying the Prospectus 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), 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 at its net asset value per
share as of the payable date of the distribution.

SYSTEMATIC WITHDRAWAL PLAN

A shareholder may establish a monthly, quarterly, semiannual or annual
withdrawal plan if the shareholder owns shares in a single account $10,000 or
more at the next determined net asset value per share at the time the plan is
established. If a 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 monthly, quarterly, semiannual or
annual 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.

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 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

B-28
<PAGE> 64

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 during a rolling 365-day period. If
exchange privileges are suspended, subsequent exchange requests for redemption
out of that Fund 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 employee-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 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 in
Class C Shares of the Fund with credit given for any contingent deferred sales
charge paid upon such redemption. 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.
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.

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.

Additionally, if the 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. Shareholders may
incur brokerage charges and a gain or loss for federal income tax purposes upon
the sale of portfolio securities so received in payment of redemptions.

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.

B-29
<PAGE> 65

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGES

("CDSC-CLASS B AND C")

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. 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 pursuant
to Section 408(d)(4) or (5) of the Code, the return of excess deferral amounts
pursuant to Code Section 401(k)(8) or 402(g)(2), the financial hardship of the
employee pursuant to United States Treasury Regulations Section 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 mailed to the shareholder. 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 a 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-

B-30
<PAGE> 66

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
purchases of shares.

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.

REINVESTMENT OF REDEMPTION PROCEEDS

A shareholder who has redeemed Class C Shares of a Fund may reinvest at net
asset value, with credit for any CDSC-Class C paid on the redeemed shares, any
portion or all of his or her redemption proceeds (plus that amount necessary to
acquire a fractional share to round off his or her purchase to the nearest full
share) in Class C Shares of the Fund, provided that the reinvestment is effected
within 180 days after such redemption and the 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 to subsequent redemptions.

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 net investment income (including taxable 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 net investment 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.

In order 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.

B-31
<PAGE> 67

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. To qualify again as a
regulated investment company in a subsequent year, the Fund may be required to
pay an interest charge on 50% of its earnings and profits attributable to
non-regulated investment company years and would be required to distribute such
earnings and profits to shareholders (less any interest charge). In addition, if
the Fund failed to qualify as a regulated investment company for its first
taxable year or, if immediately after qualifying as a regulated investment
company for any taxable year, it failed to qualify for a period greater than one
taxable year, the Fund would be required to recognize any net built-in gains
(the excess of aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.

Some of the Fund's investment practices are subject to special provisions
of the Code that, among other things, may defer the use of certain losses of the
Fund and affect the holding period of the securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving 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
in order 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 in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
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

Distributions of the Fund's net investment 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 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. Distributions from
the Fund generally will not be eligible for the corporate dividends received
deduction.

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
B-32
<PAGE> 68

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 gain. 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.

SALE OF SHARES

The sale of shares (including transfers in connection with a redemption or
repurchase of shares) will 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
and the amount received. If such shares are held as a capital asset, the gain or
loss will be a capital gain or loss. For a summary of the 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 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 United States federal income taxation regardless of its source or
(iv) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States fiduciaries who have
the authority to control all substantial decisions of the trust (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 dividends) that are not "effectively connected"
with a United States trade or business carried on by such shareholder.
Accordingly, investment in the Fund is likely to be appropriate for a Non-U.S.
Shareholder only if such person can utilize a foreign tax credit or
corresponding tax benefit in respect of such U.S. withholding tax.

Non-effectively connected capital gain dividends and gains realized from
the sale of shares will not be subject to United States federal income tax in
the case of (i) a Non-U.S. Shareholder that is a corporation and (ii) a Non-U.S.
Shareholder that 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.

B-33
<PAGE> 69

If income from the Fund or gains realized from the sale of shares is
effectively connected with a Non-U.S. Shareholder's United States trade or
business, then such amounts will be subject to United States 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 United States trade or business.

Final United States Treasury Regulations effective for payments made after
December 31, 2000, modify the withholding, backup withholding and information
reporting rules, including the procedures to be followed by Non-U.S.
Shareholders in establishing foreign status. Prospective investors should
consult their tax advisors 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 furnish the Fund with its correct taxpayer identification
number, (ii) the 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 United States 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 Non-U.S. Shareholder
the amount of dividends paid to such shareholder and the amount, if any, of tax
withheld with respect to such dividends. In case of a Non-U.S. Shareholder this
information may also be made available to the tax authorities in such Non-U.S.
Shareholder's country of residence.

GENERAL

The federal income tax discussion set forth above is for general
information only. Prospective investors and shareholders should consult their
advisors 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.

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

B-34
<PAGE> 70

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.
Since Class A Shares of the Fund were offered at a maximum sales charge of 6.75%
prior to June 12, 1989, actual Fund total return would have been somewhat less
than that computed on the basis of the current maximum sales charge. 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 or to reflect the fact no 12b-1 fees were incurred prior to
October 1, 1989.

Average annual total return quotations for periods of two or more years 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 contingent deferred sales charge
imposed at the time of redemption were reflected, it would reduce the
performance quoted.

In addition to total return information, the Fund may also advertise its
current "yield." Yield figures are based on historical earnings and are not
intended to indicate future performance. Yield is determined by analyzing the
Fund's net income per share for a 30-day (or one-month) period (which period
will be stated in the advertisement), and dividing by the maximum offering price
per share on the last day of the period. A "bond equivalent" annualization
method is used to reflect a semiannual compounding.

For purposes of calculating yield quotations, net income is determined by a
standard formula prescribed by the SEC to facilitate comparison with yields
quoted by other investment companies. Net income computed for this formula
differs from net income reported by the Fund in accordance with generally
accepted accounting principles and from net income computed for federal income
tax reporting purposes. Thus the yield computed for a period may be greater or
less than the Fund's then current dividend rate.

The Fund's yield is not fixed and will fluctuate in response to prevailing
interest rates and the market value of portfolio securities, and as a function
of the type of securities owned by the Fund, portfolio maturity and the Fund's
expenses.

Yield quotations should be considered relative to changes in the net asset
value of the Fund's shares, the Fund's investment policies, and the risks of
investing in shares of the Fund. The investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

Yield and total return are 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
of the 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

B-35
<PAGE> 71

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 funds 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
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, Salomon
Brothers Corporate Bond Index, Shearson Lehman Corporate Bond Index, Merrill
Lynch Corporate Master Index, Merrill Lynch Corporate and Government Index,
Bloomberg Financial Markets Indices, 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.

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 back cover of the Prospectus.

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, 1999 was -.51%, (ii) the five-year period ended August 31, 1999 was
7.55% and (iii) the ten-year period ended August 31, 1999 was 7.57%.

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, 1999 was 474.43%.

B-36
<PAGE> 72

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, 1999 was 503.27%.

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, 1999 was -.18%, (ii) the five-year period ended August
31, 1999 was 7.50% and (iii) the approximately seven-year, one-month period
since July 2, 1992, the commencement of distribution for Class B Shares of the
Fund, through August 31, 1999 was 8.16%.

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 2, 1992 (the commencement of distribution of Class B Shares) to August 31,
1999 was 75.40%.

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 2, 1992 (the commencement of distribution of Class B Shares) to August 31,
1999 was 75.40%.

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, 1999 was 2.48%, (ii) the five-year period ended August
31, 1999 was 7.74% and (iii) the approximately six-year, one-month period since
July 6, 1993, the commencement of distribution for Class C Shares of the Fund,
through August 31, 1999 was 6.70%.

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 6, 1993 (the commencement of distribution for Class C Shares) to August 31,
1999 was 49.04%.

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 6, 1993 (the commencement of distribution for Class C Shares) to August 31,
1999 was 49.04%.

The annualized current yield for Class A Shares, Class B Shares and Class C
Shares of the Fund for the 30-day period ending August 31, 1999 was 10.31%,
9.97% and 10.02%, respectively. The yield for Class A Shares, Class B Shares and
Class C Shares is not fixed and will fluctuate in response to prevailing
interest rates and the market value of portfolio securities, and as a function
of the type of securities owned by the Fund, portfolio maturity and the Fund's
expenses.

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 objectives and policies as well as
the risks incurred in the Fund's investment practices.

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 West Franklin Street,
Boston, Massachusetts 02110, as Custodian. The Custodian also provided
accounting services to the Fund.

SHAREHOLDER REPORTS

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

B-37
<PAGE> 73

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 200 East Randolph Drive, Chicago, Illinois
60601, the independent accountants for the Fund, performs an annual audit of the
Fund's financial statements.

LEGAL COUNSEL

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

B-38
<PAGE> 74

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of
Van Kampen High Income Corporate Bond Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen High Income Corporate
Bond Fund (the "Fund") at August 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
October 6, 1999

F-1
<PAGE> 75

PORTFOLIO OF INVESTMENTS

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE DEBT OBLIGATIONS 93.4%
CONSUMER DISTRIBUTION 9.5%
$7,500 Agrilink Foods Inc., 144A -
Private Placement (b)................ 11.875% 11/01/08 $ 7,162,500
4,250 Big 5 Corp., Ser B................... 10.875 11/15/07 4,271,250
3,000 Building One Services Corp. ......... 10.500 05/01/09 2,835,000
2,585 Chiquita Brands International,
Inc. ................................ 10.000 06/15/09 2,572,075
9,000 CHS Electronics, Inc. ............... 9.875 04/15/05 3,825,000
3,200 Community Distributors, Inc. ........ 10.250 10/15/04 2,832,000
9,255 Del Monte Foods Co., Ser B (a)....... 0/12.500 12/15/07 6,941,250
3,750 Disco SA (Argentina)................. 9.125 05/15/03 3,328,125
2,750 Disco SA (Argentina)................. 9.875 05/15/08 2,358,125
4,000 Duane Reade, Inc. ................... 9.250 02/15/08 4,020,000
3,700 Express Scripts, Inc., 144A - Private
Placement (b)........................ 9.625 06/15/09 3,746,250
2,000 Gruma SA (Mexico).................... 7.625 10/15/07 1,745,000
1,200 Jitney Jungle Stores America,
Inc. ................................ 12.000 03/01/06 966,000
5,500 King Pharmaceuticals, Inc. .......... 10.750 02/15/09 5,623,750
4,000 Luiginos, Inc., 144A - Private
Placement (b)........................ 10.000 02/01/06 3,800,000
8,255 Musicland Group, Inc. ............... 9.875 03/15/08 7,800,975
7,250 Pantry, Inc. ........................ 10.250 10/15/07 7,250,000
3,735 Pathmark Stores, Inc. ............... 12.625 06/15/02 3,781,688
6,000 Pathmark Stores, Inc. (a)............ 0/10.750 11/01/03 5,865,000
945 Phar Mor, Inc. ...................... 11.720 09/11/02 959,175
1,750 Stater Brothers Holdings, Inc.,
144A - Private Placement (b)......... 10.750 08/15/06 1,798,125
------------
83,481,288
------------
CONSUMER DURABLES 4.2%
8,900 Aetna Industries, Inc. .............. 11.875 10/01/06 9,122,500
1,000 Cambridge Industries, Inc., Ser B.... 10.250 07/15/07 705,000
6,000 Oxford Automotive, Inc., Ser D,
144A - Private Placement (b)......... 10.125 06/15/07 5,730,000
4,000 Sleepmaster LLC, 144A - Private
Placement (b)........................ 11.000 05/15/09 4,000,000
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 76
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER DURABLES (CONTINUED)
$6,430 Talon Automotive Group, Inc., Ser
B.................................... 9.625% 05/01/08 $ 5,176,150
4,500 Venture Holdings, Inc. .............. 9.500 07/01/05 4,230,000
2,000 Venture Holdings, Inc., 144A -
Private Placement (b)................ 12.000 06/01/09 1,980,000
6,300 Webb (Del E.) Corp. ................. 10.250 02/15/10 5,985,000
------------
36,928,650
------------
CONSUMER NON-DURABLES 5.7%
6,000 Cluett American Corp., Ser B......... 10.125 05/15/08 4,170,000
3,500 CMI Industries, Inc. ................ 9.500 10/01/03 3,281,250
8,900 Consoltex Group, Inc. (Canada)....... 11.000 10/01/03 9,033,500
3,000 Decora Industries, Inc. ............. 11.000 05/01/05 2,805,000
4,250 Delta Mills Insurance, Ser B......... 9.625 09/01/07 3,591,250
1,800 French Fragrances, Inc., Ser B....... 10.375 05/15/07 1,755,000
5,000 French Fragrances, Inc., Ser D....... 10.375 05/15/07 4,875,000
4,750 Globe Manufacturing Corp. ........... 10.000 08/01/08 3,206,250
6,000 Outsourcing Services Group, Inc., Ser
B.................................... 10.875 03/01/06 5,760,000
1,500 Simmons Co., 144A - Private Placement
(b).................................. 10.250 03/15/09 1,488,750
4,500 St John Knits International, Inc.,
144A - Private Placement (b)......... 12.500 07/01/09 4,365,000
1,750 United Industries Corp.,
144A - Private Placement (b)......... 9.875 04/01/09 1,548,750
3,950 Vlassic Foods International, Inc.,
144A - Private Placement (b)......... 10.250 07/01/09 3,693,250
------------
49,573,000
------------
CONSUMER SERVICES 22.2%
5,200 Amazon.com, Inc. (a)................. 0/10.000 05/01/08 3,458,000
3,000 American Plumbing & Mechanical,
144A - Private Placement (b)......... 11.625 10/15/08 2,865,000
8,050 Americredit Corp. ................... 9.250 02/01/04 8,090,250
3,000 Americredit Corp., 144A - Private
Placement (b)........................ 9.875 04/15/06 3,045,000
2,410 Argosy Gaming Co., 144A - Private
Placement (b)........................ 10.750 06/01/09 2,494,350
9,750 Booth Creek Ski Holdings, Inc., Ser
B.................................... 12.500 03/15/07 8,165,625
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 77
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER SERVICES (CONTINUED)
$2,400 Bresnan Communications Group, 144A -
Private Placement (b)................ 8.000% 02/01/09 $ 2,388,000
2,500 Cadmus Communications Corp.,
144A - Private Placement (b)......... 9.750 06/01/09 2,509,375
10,020 Capstar Broadcasting Partners (a).... 0/12.750 02/01/09 8,567,100
6,900 Casino Magic Louisiana Corp., Ser
B.................................... 13.000 08/15/03 7,831,500
6,250 Cathay International Ltd., 144A -
Private Placement (Japan) (b)........ 13.500 04/15/08 2,343,750
8,085 Charter Communications Holdings LLC,
144A - Private Placement (b)......... 8.250 04/01/07 7,660,537
2,500 Citadel Broadcasting Co. ............ 9.250 11/15/08 2,506,250
5,500 Citadel Broadcasting Co., Ser B...... 10.250 07/01/07 5,775,000
1,375 Classic Cable, Inc., 144A - Private
Placement (b)........................ 9.375 08/01/09 1,354,375
4,250 Coaxial Commerce Central Ohio,
Inc. ................................ 10.000 08/15/06 4,313,750
1,750 Diamond Cable Co. (United Kingdom)
(a).................................. 0/11.750 12/15/05 1,561,875
2,250 Frontiervision Holdings L.P. (a)..... 0/11.875 09/15/07 1,912,500
2,875 Frontiervision Holdings L.P., Ser B
(a).................................. 0/11.875 09/15/07 2,443,750
4,000 Globo Communicacoes Participation,
144A - Private Placement (Brazil)
(b).................................. 10.625 12/05/08 2,890,000
3,500 Gray Communications Systems, Inc. ... 10.625 10/01/06 3,644,375
6,500 Grupo Televisa Corp. (Mexico)........ * 05/15/08 5,411,250
2,000 Grupo Televisa Corp., Ser B
(Mexico)............................. 11.875 05/15/06 2,060,000
5,796 Helicon Group L.P. .................. 11.000 11/01/03 6,085,800
4,000 Hollywood Casino Corp.,
144A - Private Placement (b)......... 11.250 05/01/07 4,060,000
1,770 Hollywood Casino Shreveport,
144A - Private Placement (b)......... 13.000 08/01/06 1,814,250
4,000 Hollywood Park, Inc., Ser B.......... 9.500 08/01/07 3,960,000
2,000 Horseshoe Gaming LLC,
144A - Private Placement (b)......... 8.625 05/15/09 1,930,000
7,000 IHF Holdings, Inc., Ser B (a)........ 0/15.000 11/15/04 945,000
5,500 International Cabletel, Inc. (a)..... 0/11.500 02/01/06 4,785,000
</TABLE>

See Notes to Financial Statements

F-4
<PAGE> 78
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER SERVICES (CONTINUED)
$4,500 Isle of Capri Casinos, Inc.,
144A - Private Placement (b)......... 8.750% 04/15/09 $ 4,230,000
875 James Cable Partners L.P. ........... 10.750 08/15/04 894,688
4,500 Louisiana Petite Academy, Inc., Ser
B.................................... 10.000 05/15/08 4,038,750
5,000 Majestic Star Casino LLC, 144A -
Private Placement (b)................ 10.875 07/01/06 4,900,000
7,500 Multicanal Participacoes, Ser B
(Brazil)............................. 12.625 06/18/04 7,200,000
4,500 Muzak LLC, 144A - Private Placement
(b).................................. 9.875 03/15/09 4,455,000
6,050 Northland Cable Television, Inc. .... 10.250 11/15/07 6,155,875
3,000 Park N View, Inc., Ser B............. 13.000 05/15/08 915,000
3,950 Port Arthur Finance Corp., Ser A,
144A - Private Placement (b)......... 12.500 01/15/09 3,969,750
7,400 Premier Parks, Inc. (a).............. 0/10.000 04/01/08 4,921,000
7,000 Radio Unica Corp. (a)................ 0/11.750 08/01/06 4,270,000
1,960 SFX Broadcasting, Inc. .............. 10.750 05/15/06 2,107,000
1,350 Sinclair Broadcast Group, Inc. ...... 8.750 12/15/07 1,284,187
7,000 Splitrock Services, Inc., Ser B...... 11.750 07/15/08 6,335,000
3,150 Station Casinos, Inc., 144A - Private
Placement (b)........................ 8.875 12/01/08 3,071,250
4,190 Telewest Communications PLC
(United Kingdom) (a)................. 0/11.000 10/01/07 3,697,675
2,000 Telewest Communications PLC, 144A -
Private Placement (United Kingdom)
(a) (b).............................. 0/9.250 04/15/09 1,205,000
5,000 UIH Australia/Pacific, Inc., Ser B
(a).................................. 0/14.000 05/15/06 3,775,000
11,250 United International Holdings, Inc.
(a).................................. 0/10.750 02/15/08 6,496,875
6,250 Young America Corp., Ser B........... 11.625 02/15/06 4,125,000
------------
194,918,712
------------
ENERGY 2.5%
1,000 Canadian Forest Oil Ltd. ............ 8.750 09/15/07 955,000
8,500 Hurricane Hydrocarbons Ltd., 144A -
Private Placements (Canada) (b)
(f).................................. 11.750 11/01/04 1,912,500
5,750 Hydrochem Industrial Services, Inc.,
Ser B................................ 10.375 08/01/07 5,175,000
5,500 KCS Energy, Inc. (f)................. 11.000 01/15/03 4,152,500
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 79
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ENERGY (CONTINUED)
$5,000 Pride Petroleum Services, Inc. ...... 9.375% 05/01/07 $ 5,025,000
6,000 Universal Compression, Inc. (a)...... 0/9.875 02/15/08 3,720,000
1,000 Universal Compression, Inc. (a)...... 0/11.375 02/15/09 600,000
------------
21,540,000
------------
FINANCE 1.7%
4,750 Americo Life, Inc., 144A - Private
Placement (b)........................ 9.250 06/01/05 4,773,750
4,000 Avis Rent A Car, Inc., 144A - Private
Placement (b)........................ 11.000 05/01/09 4,130,000
3,000 Chatwins Group, Inc. ................ 13.000 05/01/03 2,790,000
3,000 Contifinancial Corp. ................ 7.500 03/15/02 1,185,000
2,250 Superior National Capital Trust 1.... 10.750 12/01/17 2,148,750
------------
15,027,500
------------
HEALTHCARE 3.4%
4,000 Alliance Imaging, Inc. .............. 9.625 12/15/05 3,800,000
3,900 Biovail Corporation International.... 10.875 11/15/05 4,056,000
2,250 DJ Orthopedics LLC, 144A - Private
Placement (b)........................ 12.625 06/15/09 2,148,750
2,250 Lifepoint Hospitals Holdings, Inc.,
144A - Private Placement (b)......... 10.750 05/15/09 2,261,250
2,655 Maxxim Medical, Inc., 144A - Private
Placement (b)........................ 10.500 08/01/06 2,827,575
3,000 Mediq, Inc. ......................... 11.000 06/01/08 2,355,000
1,490 Owens & Minor, Inc. ................. 10.875 06/01/06 1,557,050
8,265 Oxford Health Plans, Inc.,
144A - Private Placement (b)......... 11.000 05/15/05 8,223,675
3,000 Triad Hospitals Holdings, Inc.,
144A - Private Placement (b)......... 11.000 05/15/09 3,000,000
------------
30,229,300
------------
PRODUCER MANUFACTURING 5.5%
9,750 Carpenter W R North America, Inc. ... 10.625 06/15/07 8,482,500
500 Cemex International Capital, Inc. ... 9.660 11/29/49 465,000
3,355 Compass Aerospace Corp.,
144A - Private Placement (b)......... 10.125 04/15/05 3,002,725
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 80
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PRODUCER MANUFACTURING (CONTINUED)
$4,500 Eagle Picher Industries, Inc. ....... 9.375% 03/01/08 $ 4,286,250
5,500 Filtronic PLC, 144A - Private
Placement (b)........................ 10.000 12/01/05 5,307,500
5,255 GS Technologies Operating, Inc. ..... 12.000 09/01/04 4,138,313
8,000 IMO Industries, Inc. ................ 11.750 05/01/06 8,160,000
1,750 Juno Lighting, Inc., 144A - Private
Placement (b)........................ 11.875 07/01/09 1,732,500
2,000 Numatics, Inc. ...................... 9.625 04/01/08 1,740,000
3,000 Terex Corp. ......................... 8.875 04/01/08 2,857,500
4,500 Terex Corp., Ser D................... 8.875 04/01/08 4,286,250
6,750 Waxman Industries, Inc., Ser B (a)... 0/12.750 06/01/04 3,408,750
------------
47,867,288
------------
RAW MATERIALS/PROCESSING INDUSTRIES 9.8%
2,175 Acetex Corp. (Canada)................ 9.750 10/01/03 1,968,375
4,500 AEP Industries, Inc. ................ 9.875 11/15/07 4,387,500
4,200 Anchor Lamina, Inc. (Canada)......... 9.875 02/01/08 3,685,500
4,540 Aracruz Celulose SA, 144A - Private
Placement (Brazil) (b)............... 10.375 01/31/02 4,517,300
4,500 Doe Run Resources Corp., Ser B....... 11.250 03/15/05 4,207,500
1,500 Doman Industries Ltd., 144A - Private
Placement (b)........................ 12.000 07/01/04 1,500,000
1,000 Galey & Lord, Inc. .................. 9.125 03/01/08 500,000
1.7 units Intersil Corp., 144A - Private
Placement (b) (e).................... 13.250 08/15/09 1,751,000
2,500 Kappa Beheer Bv, 144A - Private
Placement (b)........................ 10.625 07/15/09 2,559,375
5,000 Lyondell Chemical Co. ............... 10.875 05/01/09 5,087,500
3,600 Pacifica Papers, Inc., 144A - Private
Placement (b)........................ 10.000 03/15/09 3,654,000
5,750 Packaging Corp. of America, 144A -
Private Placement (b)................ 9.625 04/01/09 5,821,875
5,054 Pioneer Americas Acquisition
Corp. ............................... 9.250 06/15/07 3,664,150
10,025 Printpack, Inc. ..................... 10.625 08/15/06 9,373,375
3,250 Radnor Holdings, Inc., Ser B......... 10.000 12/01/03 3,298,750
5,000 Renco Steel Holdings, Inc. .......... 10.875 02/01/05 4,275,000
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 81
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
2.8
units Republic Technologies International,
144A - Private Placement (b) (e)..... 13.750% 07/15/09 2,782,500
$2,250 Scovill Fasteners, Inc. ............. 11.250 11/30/07 1,293,750
6,010 Tekni-Plex, Inc., Ser B.............. 11.250 04/01/07 6,400,650
2,025 TeleCorp PCS, Inc., 144A - Private
Placement (a) (b).................... 0/11.625 04/15/09 1,189,687
4,000 Tritel PCS, Inc., 144A - Private
Placement (a) (b).................... 0/12.750 05/15/09 2,300,000
2,750 Vicap SA (Mexico).................... 10.250 05/15/02 2,433,750
6,250 Vicap SA (Mexico).................... 11.375 05/15/07 5,281,250
4,550 WHX Corp. ........................... 10.500 04/15/05 4,368,000
------------
86,300,787
------------
TECHNOLOGY 3.5%
5,500 Advanced Micro Devices, Inc. ........ 11.000 08/01/03 5,142,500
6,600 Century Communications Corp. ........ * 01/15/08 2,829,750
2,000 Crown Castle International Corp.,
144A - Private Placement (b)......... 9.500 08/01/11 1,955,000
6,000 DecisionOne Holdings Corp. (f)....... 9.750 08/01/07 270,000
3
units DecisionOne Holdings Corp. (a) (e)... 0/11.500 08/01/08 22,500
3,660 Dictaphone Corp. .................... 11.750 08/01/05 2,653,500
7,500 Fairchild Semiconductor Corp.,
144A - Private Placement (b)......... 10.375 10/01/07 7,387,500
7,550 PSINet, Inc. ........................ 11.500 11/01/08 7,682,125
2,375 PSINet, Inc., 144A - Private
Placement (b)........................ 11.000 08/01/09 2,386,875
------------
30,329,750
------------
TRANSPORTATION 4.8%
4,000 American Commercial Lines LLC........ 10.250 06/30/08 3,950,000
7,500 Atlas Air, Inc. ..................... 10.750 08/01/05 7,687,500
6,750 Atlas Air, Inc. ..................... 9.375 11/15/06 6,547,500
1,800 Atlas Air, Inc. ..................... 9.250 04/15/08 1,705,500
2,700 Cenargo International PLC............ 9.750 06/15/08 2,308,500
</TABLE>

See Notes to Financial Statements

F-8
<PAGE> 82
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TRANSPORTATION (CONTINUED)
$7,250 Greyhound Lines, Inc. ............... 11.500% 04/15/07 8,192,500
$5,950 MRS Logistica SA, Ser B,
144A - Private Placement (Brazil)
(b).................................. 10.625 08/15/05 3,778,250
6,250 Pegasus Shipping Hellas Ltd., Ser
A.................................... 11.875 11/15/04 2,281,250
4,500 Stena AB (Sweden).................... 10.500 12/15/05 4,500,000
1,800 Transport World Airlines, Inc., 144A
-Private Placement (b)............... 11.500 12/15/04 1,539,000
------------
42,490,000
------------
UTILITIES 20.6%
5,500 American Cellular Corp. ............. 10.500 05/15/08 5,678,750
6,250 Centennial Cellular Operating Co. ... 10.750 12/15/08 6,500,000
9,750 Clearnet Communications, Inc.
(Canada) (a)......................... 0/14.750 12/15/05 9,067,500
6,000 Compania De Transporte Energia, 144A
-Private Placement (Argentina) (b)... 9.250 04/01/08 4,980,000
3,950 Crown Castle International Corp.
(a).................................. 0/10.625 11/15/07 2,784,750
7,000 CTI Holdings SA (a).................. 0/11.500 04/15/08 3,360,000
11,160 E Spire Communications, Inc. (a)..... 0/13.000 11/01/05 6,779,700
3,180 E Spire Communications, Inc. (a)..... 0/12.750 04/01/06 1,788,750
1,175 Globe Telecom, Inc., 144A - Private
Placement (b)........................ 13.000 08/01/09 1,179,406
4,300 Globenet Communications Group Ltd.,
144A - Private Placement (b)......... 13.000 07/15/07 4,192,500
2,570 GST Network Funding, Inc., 144A -
Private Placement (a) (b)............ 0/10.500 05/01/08 1,464,900
568 GST Telecommunciations, Inc., 144A -
Private Placement (Canada) (a) (b)... 0/13.875 12/15/05 721,360
2,550 ICG Holdings, Inc. (a)............... 0/13.500 09/15/05 2,269,500
2,500 ICG Holdings, Inc. (a)............... 0/12.500 05/01/06 1,975,000
9,100 Intermedia Communications of Florida,
Inc. (a)............................. 0/12.500 05/15/06 7,507,500
8,250 IXC Communications, Inc. ............ 9.000 04/15/08 8,115,938
7,000 KMC Telecommunications Holdings, Inc.
(a).................................. 0/12.500 02/15/08 3,815,000
4,000 Level 3 Communications, Inc. ........ 9.125 05/01/08 3,740,000
2,000 Level 3 Communications, Inc. (a)..... 0/10.500 12/01/08 1,140,000
</TABLE>

See Notes to Financial Statements

F-9
<PAGE> 83
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTILITIES (CONTINUED)
$5,750 McLeodusa, Inc. (a).................. 0/10.500% 03/01/07 4,312,500
2,300 Metromedia Fiber Network, Inc. ...... 10.000 11/15/08 2,277,000
1,500 Metronet Communications Corp.
(Canada) (a)......................... 0/10.750 11/01/07 1,207,500
1,250 Metronet Communications Corp.
(Canada) (a)......................... 0/9.950 06/15/08 956,250
9,510 Microcell Telecommunications, Ser B
(a).................................. 0/14.000 06/01/06 7,869,525
9,000 Millicom International Cellular SA
(Luxemburg) (a)...................... 0/13.500 06/01/06 6,322,500
10,250 Netia Holdings, Inc., Ser B
(Netherlands) (a).................... 0/11.250 11/01/07 6,560,000
3,750 Nextel Communications, Inc. (a)...... 0/10.650 09/15/07 2,756,250
1,000 Nextel Communications, Inc. ......... 12.000 11/01/08 1,115,000
4,500 NTL, Inc. (a)........................ 0/9.750 04/01/08 2,947,500
5,125 Optel, Inc., Ser B, 144A - Private
Placement (b)........................ 13.000 02/15/05 3,613,125
10,450 Pinnacle Holdings, Inc. (a).......... 0/10.000 03/15/08 6,008,750
4,450 Price Communications Wireless........ 11.750 07/15/07 4,872,750
4,500 Price Communications Wireless, Ser
B.................................... 9.125 12/15/06 4,590,000
6,400 Primus Telecommunications Group...... 11.750 08/01/04 6,272,000
1,750 Primus Telecommunications Group...... 11.250 01/15/09 1,671,250
3,750 Rural Cellular Corp. ................ 9.625 05/15/08 3,825,000
2,250 Satelites Mexicanos SA (Mexico)...... 10.125 11/01/04 1,777,500
10,250 SBA Communications Corp. (a)......... 0/12.000 03/01/08 5,893,750
8,100 Startec Global Communications........ 12.000 05/15/08 6,925,500
1,000 Telecom Argentina, Ser J, 144A -
Private Placement (Argentina) (b).... 9.750 07/12/01 1,007,500
1,500 Transtel, 144A - Private Placement
(Columbia) (a) (b)................... 14.500 11/01/07 750,000
5,675 Triton Communications LLC (a)........ 0/11.000 05/01/08 3,887,375
</TABLE>

See Notes to Financial Statements

F-10
<PAGE> 84
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTILITIES (CONTINUED)
$3,500 United Pan-Europe Communications NV
144A - Private Placement
(Netherlands) (b).................... 10.875% 08/01/09 3,521,875
6,740 Verio, Inc. ......................... 10.375 04/01/05 6,706,300
4,300 Verio, Inc. ......................... 11.250 12/01/08 4,375,250
2,000 Worldwide Fiber, Inc., 144A - Private
Placement (b)........................ 12.000 08/01/09 2,000,000
------------
181,082,504
------------
TOTAL CORPORATE DEBT OBLIGATIONS 93.4%...................... 819,768,779
------------
FOREIGN GOVERNMENT OBLIGATIONS 0.7%
2,000 Republic of Argentina (Argentina).... 11.375 01/30/17 1,747,500
4,000 United Mexican States Debt
(Mexico)............................. 11.500 05/15/26 4,342,500
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS......................... 6,090,000
------------
EQUITIES 2.0%
American Telecasting, Inc. (1,750 Common Stock Warrants) (c)........ 1,750
Contour Energy Co. (75,000 Common Shares) (c)....................... 152,344
Crown Castle International Corp. (20,637 Preferred Shares, 12.75%
coupon, $1,000 par per share) (c) (d)............................... 2,115,292
Dairy Mart Convenience Stores (14,998 Common Stock Warrants) (c).... 5,399
Day International Group, Inc. (1,741 Preferred Shares, 12.25%
coupon, $1,000 par per share) (c) (d)............................... 1,410,210
KMC Telecommunications Holdings, Inc., 144A - Private Placement
(7,000 Common Stock Warrants) (b) (c)............................... 70,000
Metronet Communications Corp., 144A - Private Placement (9,250
Common Stock Warrants) (Canada) (b) (c)............................. 740,000
NTL, Inc., 144A - Private Placement (6,889 Common Stock Warrants)
(b) (c)............................................................. 89,557
Optel, Inc. (3,275 Common Shares) (c)............................... 6,550
Park N View, Inc., 144A - Private Placement (3,000 Common Stock
Warrants) (b) (c)................................................... 750
Price Communications Corp. (221,141 Common Shares) (c).............. 4,547,212
Primus Telecommunications Group (2,000 Common Stock Warrants) (c)... 41,000
Rural Cellular Corp. (7,046 Preferred Shares, 11.375% coupon, $1,000
par per share) (c) (d).............................................. 7,116,460
Signature Brands, Inc. (4,000 Common Stock Warrants) (c)............ 86,000
</TABLE>

See Notes to Financial Statements

F-11
<PAGE> 85
PORTFOLIO OF INVESTMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Market Value
- --------------------------------------------------------------------------------------
<S> <C>
EQUITIES (CONTINUED)
Splitrock Services, Inc., 144A - Private Placement
(7,000 Common Stock Warrants) (b) (c)............................... 420,000
Star Gas Partners, L.P. (1,219 Units of Limited Partnership
Interests).......................................................... 19,809
Startec Global Communications (8,100 Common Stock Warrants) (c)..... 8,100
Terex Corp. (28,000 Common Stock Rights) (c)........................ 504,000
Total Renal Care Holdings, Inc. (10,000 Common Shares) (c).......... 80,625
UIH Australia Pacific, Inc. (5,000 Common Stock Warrants) (c)....... 15,000
Urohealth Sysytems, Inc., 144A - Private Placement (4,750 Common
Stock Warrants) (b) (c)............................................. 47
Wright Medical Technolgy, Inc. (4,118 Common Stock Warrants) (c).... 412
------------
TOTAL EQUITIES 2.0%.................................................. 17,430,517
------------
TOTAL LONG-TERM INVESTMENTS 96.1%
(Cost $934,678,073)................................................. 843,289,296
------------
SHORT-TERM INVESTMENTS 2.2%
REPURCHASE AGREEMENT 1.4%
BankAmerica Securities ($12,029,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 08/31/99, to
be sold on 09/01/99 at $12,030,824)................................. 12,029,000
U.S. GOVERNMENT AGENCY OBLIGATION 0.8%
Federal Home Loan Bank Consolidated Discount Note ($7,551,000 par,
yielding 5.40%, 09/01/99 maturity).................................. 7,549,868
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $19,578,868).................................................. 19,578,868
------------
TOTAL INVESTMENTS 98.3%
(Cost $954,256,941)................................................. 862,868,164
OTHER ASSETS IN EXCESS OF LIABILITIES 1.7%........................... 15,012,278
------------
NET ASSETS 100.0%.................................................... $877,880,442
============
</TABLE>

* Zero coupon bond

(a) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.

(b) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may only be resold in
transactions exempt from registration which are normally transactions with
qualified Institutional buyers.

(d) Payment-in-kind security.

(e) One unit represents one million par of senior notes and one warrant.

(f) Non-income producing as this bond is currently in default.

See Notes to Financial Statements

F-12
<PAGE> 86

STATEMENT OF ASSETS AND LIABILITIES

August 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $954,256,941)....................... $ 862,868,164
Cash........................................................ 3,656
Receivables:
Interest.................................................. 20,136,344
Fund Shares Sold.......................................... 1,792,775
Other....................................................... 88,435
--------------
Total Assets.......................................... 884,889,374
--------------
LIABILITIES:
Payables:
Income Distributions...................................... 3,596,194
Fund Shares Repurchased................................... 1,953,435
Distributor and Affiliates................................ 628,665
Investment Advisory Fee................................... 396,504
Accrued Expenses............................................ 244,848
Trustees' Deferred Compensation and Retirement Plans........ 189,286
--------------
Total Liabilities..................................... 7,008,932
--------------
NET ASSETS.................................................. $ 877,880,442
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,055,778,413
Accumulated Undistributed Net Investment Income............. 944,173
Net Unrealized Depreciation................................. (91,388,777)
Accumulated Net Realized Loss............................... (87,453,367)
--------------
NET ASSETS.................................................. $ 877,880,442
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $492,378,343 and 86,742,193 shares of
beneficial interest issued and outstanding)........... $ 5.68
Maximum sales charge (4.75%* of offering price)......... .28
--------------
Maximum offering price to public........................ $ 5.96
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $318,228,218 and 55,993,172 shares of
beneficial interest issued and outstanding)........... $ 5.68
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $67,273,881 and 11,903,905 shares of
beneficial interest issued and outstanding)........... $ 5.65
==============
</TABLE>

*On sales of $100,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

F-13
<PAGE> 87

STATEMENT OF OPERATIONS

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

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $100,657,191
Dividends................................................... 1,012,021
Other....................................................... 3,123,947
------------
Total Income............................................ 104,793,159
------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, and C of $1,210,079, $3,128,896 and $640,673,
respectively)............................................. 4,979,648
Investment Advisory Fee..................................... 4,751,418
Shareholder Services........................................ 1,711,046
Custody..................................................... 102,732
Trustees' Fees and Related Expenses......................... 46,153
Legal....................................................... 38,780
Other....................................................... 522,300
------------
Total Expenses.............................................. 12,152,077
Less Credits Earned on Overnight Cash Balances.............. 45,952
------------
Net Expenses............................................ 12,106,125
------------
NET INVESTMENT INCOME....................................... $ 92,687,034
============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $(26,018,022)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (63,501,755)
End of the Period......................................... (91,388,777)
------------
Net Unrealized Depreciation During the Period............... (27,887,022)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(53,905,044)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 38,781,990
============
</TABLE>

See Notes to Financial Statements

F-14
<PAGE> 88

STATEMENT OF CHANGES IN NET ASSETS

For the Years Ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1999 August 31, 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................ $ 92,687,034 $ 74,061,466
Net Realized Gain/Loss........................... (26,018,022) 18,269,123
Net Unrealized Depreciation During the Period.... (27,887,022) (89,734,268)
------------- ------------
Change in Net Assets from Operations............. 38,781,990 2,596,321
------------- ------------
Distributions from Net Investment Income:
Class A Shares................................. (56,432,461) (49,213,216)
Class B Shares................................. (31,245,715) (21,538,906)
Class C Shares................................. (6,424,163) (3,848,005)
------------- ------------
Total Distributions............................ (94,102,339) (74,600,127)
------------- ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES..................................... (55,320,349) (72,003,806)
------------- ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................ 377,609,982 398,226,626
Net Asset Value of Shares Issued Through Dividend
Reinvestment................................... 50,110,723 41,295,995
Cost of Shares Repurchased....................... (332,658,016) (226,785,118)
------------- ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................... 95,062,689 212,737,503
------------- ------------
TOTAL INCREASE IN NET ASSETS..................... 39,742,340 140,733,697
NET ASSETS:
Beginning of the Period.......................... 838,138,102 697,404,405
------------- ------------
End of the Period (Including accumulated
undistributed net investment income of $944,173
and $4,912,228, respectively).................. $ 877,880,442 $838,138,102
============= ============
</TABLE>

See Notes to Financial Statements

F-15
<PAGE> 89

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------
Class A Shares 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $6.060 $6.548 $6.298 $ 6.15 $ 6.12
------ ------ ------ ------ ------
Net Investment Income............. .626 .614 .604 .607 .55
Net Realized and Unrealized
Gain/Loss....................... (.370) (.479) .267 .139 .0515
------ ------ ------ ------ ------
Total from Investment
Operations...................... .256 .135 .871 .746 .6015
Less Distributions from Net
Investment Income............... .640 .623 .621 .598 .5715
------ ------ ------ ------ ------
Net Asset Value, End of the
Period.......................... $5.676 $6.060 $6.548 $6.298 $ 6.15
====== ====== ====== ====== ======
Total Return (a).................. 4.41% 1.66% 14.44% 12.66% 10.48%
Net Assets at End of the Period
(In millions)................... $492.4 $499.3 $468.6 $421.4 $411.9
Ratio of Expenses to Average Net
Assets (b)...................... 1.03% 1.00% 1.08% 1.08% 1.12%
Ratio of Net Investment Income to
Average Net Assets (b).......... 10.65% 9.33% 9.37% 9.65% 9.23%
Portfolio Turnover................ 51% 90% 75% 76% 49%
</TABLE>

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

(b) For the years ended August 31, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.

See Notes to Financial Statements

F-16
<PAGE> 90
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------
Class B Shares 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $6.064 $6.558 $6.310 $ 6.16 $ 6.14
------ ------ ------ ------ ------
Net Investment Income........... .584 .571 .559 .559 .51
Net Realized and Unrealized
Gain/Loss..................... (.373) (.490) .262 .141 .0335
------ ------ ------ ------ ------
Total from Investment
Operations...................... .211 .081 .821 .700 .5435
Less Distributions from Net
Investment Income............... .592 .575 .573 .550 .5235
------ ------ ------ ------ ------
Net Asset Value, End of the
Period.......................... $5.683 $6.064 $6.558 $6.310 $ 6.16
====== ====== ====== ====== ======
Total Return (a).................. 3.57% 0.77% 13.58% 11.78% 9.41%
Net Assets at End of the Period
(In millions)................... $318.2 $283.1 $198.0 $114.6 $ 89.9
Ratio of Expenses to Average Net
Assets (b)...................... 1.79% 1.79% 1.86% 1.87% 1.93%
Ratio of Net Investment Income to
Average Net Assets (b).......... 9.88% 8.52% 8.60% 8.86% 8.42%
Portfolio Turnover................ 51% 90% 75% 76% 49%
</TABLE>

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

See Notes to Financial Statements

F-17
<PAGE> 91
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------
Class C Shares 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $6.035 $6.528 $6.284 $ 6.14 $ 6.11
------ ------ ------ ------ ------
Net Investment Income........... .582 .570 .561 .557 .51
Net Realized and Unrealized
Gain/Loss..................... (.374) (.488) .256 .137 .0435
------ ------ ------ ------ ------
Total from Investment
Operations...................... .208 .082 .817 .694 .5535
Less Distributions from Net
Investment Income............... .592 .575 .573 .550 .5235
------ ------ ------ ------ ------
Net Asset Value, End of the
Period.......................... $5.651 $6.035 $6.528 $6.284 $ 6.14
====== ====== ====== ====== ======
Total Return (a).................. 3.42% 0.93% 13.64% 11.66% 9.63%
Net Assets at End of the Period
(In millions)................... $ 67.3 $ 55.8 $ 30.8 $ 17.5 $ 15.7
Ratio of Expenses to Average Net
Assets (b)...................... 1.79% 1.79% 1.86% 1.87% 1.93%
Ratio of Net Investment Income to
Average Net Assets (b).......... 9.87% 8.49% 8.57% 8.86% 8.42%
Portfolio Turnover................ 51% 90% 75% 76% 49%
</TABLE>

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

See Notes to Financial Statements

F-18
<PAGE> 92

NOTES TO FINANCIAL STATEMENTS

August 31, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen High Income Corporate Bond Fund (the "Fund"), a Delaware business
trust, 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 provide maximum current income through investment in high
yielding, high risk fixed-income securities. The Fund commenced investment
operations on October 2, 1978. The Fund commenced distribution of its Class B
and Class C shares on July 2, 1992 and July 6, 1993, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION--Fixed income investments and preferred stock are stated
at value using market quotations or indications of value obtained from an
independent pricing service. Investments in securities listed on a securities
exchange are valued at the 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. For
those securities where quotations or prices are not available as noted above,
valuations are 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.
Fund investments include lower-rated debt securities which may be more
susceptible to adverse economic conditions than other investment grade holdings.
These securities are often subordinated to the prior claims of other senior
lenders and uncertainties exist as to an issuer's ability to meet principal and
interest payments. At the end of the period, debt securities rated below
investment grade and comparable unrated securities represented approximately 98%
of the investment portfolio. At August 31, 1999, approximately 15% of the Fund's
long-term investments were in non-U.S. issuers, of which the largest geographic
exposure was Canada with 3%.

F-19
<PAGE> 93
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

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 purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At August 31, 1999, there were no
when issued or delayed delivery purchase commitments.
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 Asset Management Inc. (the "Adviser") or its
affiliates (collectively, "Van Kampen"), 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 maintain the
value of the underlying security at not less than the repurchase proceeds due
the Fund.

C. INCOME AND EXPENSES--Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts on debt
securities purchased are amortized over the life of the respective security.
Premiums on debt securities are not amortized. 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 the loss and offset such losses against any future realized capital
gains. At August 31, 1999, the Fund

F-20
<PAGE> 94
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

had an accumulated capital loss carryforward for tax purposes of $68,001,037
which expires between August 31, 2000 and August 31, 2007. Of this amount,
$45,375,504 will expire in 2000. Net realized gains or losses may differ for
financial reporting and tax purposes primarily as a result of market discount
from bonds sold, post October 31 losses which are not realized for tax purposes
until the first day of the following fiscal year and the deferral of losses
relating to wash sales transactions.
At August 31, 1999, for federal income tax purposes, cost of long- and
short-term investments is $954,541,201, the aggregate gross unrealized
appreciation is $13,096,054 and the aggregate gross unrealized depreciation is
$104,769,091, resulting in net unrealized depreciation on long- and short-term
investments of $91,673,037.

E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included in ordinary income for
tax purposes.
Due to inherent differences in the recognition of income, expenses and
realized gain/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between financial and tax basis
reporting for the 1999 fiscal year have been identified and appropriately
reclassified. Permanent book and tax basis differences relating to the
recognition of market discount on bonds disposed of in the prior period totaling
$807,089 and a resulting adjustment to the amount of capital loss carryforward
which expired was reclassified in the current period from accumulated
undistributed net investment income to capital. Permanent book and tax basis
differences relating to the expiration of a portion of the capital loss
carryforward totaling $125,160,730 were reclassified from accumulated net
realized gain/loss to capital. Permanent book and tax basis differences relating
to the recognition of market discount on bonds totaling $184,649 were
reclassified from accumulated net realized gain/loss to accumulated
undistributed net investment income. Additionally, permanent differences of
$1,930,310 related to consent fee income was reclassified from accumulated
undistributed net investment income to accumulated net realized gain/loss.

F-21
<PAGE> 95
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

F. EXPENSE REDUCTIONS--During the year ended August 31, 1999, the Fund's custody
fee was reduced by $45,952 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 NET ASSETS % PER ANNUM
- ---------------------------------------------------------------------
<S> <C>
First $150 million.................................... .625 of 1%
Next $150 million..................................... .550 of 1%
Over $300 million..................................... .500 of 1%
</TABLE>

For the year ended August 31, 1999, the Fund recognized expenses of
approximately $38,800 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, 1999, the Fund recognized expenses of
approximately $216,800 representing Van Kampen's cost of providing accounting
services to the Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the year ended August 31, 1999,
the Fund recognized expenses of approximately $1,278,700. Transfer agency fees
are determined through negotiations with the Fund's Board of Trustees and are
based on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

F-22
<PAGE> 96
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

3. CAPITAL TRANSACTIONS
At August 31, 1999, capital aggregated $698,093,022, $293,770,644 and
$63,914,747 for Class A, B and C shares, respectively. For the year ended August
31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................... 32,072,403 $ 188,609,487
Class B.................................... 25,472,343 150,618,753
Class C.................................... 6,517,433 38,381,742
----------- -------------
Total Sales.................................. 64,062,179 $ 377,609,982
=========== =============
Dividend Reinvestment:
Class A.................................... 5,422,970 $ 31,977,983
Class B.................................... 2,538,917 14,977,036
Class C.................................... 538,024 3,155,704
----------- -------------
Total Dividend Reinvestment.................. 8,499,911 $ 50,110,723
=========== =============
Repurchases:
Class A.................................... (33,140,278) $(196,504,687)
Class B.................................... (18,690,883) (110,387,970)
Class C.................................... (4,391,924) (25,765,359)
----------- -------------
Total Repurchases............................ (56,223,085) $(332,658,016)
=========== =============
</TABLE>

F-23
<PAGE> 97
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

At August 31, 1998, capital aggregated $743,728,332, $283,660,303 and
$57,680,730 for Class A, B and C shares, respectively. For the year ended August
31, 1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales
Class A.................................... 28,314,218 $ 187,996,517
Class B.................................... 25,445,038 169,122,792
Class C.................................... 6,221,313 41,107,317
----------- -------------
Total Sales.................................. 59,980,569 $ 398,226,626
=========== =============
Dividend Reinvestment:
Class A.................................... 4,382,061 $ 28,862,654
Class B.................................... 1,568,905 10,333,349
Class C.................................... 320,344 2,099,992
----------- -------------
Total Dividend Reinvestment.................. 6,271,310 $ 41,295,995
=========== =============
Repurchases:
Class A.................................... (21,870,630) $(144,129,518)
Class B.................................... (10,532,646) (69,416,384)
Class C.................................... (2,018,608) (13,239,216)
----------- -------------
Total Repurchases............................ (34,421,884) $(226,785,118)
=========== =============
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996 will automatically convert to Class A shares after the
eighth year following purchase. Class B shares purchased before June 1, 1996
automatically convert to Class A shares after the sixth year following purchase.
For the year ended August 31, 1999, 11,279,092 Class B shares automatically
converted to Class A shares. The CDSC will be imposed on

F-24
<PAGE> 98
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

most redemptions made within five years of the purchase for Class B and one year
of the purchase for Class C as detailed in the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------
<S> <C> <C>
First.......................................... 4.00% 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, 1999, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$218,800 and CDSC on redeemed shares of approximately $773,300. 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 $510,175,034 and $426,498,986,
respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.
The Fund may invest in futures contracts, a type of derivative. A futures
contract is an agreement involving the delivery of a particular asset on a
specified future date at an agreed upon price. The Fund generally invests in
futures on U.S. Treasury Notes. These contracts are generally used to manage the
portfolio's effective maturity and duration.

F-25
<PAGE> 99
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

August 31, 1999
- --------------------------------------------------------------------------------

Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin).
There were no transactions in futures contracts for the year ended August
31, 1999.

6. 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 average net assets and
1.00% each for Class B and Class C average net assets are accrued daily.
Included in these fees for the year ended August 31, 1999, are payments retained
by Van Kampen of approximately $2,742,700.

F-26
<PAGE> 100

PART C: OTHER INFORMATION

ITEM 23. EXHIBITS.

<TABLE>
<S> <C>
(a)(1) -- First Amended and Restated Agreement and Declaration of
Trust (1)
(2) -- Second Certificate of Amendment (4)
(3) -- Second Amended and Restated Certificate of Designation
(4)
(b) -- Amended and Restated Bylaws (1)
(c)(1) -- Specimen Class A Share Certificate(3)
(2) -- Specimen Class B Share Certificate(3)
(3) -- Specimen Class C Share Certificate(3)
(d) -- Investment Advisory Agreement(3)
(e)(1) -- Distribution and Service Agreement(3)
(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+
(2) -- Form of the Trustee Retirement Plan+
(g)(1) -- Custodian Contract(3)
(2) -- Transfer Agency and Service Agreement(3)
(h)(1) -- Data Access Services Agreement (2)
(2) -- Fund Accounting Agreement(3)
(i)(1) -- Opinion and Consent of Skadden, Arps, Slate, Meagher &
Flom (Illinois) (2)
(2) -- Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois)+
(j) -- Consent of PricewaterhouseCoopers LLP+
(k) -- Not applicable.
(l) -- Not applicable.
(m)(1) -- Plan of Distribution pursuant to Rule 12b-1 (2)
(2) -- Form of Shareholder Assistance Agreement (2)
(3) -- Form of Administrative Services Agreement (2)
(4) -- Service Plan (2)
(n) -- Not applicable.
(o) -- Amended Multi-Class Plan (3)
(p) -- Power of Attorney +
(z)(1) -- List of 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 Post-Effective Amendment No. 36 to
Registrant's Registration Statement on Form N-1A, File No. 2-62115, filed
December 22, 1995.

(2) Incorporated herein by reference to Post-Effective Amendment No. 38 to
Registrant's Registration Statement on Form N-1A, File No. 2-62115, filed
December 26, 1996.

(3) Incorporated herein by reference to Post-Effective Amendment No. 40 to
Registrant's Registration Statement on Form N-1A, File No. 2-62115, filed
December 24, 1997.

(4) Incorporated herein by reference to Post-Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A, File No. 2-62115, filed
October 22, 1998.

+ Filed herewith.

C-1
<PAGE> 101

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 First
Amended and Restated Agreement and Declaration of Trust. Article 8; Section 8.4
of the First Amended and Restated 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 "1933 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
1933 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 1933 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 1933 Act
against any loss,

C-2
<PAGE> 102

liability, claim damages or expense (including the reasonable cost of investing
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 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 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.

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 Asset Management Inc. (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., which acts as
principal underwriter for certain investment companies and unit investment
trusts. See Exhibit (z)(1).

(b) Van Kampen Funds Inc. which is an affiliated person of the Registrant, is
the only principal underwriter for the Registrant. The name, principal
business address and positions and offices 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
promulgated thereunder to be maintained (i) by the Registrant will be maintained
at its offices, located at 1 Parkview Plaza, PO Box 5555, 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, MA 02171; (ii) by the Adviser,
will be maintained at its offices, located at 1 Parkview Plaza, PO Box 5555,
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, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555.

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-3
<PAGE> 103

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 HIGH INCOME CORPORATE BOND FUND, 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 23rd day of December, 1999.

VAN KAMPEN
HIGH INCOME CORPORATE BOND FUND

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 23, 1999 by the following
persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<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

/s/ PAUL G. YOVOVICH* Trustee
- -----------------------------------------------------
Paul G. Yovovich
</TABLE>

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

* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.

/s/ A. THOMAS SMITH III December 23, 1999

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

A. Thomas Smith III

Attorney-in-Fact
<PAGE> 104

SCHEDULE OF EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 43 TO FORM N-1A

AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

<TABLE>
<S> <C>
(f)(1) Form of Trustee Deferred Compensation Plan
(f)(2) Form of Trustee Retirement Plan
(i)(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(j) Consent of PricewaterhouseCoopers LLP
(p) Power of Attorney
(z)(1) List of Investment Companies in response to Item 27(a)
List of Officers and Directors of Van Kampen Funds Inc. in
(z)(2) response to Item 27(b)
</TABLE>

<PAGE> 1
EXHIBIT (f) (1)

FORM OF
DEFERRED COMPENSATION AGREEMENT

AGREEMENT, made on this ____ day of _______________, _________
by and between each of the funds listed on Schedule A attached hereto as may be
amended from time to time, each a registered investment company having its
principal offices at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois
60181-5555 (collectively the "Funds" or individually the "Fund"), and
Trustee/Director's Name, residing at Trustee/Director's Address (the "Trustee").

WHEREAS, the Fund and the Trustee desire to enter into an
agreement whereby the Fund will provide to the Trustee a vehicle under which the
Trustee can defer receipt of trustees' fees payable by the Fund.

NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Fund and the Trustee hereby agree
as follows:

1. DEFINITION OF TERMS AND CONSTRUCTION

1.1 Definitions. Unless a different meaning is plainly implied
by the context, the following terms as used in this Agreement shall have the
following meanings:

(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death of
the Trustee.

(b) "Board of Trustees" shall mean the Board of Trustees
or Board of Directors, as the case may be, of the Fund.

(d) "Compensation" shall mean the amount of trustee's fees
paid by the Fund to the Trustee during a Deferral Year prior to reduction for
Compensation Deferrals made under this Agreement.

(e) "Compensation Deferral" shall mean the amount or
amounts of the Trustee's Compensation deferred under the provisions of Section 3
of this Agreement.

(f) "Deferral Account" shall mean the account maintained
to reflect the Trustee's Compensation Deferral made pursuant to Section 3 hereof
and any other credits or debits thereto.

<PAGE> 2

(g) "Deferral Year" shall mean each calendar year during
which the Trustee makes, or is entitled to make, a Compensation Deferral under
Section 3 hereof.

(h) "Valuation Date" shall mean any day upon which the
Fund makes a valuation of the Deferral Account and shall, at a minimum, be the
last business day of each calendar quarter.

1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.

1.3 Headings. The headings and subheadings in this Agreement
are inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.

2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED

2.1 Commencement of Compensation Deferrals. The Trustee may
elect, on a form provided by, and submitted to, the President of the Fund, to
commence Compensation Deferrals under Section 3 hereof for the period beginning
on the later of (i) the date this Agreement is executed or (ii) the date such
form is submitted to the President of the Fund.

2.2 Termination of Deferrals. The Trustee shall not be
eligible to make Compensation Deferrals after the earlier of the following
dates:

(a) The date of which he ceases to serve as a Trustee of
the Fund; or

(b) The effective date of the termination of this
Agreement.

3. COMPENSATION DEFERRALS

3.1 Compensation Deferral Elections.

(a) The Trustee may elect, on the form described in
Section 2.1 hereof, to defer the receipt of all or a portion of the Compensation
for such Deferral Year. Such writing shall set forth the amount of such
Compensation Deferral (in whole percentage amounts). Such election shall
continue in effect for all subsequent Deferral Years unless it is canceled or
modified as provided below.

<PAGE> 3

(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Fund to the Trustee based upon the percentage
amount elected by the Trustee under Section 3.1(a) hereof.

(c) The Trustee may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the President of
the Fund a revised Compensation Deferral election form. Such change will be
effective as of the first day following the date such revision is submitted to
the President of the Fund.

3.2 Valuation of Deferral Account.

(a) The Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Trustee's Compensation
Deferrals under this Agreement. Compensation Deferrals shall be allocated to the
Deferral Account on the first business day following the date such Compensation
Deferrals are withheld from the Trustee's Compensation. The Deferral Account
shall be debited to reflect any distributions from such Account. Such debits
shall be debited to the Deferral Account as of the date such distributions are
made.

(b) Any Compensation Deferrals made into a Trustee's
Deferral Account will be valued as if such amounts are invested in the manner
set forth under Section 3.3 beginning as of the close of business on the last
day of the month in which such Compensation Deferrals were credited to such
Trustee's Deferral Account. As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Account is invested in the manner est
forth herein) attributable to the period following the next preceding Valuation
Date shall be credited to and/or deducted from the Trustee's Deferral Account.

3.3 Investment of Deferral Account Balance.

(a) (1) The Trustee may select, from various options made
available by the Fund, the investment media in which all or part of his Deferral
Account shall be deemed to be invested.

(2) The Trustee shall make an investment designation
on a form provided by the President of the Fund which shall remain effective
until another valid direction has been made by the Trustee as herein provided.
On the investment designation form, the Trustee may select from underlying
investment securities from the options made available to the Trustee pursuant to
Section 3.3(a)(1). The Trustee may amend the investment designation only once
each calendar quarter by giving written direction to the President of the Fund.
Unless otherwise specified, a Trustee's amendment to an investment designation
applies only to future compensation Deferrals. A Trustee may amend the
investment designation for existing amounts in the Trustee's Deferral Account
provided, however, that such changes in investment designation will only be
valid and applied to the existing amounts in the Trustee's Deferral Account if
the Trustee provides sufficient instruction regarding amounts to be exchanged. A
change in

<PAGE> 4

investment designation will be valid only if, after giving effect to such change
in investment designation, the Trustee has selected investment securities from
the options made available to the Trustee pursuant to Section 3.3(a)(1). A
timely, valid change in a Trustee's investment designation shall become
effective as of the close of business on the last day of the calendar quarter
following receipt by the President of the Fund.

(3) The investment media deemed to be made available
to the Trustee, and any limitation on the maximum or minimum percentages of the
Trustee's Deferral Account that may be invested in any particular medium, shall
be the same as from time to time communicated to the Trustee by the President of
the Fund.

(b) Except as provided below, the Trustee's Deferral
Account shall be deemed to be invested in accordance with the investment
designations, provided such designations conform to the provisions of this
Section. If:

(1) the Trustee does not furnish the President of the
Fund with written investment instructions,

(2) the written investment instructions from the
Trustee are unclear, or

(3) less than all of the Trustee's Deferral Account is
covered by such written investment instructions,

then the Trustee's Deferral Account shall be deemed to be invested in the Fund
until such time as the Trustee shall provide the President of the Fund with
complete investment instructions. Notwithstanding the above, the Board of
Trustees, in its sole discretion, may disregard the Trustee's election and
determine that all Compensation Deferrals shall be deemed to be invested in the
Fund.

The Fund shall provide an annual statement to the Trustee
showing such information as is appropriate, including the aggregate amount in
the Deferral Account, as of a reasonably current date.

4. DISTRIBUTIONS FROM DEFERRAL ACCOUNT

4.1 In General. Distributions from the Trustee's Deferral Account shall
be paid in cash, in generally equal annual installments over a period of five
(5) years beginning on the date of the Trustee's retirement or disability,
except that the Board of Trustees may, in its sole discretion, accelerate or,
with the consent of the Trustee, extend the distribution of such Deferral
Account. Notwithstanding the foregoing, in the event of the liquidation,
dissolution or winding up of the Fund or the distribution of all or
substantially all of the Fund's assets and property relating to one or more
series of its shares to the shareholders (for this purpose a sale, conveyance or
transfer of the Fund's assets to a trust, partnership, association or
corporation in exchange for cash, shares or other securities with the transfer
being made subject to, or with the assumption by the

<PAGE> 5

transferee of, the liabilities of the Fund shall not be deemed a termination of
the Fund or such a distribution), all unpaid amounts in the Deferral Account as
of the effective date thereof shall be paid in a lump sum on such effective
date.

4.2 Death Prior to Distribution of Deferral Account. Upon the death of
the Trustee prior to the commencement of the distribution of the amounts
credited to the Deferral Account, the Deferral Account shall be distributed to
the Beneficiary over a period of five (5) years beginning as soon as practicable
after the Trustee's death. In the event of the death of the Trustee after the
commencement of such distribution, but prior to the complete distribution of the
Deferral Account, the balance of the amounts in the Deferral Account shall be
distributed to the Beneficiary over the remaining period during which such
amounts were distributable to the Trustee under Section 4.1 hereof. In the event
the Trustee survives the designated Beneficiary, the balance of such Deferral
Account shall be paid in a lump sum to such Trustee's estate. Notwithstanding
the above, the Board of Trustees may, in its sole discretion, accelerate or,
with the consent of the Beneficiary or the Trustee's estate, as applicable,
extend the distribution of the Deferral Account.

4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the
Trustee's Beneficiary shall be the person or persons so designated by the
Trustee in a written instrument submitted to the President of the Fund. In the
event the Trustee fails to properly designate a Beneficiary, the balance of such
Trustee's Deferred Account shall be paid in a lump sum to such Trustee's estate.

4.4 Payments Due Missing Persons. The Fund shall make a reasonable
effort to locate all persons entitled to benefits under this Agreement. However,
notwithstanding any provisions of this Agreement to the contrary, if, after a
period of five (5) years from the date such benefit shall be due, any such
persons entitled to benefits have not been located, their rights under this
Agreement shall stand suspended. Before this provision becomes operative, the
Fund shall send a certified letter to all such persons to their last known
address advising them that their benefits under this Agreement shall be
suspended. Any such suspended amounts shall be held by the Fund for a period of
three (3) additional years (or a total of eight (8) years from the time the
benefits first become payable) and thereafter, if unclaimed, such amounts shall
be forfeited.

5. AMENDMENTS AND TERMINATION

5.1 Amendments.

(a) The Fund and the Trustee may, by a written instrument
signed by both such parties, amend this Agreement at any time and in any manner.

(b) The Fund reserves the right to amend, in whole or in part,
and in any manner, any or all of the provisions of this Agreement by action of
its Board

<PAGE> 6

of Trustees for the purposes of complying with any provision of the Code or any
other technical or legal requirements, provided that:

(1) No such amendment shall make it possible for any
part of the Trustee's Deferral Account to be used for, or diverted to,
purposes other than for the exclusive benefit of the Trustee or the
Beneficiaries, except to the extent otherwise provided in this
Agreement; and

(2) No such amendment may reduce the amount of the
Trustee's Deferral Account as of the effective date of such amendment.

5.2 Termination. The Trustee and the Fund may, by written instrument
signed by both such parties, terminate this Agreement at any time. The rights of
the Trustee to the Deferral Account shall become payable as of the Valuation
Date next following the effective date of the termination of this Agreement.

6. MISCELLANEOUS.

6.1 Rights of Creditors.

(a) This Agreement is unfunded. Neither the Trustee nor any
other persons shall have any interest in any specific asset or assets of the
Fund by reason of any Deferral Account hereunder, nor any rights to receive
distribution of the Deferral Account except and as to the extent expressly
provided hereunder. The Fund shall not be required to purchase, hold or dispose
of any investments pursuant to this Agreement; however, if in order to cover its
obligations hereunder the Fund elects to purchase any investments the same shall
continue for all purposes to be a part of the general assets and property of the
Fund, subject to the claims of its general creditors and no person other than
the Fund shall by virtue of the provisions of this Agreement have any interest
in such assets other than an interest as a general creditor.

(b) The rights of the Trustee and the Beneficiaries to the
amounts held in the Deferral Account are unsecured and shall be subject to the
creditors of the Fund. With respect to the payment of amounts held under the
Deferral Account, the Trustee and the Beneficiaries have the status of unsecured
creditors of the Fund. This Agreement is executed on behalf of the Fund by an
officer of the Fund as such and not individually. Any obligation of the Fund
hereunder shall be an unsecured obligation of the Fund and not of any other
person.

6.2 Agents. The Fund may employ agents and provide for such clerical,
legal, actuarial, accounting, advisory or other services as it deems necessary
to perform its duties under this Agreement. The Fund shall bear the cost of such
services and all other expenses it incurs in connection with the administration
of this Agreement.

<PAGE> 7

6.3 Liability and Indemnification. Except for its own gross negligence,
willful misconduct or willful breach of the terms of this Agreement, the Fund
shall be indemnified and held harmless by the Trustee against liability or
losses occurring by reason of any act or omission of the Fund or any other
person.

6.4 Incapacity. If the Fund shall receive evidence satisfactory to it
that the Trustee or any Beneficiary entitled to receive any benefit under the
Agreement is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such benefit and to give a valid
release therefor, and that another person or an institution is then maintaining
or has custody of the Trustee or Beneficiary and that no guardian, committee or
other representative of the estate of the Trustee or Beneficiary shall have been
duly appointed, the Fund may make payment of such benefit otherwise payable to
the Trustee or Beneficiary to such other person or institution, including a
custodian under the Uniform Gifts to Minors Act or corresponding legislation
(such custodian shall be an adult, a guardian of the minor or a trust company),
and the release of such other person or institution shall be a valid and
complete discharge for the payment of such benefit.

6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.

6.6 Governing Law. This Agreement is made and entered into in the State
of Illinois, and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Illinois.

6.7 Nonguarantee of Trusteeship. Nothing contained in this Agreement
shall be construed as a contract or guarantee of the right of the Trustee to be,
or remain as, a trustee of the Fund or to receive any, or any particular rate
of, Compensation.

6.8 Counsel. The Fund may consult with legal counsel with respect to
the meaning or construction of this Agreement or its obligations or duties
hereunder or with respect to any action or proceeding or any question of law,
and it shall be fully protected with respect to any action taken or omitted by
it in good faith pursuant to the advice of legal counsel.

6.9 Spendthrift Provision. The Trustee's and Beneficiaries' interests
in the Deferral Account may not be anticipated, sold, encumbered, pledged,
mortgaged, charged, transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so by any person
shall render the Deferral Amount immediately forfeitable.

6.10 Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or mailed by United
States

<PAGE> 8

registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight delivery service providing for a signed return
receipt, addressed to the Trustee at the home address set forth in the Fund's
records and to the Fund at the address set forth on the first page of this
Agreement, provided that all notices to the Fund shall be directed to the
attention of the President of the Fund or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

6.11 Entire Agreement. This Agreement contains the entire understanding
between the Fund and the Trustee with respect to the payment of non-qualified
elective deferred compensation by the Fund to the Trustee.

6.12 Interpretation of Agreement. Interpretations of, and
determinations related to, this Agreement made by the Fund in good faith,
including any determinations of the amounts of the Deferral Account, shall be
conclusive and binding upon all parties; and the Fund shall not incur any
liability to the Trustee for any such interpretation or determination so made or
for any other action taken by it in connection with this Agreement in good
faith.

6.13 Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the Fund and its successors and assigns and to
the Trustee and such Trustee's heirs, executors, administrators and personal
representatives.

6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.

6.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

<PAGE> 9

IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the day and year first above
written.

On behalf of the Funds
listed on Schedule A
attached hereto:

By:
------------------------------
Name:
----------------------------
Title:
---------------------------

On behalf of the
Trustee/Director listed on
page 1 hereto:

----------------------------------
Trustee/Director's Signature

<PAGE> 1

EXHIBIT (f) (2)

FORM OF
RETIREMENT PLAN FOR EACH FUND

Van Kampen (Fund Name), a registered investment company
having its principal offices at 1 Parkview Plaza, P.O. Box 5555,Oakbrook
Terrace, Illinois 60181-5555 (the "Fund"), has adopted this Retirement Plan,
effective (date shown on Annex A) (the "Plan"), for its Eligible Trustees (as
defined herein) in order to recognize and reward the valued services provided by
such trustees or directors, as the case may be, to the Fund.

1. DEFINITION OF TERMS AND CONSTRUCTION

1.1 Definitions. Unless a different meaning is plainly implied
by the context, the following terms as used in this Plan shall have the
following meanings:

(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 6.4 hereof to receive benefits after the death of
the Eligible Trustee.

(b) "Board of Trustees" shall mean the Board of Trustees
or the Board of Directors, as the case may be, of the Fund.

(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.

(e) "Compensation" shall mean an amount equal to $2,500.

(f) "Disability" shall have the meaning described in
Section 5.1.

(g) "Early Retirement Benefit" shall have the meaning
described in Section 3.3.

(h) "Effective Date" shall mean.

(i) "Effective Date Trustee" means a person who is a
trustee or director, as the case may be, of the Fund on the Effective Date.

<PAGE> 2

(j) "Eligible Retirement Age" shall have the meaning
described in Section 4.1.

(k) "Eligible Trustee" shall mean a person who: (i) is or
becomes a trustee or director, as the case may be, of the Fund on or after the
Effective Date, and (ii) is, prior to the time of such trustee's or director's,
as the case may be, termination of service, receiving trustee's or director's
fees from the Fund.

(l) "Fund Complex" shall mean the funds listed on Schedule
A attached hereto as may be amended from time to time.

(m) "Mandatory Retirement Age" shall have the meaning
described in Section 4.1.

(n) "Normal Distribution" shall have the meaning described
in Section 6.1.

(o) "Normal Retirement Benefit" shall have the meaning
described in Section 3.2.

(p) "Plan Committee" shall have the meaning described in
Section 8.2.

(q) "Retirement Benefit" shall mean the applicable normal
Retirement Benefit, Early Retirement Benefit or Capped Retirement Benefit due to
such trustee or director, as the case may be.

(r) "Retirement Benefit Cap" shall mean the amount listed
on Schedule A attached hereto as may be amended from time to time.

(s) "Service Requirement" shall have the meaning described
in Section 2.1.

(t) "Years of Service" shall be counted using January 1st
of the year such trustee or director, as the case may be, begins service as a
trustee or director of the Fund and include all completed calendar years of
service prior to such trustee's or director's, as the case may be, termination
of service, including such service performed prior to the adoption of the plan.

2
<PAGE> 3

1.2 Plurals and Gender. Where appearing in this Plan the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
References herein to "trustees" shall include trustees of a fund organized as a
trust or directors of a fund organized as a corporation, as the case may be.

1.3 Headings. The headings and subheadings in this Plan are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.

2. SERVICE REQUIREMENT

2.1 Service Requirement. Each Eligible Trustee that has
completed five (5) Years of Service as a trustee for the Fund shall be entitled
to receive retirement benefits from the Fund. An Eligible Trustee is not
entitled to benefits pursuant to the Plan merely because such trustee is an
Eligible Trustee; a trustee must meet the Years of Service requirement.

3. RETIREMENT BENEFIT

3.1 In General. The retirement benefit amount for an Eligible
Trustee meeting the Service Requirement is determined at the time of such
trustee's termination of service as a trustee. Subject to Sections 3.4 and 5.1,
an Eligible Trustee terminating service as a trustee to the Fund prior to
attaining the Eligible Retirement Age is eligible for the Early Retirement
Benefit as described in Section 3.3. Subject to Section 3.4, an Eligible Trustee
terminating service as a trustee to the fund after attaining the Eligible
Retirement Age is eligible for the Normal Retirement Benefit as described in
Section 3.2. An Eligible Trustee terminating service as a trustee to the Fund
after the Mandatory Retirement Age forfeits and is not entitled to any
retirement benefit under the Plan.

3.2 Normal Retirement Benefit. The Normal Retirement Benefit
shall be 50% of the Compensation and such benefit shall increase by 10% for each
Year of Service by such trustee in excess of five (5) Years of Service up to a
maximum amount of 100% of the Compensation for any trustee who has completed ten
(10) or more Years of Service.

3
<PAGE> 4

<TABLE>
<CAPTION>
=======================================================================
Years of Service Percentage Of Compensation
- -----------------------------------------------------------------------
<S> <C> <C>
Less than 5 0%
- -----------------------------------------------------------------------
5 50%
- -----------------------------------------------------------------------
6 60%
- -----------------------------------------------------------------------
7 70%
- -----------------------------------------------------------------------
8 80%
- -----------------------------------------------------------------------
9 90%
- -----------------------------------------------------------------------
10 or more 100%
- -----------------------------------------------------------------------
</TABLE>

3.3 Early Retirement Benefit. The Early Retirement Benefit
shall be the Normal Retirement Benefit for such trustee based upon such
trustee's Years of Service at the time of such trustee's termination of service
reduced by 3% for each year prior to the Eligible Retirement Age.

3.4 Retirement Benefit Cap. A trustee shall not receive
aggregate retirement benefits per calendar year from the Fund Complex in excess
of the Retirement Benefit Cap in effect at the time of such trustee's
termination of service. When a trustee would otherwise be entitled to aggregate
retirement benefits from the Fund Complex in excess of the Retirement Benefit
Cap but for this provision, the Fund shall only pay a Capped Retirement Benefit
to such trustee based on its pro rata portion of the retirement benefit the Fund
would have paid relative to the aggregate retirement benefits from the Fund
Complex absent such Retirement Benefit Cap.

4. RETIREMENT AGE

4.1 Retirement Age. The Eligible Retirement Age shall be upon
attaining the age of 60. A trustee may elect to continue to serve as a trustee
beyond the Eligible Retirement Age to a Mandatory Retirement Age of December
31st in the year such trustee reaches the age of 72; provided, however, that the
Mandatory Retirement Age shall be the later of the Mandatory Retirement Age as
set forth herein or as set forth in the by-laws of the Fund as may be amended
from time to time.

4
<PAGE> 5

5. DISABILITY

5.1 Disability. Disability shall have the meaning as set forth
in the Code under Section 22(e)(3). An Eligible Trustee who becomes disabled, as
defined herein, prior to reaching the Eligible Retirement Age is not subject to
the Early Retirement Benefit provision in section 3.3 but is instead eligible to
receive the lesser of the Normal Retirement Benefit or Capped Retirement Benefit
calculated as described in Section 3 using the Disability date as the date of
such trustee's termination of service.

6. PAYMENT OF RETIREMENT BENEFITS

6.1 Retirement or Disability Terminating Trustee's Service.
Subject to Sections 6.2 and 6.3, an Eligible Trustee shall receive the amount of
the applicable Retirement Benefit calculated pursuant to Section 3 for each of
the ten (10) years commencing in the fiscal year of such trustee's termination
of service (the "Normal Distribution"). Payment of benefits to an Eligible
Trustee shall commence, and be paid annually thereafter, at the end of the
Fund's fiscal year. In the event of such Eligible Trustee's death prior to
complete distribution under the Plan, such trustee's Beneficiary shall receive
the remaining retirement benefits based upon the Normal Distribution. In the
event the Eligible Trustee survives the Beneficiary or no Beneficiary has been
named, the Fund shall pay a lump sum amount equal to the actuarial present value
of the remaining retirement benefits to the Eligible Trustee's estate.

6.2 Death Terminating Trustee's Service. Subject to Section
6.3, in the event an Eligible Trustee's death causes the termination of service,
the Eligible Trustee's Beneficiary shall receive the amount of the applicable
Retirement Benefit calculated pursuant to Section 3 for each of the ten (10)
years commencing in the fiscal year of such trustee's death. Payment of benefits
to such Beneficiary shall commence, and be paid annually thereafter, at the end
of the Fund's fiscal year. In the event the Eligible Trustee survived the
Beneficiary or no Beneficiary was named, the Fund shall pay a lump sum amount
equal to the actuarial present value of the applicable retirement benefits to
the Eligible Trustee's estate.

6.3 Liquidation, Dissolution, Winding Up or Distribution of
Substantially All of the Assets of the Fund. Notwithstanding Sections 6.1 or
6.2, in the event of a liquidation, dissolution or winding up of the Fund or
distribution of all or substantially all of the Fund's assets and property, the
Fund shall pay to each Eligible Trustee serving as a trustee of the Fund on the
effective date of such liquidation, dissolution, winding up or distribution a
lump sum amount equal to the actuarial present value of the applicable Normal
Retirement Benefit or Early Retirement Benefit calculated pursuant to Section 3
using the effective date of such liquidation, dissolution, winding up or
distribution as the date of such trustee's termination

5
<PAGE> 6

of services. In the event an Eligible Trustee terminates services prior to such
liquidation, dissolution, winding up or distribution and such trustee (or such
trustee's Beneficiary) is then receiving payment of benefits pursuant to either
Section 6.1 or 6.2 at the time of such liquidation, dissolution, winding up or
distribution, the Fund shall pay to such trustee (or Beneficiary) on the
effective date of such liquidation, dissolution, winding up or distribution a
lump sum amount equal to the actuarial present value of the remaining retirement
benefits due to such trustee (or Beneficiary).

6.4 Designation of Beneficiary. The Eligible Trustee's
Beneficiary shall be the person or persons so designated by such trustee in a
written instrument submitted to the President of the Fund. In the event the
Eligible Trustee fails to properly designate a Beneficiary, the Fund shall pay a
lump sum amount equal to the actuarial present value of the applicable
retirement benefits to the Eligible Trustee's estate.

6.5 Payments Due Missing Persons. The Fund shall make a
reasonable effort to locate all persons entitled to benefits under this Plan.
However, notwithstanding any provisions of this Plan to the contrary, if, after
a period of five (5) years from the date such benefit shall be due, any such
persons entitled to benefits have not been located, their rights under this Plan
shall stand suspended. Before this provision becomes operative, the Fund shall
send a certified letter to all such persons to their last known address advising
them that their benefits under this Plan shall be suspended. Any such suspended
amounts shall be held by the Fund for a period of three (3) additional years (or
a total of eight (8) years from the time the benefits first become payable) and
thereafter, if unclaimed, such amounts shall be forfeited.

6.6 Actuarial Present Value Calculations. For purposes of this
Plan, the "actuarial present value" of any benefits shall be computed using
interest factors and other reasonable assumptions chosen by the Plan Committee.
The Plan Committee shall have sole and uncontrolled discretion with respect to
the application of the provisions of this paragraph and such exercise of
discretion shall be conclusive and binding on the Eligible Trustee, any
Beneficiary or other person.

7. AMENDMENTS AND TERMINATION

7.1 Amendments. The Fund anticipates the Plan to be permanent
but the Fund reserves the right to amend any or all of the provisions of this
Plan by action of its Board of Trustees or Board of Directors, as the case may
be, when, in the sole opinion of the Board of Trustees or Board of Directors, as
the case may be, such amendment is advisable, including for the purposes of
complying with any provision of the Code or any other technical or legal
requirements.

6
<PAGE> 7

7.2 Termination. The Fund may by action of its Board of
Trustees or Board of Directors, as the case may be, terminate this Plan at any
time.

8. MISCELLANEOUS.

8.1 Forfeiture of Benefits. Notwithstanding any other
provision of the Plan, future payment of any retirement benefit hereunder to an
Eligible Trustee, Beneficiary or other person will, at the discretion of the
Plan Committee, be discontinued and forfeited, and the Fund will have no further
obligation hereunder to such Eligible Trustee, Beneficiary or other person, if
any of the following circumstances occur:

(a) The Eligible Trustee is discharged from the Fund's
Board of Trustees or Board of Directors, as the case may be, for cause;

(b) The Eligible Trustee engages in competition with the
Fund or other acts considered detrimental or not in the best interests of the
Fund or its shareholders following such trustee's termination of service; or

(c) The Eligible Trustee performs an act or acts of wilful
malfeasance or reckless disregard of duties in connection with the service as a
trustee for the Fund.

The Plan Committee shall have the sole and uncontrolled discretion with respect
to the application of the provisions of this paragraph and such exercise of
discretion shall be conclusive and binding on the Eligible Trustee, any
Beneficiary or other person.

8.2 Administration. The Plan shall be administered by a Plan
Committee which shall be composed of three non-affiliated trustees and the
principal financial or accounting officer as designated by the Board of Trustees
or Board of Directors, as the case may be, of the Fund.

8.3 Agents. The Fund may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform its duties under this Plan. The Fund shall bear the cost of
such services and all other expenses it incurs in connection with the
administration of this Plan.

8.4 Funding and Rights of Creditors. The obligations of the
Fund under this Agreement are unfunded. Neither the Eligible Trustees, the
Beneficiaries nor any other persons shall have any interest in any specific
asset or assets of the Fund for the benefits hereunder, nor any rights to
receive distribution of the benefits except and as to the extent expressly
provided hereunder. The rights of the Eligible Trustees, the Beneficiaries or
any other person to the benefits hereunder are unsecured and shall have no
priority over the

7
<PAGE> 8

other creditors of the Fund. Any obligation of the Fund hereunder shall be an
unsecured obligation of the Fund and not of any other person in relation to this
Plan.

8.5 Liability and Indemnification. Except for its own gross
negligence, willful misconduct or willful breach of the terms of this Plan, the
Fund shall be indemnified and held harmless by the Eligible Trustee against
liability or losses occurring by reason of any act or omission of the Fund or
any other person.

8.6 Incapacity. If the Fund shall receive evidence
satisfactory to it that the Eligible Trustee or any Beneficiary entitled to
receive any benefit under the Plan is, at the time when such benefit becomes
payable, a minor, or is physically or mentally incompetent to receive such
benefit and to give a valid release therefor, and that another person or an
institution is then maintaining or has custody of the Eligible Trustee or
Beneficiary and that no guardian, committee or other representative of the
estate of the Eligible Trustee or Beneficiary shall have been duly appointed,
the Fund may make payment of such benefit otherwise payable to the Trustee or
Beneficiary to such other person or institution, including a custodian under the
Uniform Gifts to Minors Act or corresponding legislation (such custodian shall
be an adult, a guardian of the minor or a trust company), and the release of
such other person or institution shall be a valid and complete discharge for the
payment of such benefit.

8.7 Governing Law. This Plan is established under laws of the
State of Illinois, and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Illinois.

8.8 Nonguarantee of Trusteeship. Nothing contained in this
Plan shall be construed as a contract or guarantee of the right of the Eligible
Trustee to be, or remain as, a trustee of the Fund or to receive any, or any
particular rate of, Compensation.

8.9 Spendthrift Provision. The Eligible Trustee's and
Beneficiaries' interests in the benefits hereunder may not be anticipated, sold,
encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor
become subject to execution, garnishment or attachment, and any attempt to do so
by any person shall render the benefits immediately forfeitable.

8.10 Disclosure and Notices. The rights and benefits of
Eligible Trustees under the Plan shall not be represented or evidenced by any
form of certificate or other instrument. Each Eligible Trustee shall receive a
copy of the Plan and the Plan Committee will make available for inspection by
any Eligible Trustee a copy of the rules and regulations used by the Plan
Committee in administering the Plan. For purposes of this Plan, all notices and
other communications provided for in this Plan shall be in writing and shall be
deemed

8
<PAGE> 9

to have been duly given when delivered personally or mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight delivery service providing for a signed return
receipt, addressed to the Eligible Trustee at the home address set forth in the
Fund's records and to the Fund at the address set forth on the first page of
this Plan, provided that all notices to the Fund shall be directed to the
attention of the President of the Fund or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

8.11 Interpretation of Plan. Interpretations of, and
determinations related to, this Plan made by the Plan Committee in good faith,
including any determinations of the amounts of the benefits, shall be conclusive
and binding upon all parties; and the Fund shall not incur any liability to the
Eligible Trustee for any such interpretation or determination so made or for any
other action taken by it in connection with this Plan in good faith.

8.12 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Fund and its successors and assigns
and to the Eligible Trustees and such trustees' heirs, executors, administrators
and personal representatives.

<PAGE> 1
Exhibit(i)(2)

[Letterhead of Skadden, Arps, Slate, Meagher & Flom (Illinois)]

December 23, 1999

Van Kampen High Income Corporate Bond Fund
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

Re: Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A for
the Van Kampen High Income Corporate Bond
Fund (the "Registration Statement")
(File Nos. 2-62115 and 811-2851)
--------------------------------

We hereby consent to the reference to our firm under the heading "Legal
Counsel" in the Registration Statement. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder.

Very truly yours,

/s/ Skadden, Arps, Slate,
Meagher & Flom (Illinois)

<PAGE> 1

EXHIBIT (j)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 43 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
October 6, 1999, relating to the financial statements and financial highlights
of Van Kampen High Income Corporate Bond Fund, which appears in such Statement
of Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "Financial Highlights"
and "Independent Accountants" in such Prospectus and to the reference to us
under the heading "Independent Accountants" in such Statement of Additional
Information.

/s/ PRICEWATERHOUSECOOPERS LLP

PRICEWATERHOUSECOOPERS LLP

Chicago, Illinois
December 23, 1999

<PAGE> 1
EXHIBIT (p)

POWER OF ATTORNEY

The undersigned, being Officers and Trustees of each of the Van Kampen
Open End Trusts (individually, a "Trust") as indicated on Schedule 1 attached
hereto and incorporated by reference, each a Delaware business trust, except for
the Van Kampen Pennsylvania Tax Free Income Fund being a Pennsylvania trust, and
being Officers and Directors of Van Kampen Series Fund, Inc. (the
"Corporation"), a Maryland corporation, do hereby, in the capacities shown
below, appoint Richard F. Powers, III, Dennis J. McDonnell and A. Thomas Smith
III, each of Oakbrook Terrace, Illinois, as agents and attorneys-in-fact with
full power of substitution and resubstitution, for each of the undersigned, to
execute and deliver, for and on behalf of the undersigned, any and all
amendments to the Registration Statement filed by each Trust or the Corporation
with the Securities and Exchange Commission pursuant to the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940.

This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together shall constitute
one instrument.

Dated: December 15, 1999

Signature Title
--------- -----

/s/ Richard F. Powers, III President, Trustee/Director
- ------------------------------------
Richard F. Powers, III

/s/ John L. Sullivan Vice President, Chief Financial
- ------------------------------------ Officer and Treasurer
John L. Sullivan

/s/ J. Miles Branagan Trustee/Director
- ------------------------------------
J. Miles Branagan

/s/ Jerry D. Choate Trustee/Director
- ------------------------------------
Jerry D. Choate

/s/ Linda Hutton Heagy Trustee/Director
- ------------------------------------
Linda Hutton Heagy

/s/ R. Craig Kennedy Trustee/Director
- ------------------------------------
R. Craig Kennedy

/s/ Mitchell M. Merin Trustee/Director
- ------------------------------------
Mitchell M. Merin

/s/ Jack E. Nelson Trustee/Director
- ------------------------------------
Jack E. Nelson

/s/ Phillip B. Rooney Trustee/Director
- ------------------------------------
Phillip B. Rooney

/s/ Fernando Sisto, Sc. D Trustee/Director
- ------------------------------------
Fernando Sisto, Sc. D.

/s/ Wayne W. Whalen Trustee/Director
- ------------------------------------
Wayne W. Whalen

/s/ Suzanne H. Woolsey Trustee/Director
- ------------------------------------
Suzanne H. Woolsey

/s/ Paul G. Yovovich Trustee/Director
- ------------------------------------
Paul G. Yovovich

<PAGE> 2

SCHEDULE 1

VAN KAMPEN U.S. GOVERNMENT TRUST
VAN KAMPEN TAX FREE TRUST
VAN KAMPEN TRUST
VAN KAMPEN EQUITY TRUST
VAN KAMPEN EQUITY TRUST II
VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN TAX FREE MONEY FUND
VAN KAMPEN COMSTOCK FUND
VAN KAMPEN CORPORATE BOND FUND
VAN KAMPEN EMERGING GROWTH FUND
VAN KAMPEN ENTERPRISE FUND
VAN KAMPEN EQUITY INCOME FUND
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
VAN KAMPEN GOVERNMENT SECURITIES FUND
VAN KAMPEN GROWTH AND INCOME FUND
VAN KAMPEN HARBOR FUND
VAN KAMPEN HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN LIFE INVESTMENT TRUST
VAN KAMPEN LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN PACE FUND
VAN KAMPEN REAL ESTATE SECURITIES FUND
VAN KAMPEN RESERVE FUND
VAN KAMPEN TAX-EXEMPT TRUST
VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN WORLD PORTFOLIO SERIES TRUST

<PAGE> 1
EXHIBIT (z)(1)

Item 27(a)
- ----------

Van Kampen U.S. Government Trust
Van Kampen U.S. Government Fund
Van Kampen Tax Free Trust
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen California Tax Free Income Fund*
Van Kampen Michigan Tax Free Income Fund*
Van Kampen Missouri Tax Free Income Fund*
Van Kampen Ohio Tax Free Income Fund*
Van Kampen Trust
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Equity Trust
Van Kampen Aggressive Growth Fund
Van Kampen Great American Companies Fund
Van Kampen Growth Fund
Van Kampen Mid Cap Value Fund
Van Kampen Prospector Fund
Van Kampen Small Cap Value Fund
Van Kampen Utility Fund
Van Kampen Equity Trust II
Van Kampen Technology Fund
Van Kampen Pennsylvania Tax Free Income Fund
Van Kampen Tax Free Money Fund
Van Kampen Prime Rate Income Trust
Van Kampen Senior Floating Rate Fund
Van Kampen Comstock Fund
Van Kampen Corporate Bond Fund
Van Kampen Emerging Growth Fund
Van Kampen Enterprise Fund
Van Kampen Equity Income Fund
Van Kampen Exchange Fund
The Explorer Institutional Trust
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 2

Van Kampen Limited Maturity Government Fund
Van Kampen Global Managed Assets Fund
Van Kampen Government Securities Fund
Van Kampen Growth and Income Fund
Van Kampen Harbor Fund
Van Kampen High Income Corporate Bond Fund
Van Kampen Life Investment Trust on behalf of its series
Asset Allocation Portfolio
Comstock Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio
Van Kampen Pace Fund
Van Kampen Real Estate Securities Fund
Van Kampen Reserve Fund
Van Kampen Tax Exempt Trust
Van Kampen High Yield Municipal Fund
Van Kampen U.S. Government Trust for Income
Van Kampen World Portfolio Series Trust
Van Kampen Global Government Securities Fund
Van Kampen Series Fund, Inc.
Van Kampen American Value Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Debt Fund*
Van Kampen Emerging Markets Fund
Van Kampen Equity Growth Fund
Van Kampen European Equity Fund
Van Kampen Focus Equity Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Global Fixed Income Fund
Van Kampen Global Franchise Fund
Van Kampen Growth and Income Fund II*
Van Kampen High Yield & Total Return Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund*
Van Kampen Latin American Fund
Van Kampen Mid Cap Growth Fund
Van Kampen Value Fund
Van Kampen Worldwide High Income Fund

<PAGE> 3

<TABLE>
<S> <C>
Insured Municipals Income Trust Series 414
Strategic Municipal Trust, Intermediate Series 2
California Insured Municipals Income Trust Series 182
FLORIDA INSURED MUNICIPALS INCOME TRUST SERIES 127
MICHIGAN INSURED MUNICIPALS INCOME TRUST SERIES 159
Missouri Insured Municipals Income Trust Series 113
PENNSYLVANIA INSURED MUNICIPALS INCOME TRUST SERIES 245
Virginia Investors' Quality Tax-Exempt Trust Series 86
THE DOW(SM) STRATEGIC 10 TRUST OCTOBER 1999
SERIES
THE DOW(SM) STRATEGIC 10 TRUST OCTOBER 1999
TRADITIONAL
SERIES
THE DOW(SM) STRATEGIC 5 TRUST OCTOBER 1999
SERIES
THE DOW(SM) STRATEGIC 5 TRUST OCTOBER 1999
TRADITIONAL
SERIES
EAFE STRATEGIC 20 TRUST OCTOBER 1999
SERIES
STRATEGIC PICKS OPPORTUNITY TRUST OCTOBER 1999
SERIES
Great International Firms Trust Series 9
Brand Name Equity Trust Series 10
Dow 30 Index Trust Series 8
Dow 30 Index and Treasury Trust Series 10
Global Energy Trust Series 10
Financial Institutions Trust Series 1
Edward Jones Select Growth Trust August 1999
Series
Internet Trust Series 16A
Internet Trust Series 16B
Morgan Stanley High-Technology 35 Index Trust Series 8A
Morgan Stanley High-Technology 35 Index Trust Series 8B
Pharmaceutical Trust Series 7A
Pharmaceutical Trust Series 7B
Telecommunications & Bandwidth Trust Series 7A
Telecommunications and Bandwidth Trust Series 7B
New Frontier Utility Trust Series 7A
New Frontier Utility Trust Series 7B
Roaring 2000s Trust Series 3
Roaring 2000s Trust Traditional Series 3
Robert Baird - Utility & Communications Trust Series 1
Josephthal - Small Cap Focus Portfolio Series 1
Morgan Stanley Multinational Index Trust Series 1A
Morgan Stanley Multinational Index Trust Series 1B
Software Trust Series 1A
Software Trust Series 1B
Gruntal - E-Commerce Software Growth Trust Series 1
Wheat First Union - Mid-Cap Banking Opportunity Trust Series 1
</TABLE>

* Funds that have not commenced investment operations.

<PAGE> 1
EXHIBIT (z)(2)

Item 27(b)
- ----------

<TABLE>

<S> <C> <C>
Richard F. Powers III Chairman & Chief Executive Officer Oakbrook Terrace, IL
John H. Zimmerman III President Oakbrook Terrace, IL
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary;
Vice President and Secretary of the Funds
William R. Rybak Executive Vice President, Chief
Financial Officer & Treasurer Oakbrook Terrace, IL
Michael H. Santo Executive Vice President & Chief
Operations & Technology Officer Oakbrook Terrace, IL
Colette M. Saucedo Executive Vice President & Houston, TX
Chief Administrative Officer
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary; Vice President
and Secretary of the Funds
Laurence J. Althoff Sr. Vice President & Controller Oakbrook Terrace, IL
Don J. Andrews Sr. Vice President & Chief Compliance Oakbrook Terrace, IL
Officer
Sara L. Badler Sr. Vice President, Deputy Oakbrook Terrace, IL
General Counsel & Assistant Secretary;
Assistant Secretary of the Funds
James J. Boyne Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
John E. Doyle Sr. Vice President Oakbrook Terrace, IL
Richard G. Golod Sr. Vice President Annapolis, MD
Steven T. Johnson Sr. Vice President Oakbrook Terrace, IL
Walter E. Rein Sr. Vice President Oakbrook Terrace, IL
James J. Ryan Sr. Vice President Oakbrook Terrace, IL
Frederick Shepherd Sr. Vice President Houston, TX
Robert S. West Sr. Vice President Oakbrook Terrace, IL
Patrick J. Woelfel Sr. Vice President Oakbrook Terrace, IL
Edward G. Wood, III Sr. Vice President,
Chief Operating Officer; Oakbrook Terrace. IL
Vice President of the Funds

Patricia A. Bettlach 1st Vice President Chesterfield, MO
Glenn M. Cackovic 1st Vice President Laguna Niguel, CA
Eric J. Hargens 1st Vice President Orlando, FL
Gregory Heffington 1st Vice President Ft. Collins, CO
David S. Hogaboom 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President Danville, CA
Carl Mayfield 1st Vice President Lakewood, CO
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
Maura A. McGrath 1st Vice President New York, NY
Robert F. Muller, Jr. 1st Vice President Oakbrook Terrace, IL
Thomas Rowley 1st Vice President St. Louis, MO
Andrew J. Scherer 1st Vice President Oakbrook Terrace, IL
James D. Stevens 1st Vice President North Andover, MA
</TABLE>

<PAGE> 2
<TABLE>
<S> <C> <C>
James R. Yount 1st Vice President Mercer Island, WA

James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Timothy R. Armstrong Vice President Wellington, FL
Shakeel Anwar Barkat Vice President Annapolis, MD
Scott C. Bernstiel Vice President Plainsboro, NJ
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
William Edwin Bond Vice President New York, NY
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Elizabeth M. Brown Vice President Houston, TX
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Juanita E. Buss Vice President Kennesaw, GA
Christine Cleary Byrum Vice President Tampa, FL
Richard J. Charlino Vice President Oakbrook Terrace, IL
Deanne Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
German Clavijo Vice President Atlanta, GA
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Kevin J. Connors Vice President Oakbrook Terrace, IL
Suzanne Cummings Vice President Oakbrook Terrace, IL
Michael E. Eccleston Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John G. Hansen Vice President Oakbrook Terrace, IL
Joseph Hays Vice President Cherry Hill, NJ
Michael D. Hibsch Vice President Oakbrook Terrace, IL
Susan J. Hill Vice President Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
Bryn M. Hoggard Vice President Houston, TX
Michelle Huber Vice President Oakbrook Terrace, IL
Michael B. Hughes Vice President Oakbrook Terrace, IL
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Dana R. Klein Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Senior Compliance Director Oakbrook Terrace, IL
Richard D. Kozlowski Vice President Atlanta, GA
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
Tony E. Leal Vice President Daphne, AL
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
S. William Lehew III Vice President Charlotte, NC
Jonathan Linstra Vice President Oakbrook Terrace, IL
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Linda S. MacAyeal Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
Stuart R. Moehlman Vice President Houston, TX
Ted Morrow Vice President Plano, TX
Peter Nicholas Vice President Beverly, MA
Steven R. Norvid Vice President Oakbrook Terrace, IL
Allyn O' Connor Vice President & Assoc. General Counsel Oakbrook Terrace, IL
Gregory S. Parker Vice President Houston, TX
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Richard J. Poli Vice President Philadelphia, PA
Ronald E. Pratt Vice President Marietta, GA
Daniel D. Reams Vice President Royal Oak, MI
Kevin Wayne Reszel Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace. IL
Jeffrey L. Rose Vice President Houston, TX
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Diane Saxon Vice President & Assistant Treasurer Oakbrook Terrace, IL
Stephanie Scarlata Vice President Bedford Corners, NY
Christina L. Schmieder Vice President Oakbrook Terrace, IL
Timothy M. Scholten Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Gwen L. Shaneyfalt Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorenson Vice President Oakbrook Terrace, IL
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Richard Stefanec Vice President Los Angles, CA
William C. Strafford Vice President Granger, IN
Mark A. Syswerda Vice President Oakbrook Terrace, IL
Charles S. Thompson Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Daniel B. Waldron Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Robert A. Watson Vice President Oakbrook Terrace, IL
Weston B. Wetherell Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Asst. Secretary;
Assistant Secretary of the Funds
Frank L. Wheeler Vice President Oakbrook Terrace, IL
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Joel John Wilczewski Vice President Oakbrook Terrace, IL
Thomas M. Wilson Vice President Oakbrook Terrace, IL
Barbara A. Withers Vice President Oakbrook Terrace, IL
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<PAGE> 4
<TABLE>
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David M. Wynn Vice President Phoenix, AZ
Patrick M. Zacchea Vice President Oakbrook Terrace, IL

Scott F. Becker Asst. Vice President Oakbrook Terrace, IL
Brian E. Binder Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Lynn Chadderton Asst. Vice President Oakbrook Terrace, IL
Amy Cooper Asst. Vice President Oakbrook Terrace, IL
Sarah K. Geiser Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Laurie L. Jones Asst. Vice President Houston, TX
Robin R. Jordan Asst. Vice President Oakbrook Terrace, IL
Anne S. Kochevar Asst. Vice President Oakbrook Terrace, IL
Ivan R. Lowe Asst. Vice President Houston, TX
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Leah Richardson Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Regina Rosen Asst. Vice President Oakbrook Terrace, IL
Pamela S. Salley Asst. Vice President Houston, TX
Thomas J. Sauerborn Asst. Vice President New York, NY
David T. Saylor Asst. Vice President Oakbrook Terrace, IL
Lisa Schultz Asst. Vice President Oakbrook Terrace, IL
Lauren B. Sinai Asst. Vice President Oakbrook Terrace, IL
Scott Stevens Asst. Vice President Oakbrook Terrace, IL
Kristen L. Transier Asst. Vice President Houston, TX
Michael Trizil Asst. Vice President Oakbrook Terrace, IL
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Sharon M. C. Wells Asst. Vice President Oakbrook Terrace, IL

Cathy Napoli Assistant Secretary Oakbrook Terrace, IL
William R. Rybak Treasurer Oakbrook Terrace, IL
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Rebecca Newman Officer Houston, TX
Theresa M. Renn Officer Oakbrook Terrace, IL
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
Richard F. Powers III Director Oakbrook Terrace, IL
Michael H. Santo Director Oakbrook Terrace, IL
A. Thomas Smith III Director Oakbrook Terrace, IL
William R. Rybak Director Oakbrook Terrace, IL
John H. Zimmerman III Director Oakbrook Terrace, IL
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