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VAN KAMPEN HARBOR FUND
SUPPLEMENT DATED AUGUST 6, 1999 TO THE
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 29, 1999
The subsection entitled "CONVERTIBLE SECURITIES" under the section entitled
"INVESTMENT OBJECTIVE AND POLICIES" in the Statement of Additional Information
is supplemented with the following additional information:
The Fund's investments in convertible securities may include securities with
enhanced convertible features or "equity-linked" features. These securities come
in many forms and may include features, among others, such as the following: (i)
may be issued by the issuer of the underlying equity security on its own
securities or securities it holds of another company or be issued by a third
party (typically a brokerage firm or other financial entity) on a security of
another company, (ii) may convert into equity securities, such as common stock,
or may be redeemed for cash or some combination of cash and the linked security
at a value based upon the value of the underlying equity security, (iii) may
have various conversion features prior to maturity at the option of the holder
or the issuer or both, (iv) may limit the appreciation value with caps or
collars of the value of underlying equity security and (v) may have fixed,
variable or no interest payments during the life of the security which reflect
the actual or a structured return relative to the underlying dividends of the
linked equity security. Generally these securities are designed to give
investors enhanced yield opportunities to the equity securities of an issuer,
but these securities may involve a limited appreciation potential, downside
exposure, or a finite time in which to capture the yield advantage. For example,
certain securities may provide a higher current dividend income than the
dividend income on the underlying security while capping participation in the
capital appreciation of such security. Other securities may involve arrangements
with no interest or dividend payments made until maturity of the security or an
enhanced principal amount received at maturity based on the yield and value of
the underlying equity security during the security's term or at maturity.
Besides enhanced yield opportunities, another advantage of using such securities
is that they may be used for portfolio management or hedging purposes to reduce
the risk of investing in a more volatile underlying equity security. There may
be additional types of convertible securities with features not specifically
referred to herein in which the Fund may invest consistent with its investment
objective and policies.
Investments in enhanced convertible or equity-linked securities may subject
the Fund to additional risks not ordinarily associated with investments in
traditional convertible securities. Particularly when such securities are issued
by a third party on an underlying linked security of another company, the Fund
is subject to risks if the underlying security underperforms or the issuer
defaults on the payment of the dividend or the underlying security at maturity.
Additionally, the trading market for certain securities may be less liquid than
for other convertible securities making it difficult for the Fund to dispose of
a particular security in a timely manner, and reduced liquidity in the secondary
market for any such securities may make it more difficult to obtain market
quotations for valuing the Fund's portfolio.
