VAN KAMPEN AMERICAN CAPITAL U S GOVERNMENT TRUST, 485B24E, 1996-04-25

VAN KAMPEN AMERICAN CAPITAL U S GOVERNMENT TRUST
485B24E, 1996-04-25

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 1996

REGISTRATION NOS. 2-89190
811-3950
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 28 /X/
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 29 /X/
</TABLE>

VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT TRUST

(Exact Name of Registrant as Specified in Declaration of Trust)

One Parkview Plaza, Oakbrook Terrace, Illinois 60181
(Address of Principal Executive Offices)

(708) 684-6000
(Registrant's Telephone Number)

Ronald A. Nyberg, Esq.
Executive Vice President,
General Counsel and Secretary,
Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Name and Address of Agent for Service)

Copies to:
Wayne W. Whalen, Esq.
Thomas A. Hale, Esq.
Skadden, Arps, Slate, Meagher & Flom
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: (CHECK APPROPRIATE
BOX)

/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)

/X/ ON APRIL 29, 1996 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:

/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
DECLARATION PURSUANT TO RULE 24F-2

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES AND INTENDS TO
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION A FORM 24F-2 FOR ITS FISCAL
YEAR ENDING DECEMBER 31, 1996 ON OR ABOUT FEBRUARY 28, 1997.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

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<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSES MAXIMUM
TITLE OF SECURITY BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT(1) PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of Beneficial
Interest, par value $0.01 per
share............................. 15,909,849 shares $14.43 $290,000 $100.00
- ----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Based on the offering price of $14.43 per share on April 22, 1996.

(2) This calculation is made pursuant to Rule 24e-2 under the Investment Company
Act of 1940. During the fiscal year ended December 31, 1995, the Registrant
had aggregate net redemptions or repurchases in the amount of 15,889,752
shares. None of such redeemed or repurchased shares have been utilized for
reductions prior to this time and all of such shares are being used for
reduction at this time.

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

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

CROSS REFERENCE SHEET

(AS REQUIRED BY ITEM 501(B) OF REGULATION S-K)

<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A IN PROSPECTUS
- ---------------------------------- -----------------------------------------------------------
PART A INFORMATION REQUIRED IN A PROSPECTUS
<C> <S> <C>
Item 1. Cover Page............. Cover Page
Item 2. Synopsis............... SHAREHOLDER TRANSACTION EXPENSES; ANNUAL FUND OPERATING
EXPENSES AND EXAMPLE
Item 3. Condensed Financial
Information.......... FINANCIAL HIGHLIGHTS; FUND PERFORMANCE
Item 4. General Description of
Registrant........... THE FUND'S INVESTMENT OBJECTIVE; HOW THE FUND SEEKS ITS
INVESTMENT OBJECTIVE; FUND ORGANIZATION
Item 5. Management of the
Fund................. SHAREHOLDER TRANSACTION EXPENSES; ANNUAL FUND OPERATING
EXPENSES AND EXAMPLE; HOW THE FUND IS MANAGED
Item 6. Capital Stock and Other
Securities........... FUND ORGANIZATION; HOW TO BUY SHARES; HOW TO SELL SHARES;
DISTRIBUTION AND SERVICE PLANS; DISTRIBUTIONS AND TAXES;
ADDITIONAL INFORMATION
Item 7. Purchase of Securities
Being Offered........ HOW TO BUY SHARES; DISTRIBUTION AND SERVICE PLANS
Item 8. Redemption or
Repurchase........... HOW TO BUY SHARES; HOW TO SELL SHARES
Item 9. Pending Legal
Proceedings.......... Not Applicable
</TABLE>

i
<PAGE> 3

<TABLE>
<CAPTION>
LOCATION OR CAPTION
ITEM NUMBER OF IN STATEMENT OF
FORM N-1A ADDITIONAL INFORMATION
- ---------------------------------- -----------------------------------------------------------
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<S> <C> <C>
Item 10. Cover Page............. Cover Page

Item 11. Table of Contents...... Table of Contents

Item 12. General Information
and History.......... The Fund and the Trust
Item 13. Investment Objectives
and Policies......... Investment Policies and Restrictions; U.S. Government
Securities; Additional Investment Considerations
Item 14. Management of the
Fund................. Trustees and Officers
Item 15. Control Persons and
Principal Holders of
Securities........... Trustees and Officers
Item 16. Investment Advisory and
Other Services....... Contained in Prospectus under captions: HOW THE FUND IS
MANAGED; DISTRIBUTION AND SERVICE PLANS; Legal Counsel;
Investment Advisory and Other Services; Custodian and
Independent Auditors; Trustees and Officers; The
Distributor; Notes to Financial Statements
Item 17. Brokerage Allocation... Contained in the Prospectus under caption: HOW THE FUND IS
MANAGED; Portfolio Transactions and Brokerage Allocation
Item 18. Capital Stock and
Other Securities..... Contained in the Prospectus under caption: FUND
ORGANIZATION; The Fund and the Trust; Alternative Sales
Arrangements; Purchase of Shares
Item 19. Purchase, Redemption
and Pricing of
Securities Being
Offered.............. Contained in Prospectus under captions: HOW TO BUY SHARES;
HOW TO SELL SHARES; Alternative Sales Arrangements;
Purchase of Shares; Shareholder Services; Redemptions;
Distributions from the Fund
Item 20. Tax Status............. Contained in Prospectus under captions: DISTRIBUTIONS AND
TAXES; Tax Status of the Fund
Item 21. Underwriters........... Contained in the Prospectus under captions: HOW TO BUY
SHARES; DISTRIBUTION AND SERVICE PLANS; The Distributor;
Alternative Sales Arrangements; Purchase of Shares; Notes
to Financial Statements
Item 22. Calculations of
Performance Data..... Contained in Prospectus under caption: FUND PERFORMANCE;
Performance Information
Item 23. Financial Statements... Contained in the Prospectus under caption: FINANCIAL
HIGHLIGHTS; Independent Auditors' Report; Financial
Statements; Notes to Financial Statements; Trustees and
Officers
</TABLE>
[/R]

PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.

ii
<PAGE> 4

- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND
- --------------------------------------------------------------------------------

Van Kampen American Capital U.S. Government Fund (the "Fund") is a
diversified series of the Van Kampen American Capital U.S. Government Trust (the
"Trust"), an open-end management investment company. The Fund's investment
objective is to provide a high level of current income, with liquidity and
safety of principal. The Fund invests primarily in obligations issued or
guaranteed by the U.S. Government or by its agencies or instrumentalities. The
Fund may invest a substantial portion of its assets in mortgage-backed
securities issued by agencies of the U.S. Government, some of which are backed
by the full faith and credit of the U.S. Government and others of which are
backed only by the right of the issuer to borrow from the U.S. Treasury or the
credit of the issuer. The Fund may engage in strategic transactions including
borrowing for investment purposes and utilizing financial derivative
instruments, subject to the limitations set forth in this Prospectus. Such
transactions may entail certain risks, which are described under "How the Fund
Seeks Its Investment Objective." The net asset value and the return of the Fund
will fluctuate depending on market conditions and other factors. The Fund is
managed by Van Kampen American Capital Investment Advisory Corp. (the "Adviser")
and distributed by Van Kampen American Capital Distributors, Inc. (the
"Distributor").

Investors may elect to purchase Class A Shares, Class B Shares or Class C
Shares, each with different sales charges and expenses. The different classes of
shares permit an investor to choose the method of purchasing shares that is more
beneficial to the investor, taking into account the amount of the purchase, the
length of time the investor expects to hold the shares and other circumstances.
See "How to Buy Shares."

Additional information about the Fund is contained in a Statement of
Additional Information dated April 29, 1996, which has been filed with the
Securities and Exchange Commission, a copy of which may be obtained without
charge by calling: (800) 421-5666 (or (800) 772-8889 for the hearing impaired).
This Prospectus, which incorporates by reference the entire Statement of
Additional Information, concisely sets forth certain information about the Fund
that a prospective shareholder should know before investing in the Fund.
Shareholders should read this Prospectus carefully and retain it for future
reference. ------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATORS NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

------------------
VAN KAMPEN AMERICAN CAPITAL SM

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

One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(800) 421-5666

APRIL 29, 1996

<PAGE> 5

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder Transaction Expenses............................... 3
Annual Fund Operating Expenses and Example..................... 4
Financial Highlights........................................... 5
The Fund's Investment Objective................................ 7
How the Fund Seeks Its Investment Objective.................... 7
How the Fund Is Managed........................................ 11
How to Buy Shares.............................................. 13
How to Sell Shares............................................. 17
Distribution and Service Plans................................. 20
Distributions and Taxes........................................ 22
Fund Performance............................................... 22
Fund Organization.............................................. 23
Additional Information......................................... 24
</TABLE>

NO DEALER, SALESMAN 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 ADVISER, OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE 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.

2
<PAGE> 6

- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- ------------ ------------
<S> <C> <C> <C>
Maximum sales load imposed
on purchases (as a
percentage of the offering
price)..................... 4.75% (1) None None
Maximum sales load imposed
on reinvested dividends (as
a percentage of the
offering price)............ None None(3) None(3)
Deferred sales load (as a
percentage of the lesser of
the original purchase price
or redemption proceeds).... None (2) Year 1--4.00% Year 1--1.00%

Year 2--3.75% After--None

Year 3--3.50%

Year 4--2.50%

Year 5--1.50%

Year 6--1.00%

After--None
Redemption fees (as a
percentage of amount
redeemed).................. None None None
Exchange fees............... None None None
</TABLE>

- ------------------------------------------------------------------------------
(1) Reduced on investments of $100,000 or more. See "How to Buy Shares--
Class A Shares."

(2) Investments of $1 million or more are not subject to an initial sales
charge, but a contingent deferred sales charge of 1.00% may be imposed on
redemptions made within one year of the purchase.

(3) Subject to a 12b-1 fee, a portion of which may indirectly pay for the
initial sales commission incurred on behalf of the investor. See
"Distribution and Service Plans."

3
<PAGE> 7

- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- ------- -------

<S> <C> <C> <C>
Management fees (as a percentage of average
daily net assets)............................ 0.51% 0.51% 0.51%
12b-1 fees (as a percentage of average daily
net assets)(1)............................... 0.19% 1.00% 1.00%
Other expenses (as a percentage of average
daily net assets):
Miscellaneous other expenses.......... 0.23% 0.24% 0.24%
Interest expenses..................... 0.27% 0.27% 0.27%
-------- ------- -------
Total other expenses (as a
percentage of average daily net
assets)......................... 0.50% 0.51% 0.51%
-------- ------- -------
Total expenses (as a percentage of average
daily
net assets)(2)............................... 1.20% 2.02% 2.02%
</TABLE>

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

(1) Such fees are being phased-in and it is anticipated that such fees will
increase over time to the maximum aggregate amount of 0.25% of the net
assets attributable to the Class A Shares. See "Distribution and Service
Plans."

(2) The Fund incurred financing expenses related to borrowings for investment
purposes. Borrowings provide the opportunity for increased net income, but
may increase the Fund's investment risk. "Total expenses" without regard to
the "Interest expenses" would have been 0.93%, 1.75% and 1.75% for each of
the Class A Shares, Class B Shares and Class C Shares, respectively. See
"Financial Highlights" and "How the Fund Seeks Its Investment Objective."

EXAMPLE:

A $1,000 investment would have the following transaction costs and operating
expenses assuming a 5% annual return. This example should not be considered
indicative of actual or expected Fund performance or expenses, both of which
will vary.

<TABLE>
<CAPTION>
WITH REDEMPTION AT
THE END OF PERIOD: ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
- ------------------------------- -------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Class A Shares................. $ 59 $ 84 $110 $ 186
Class B Shares................. $ 61 $ 98 $124 $ 194*
Class C Shares................. $ 31 $ 63 $109 $ 235
</TABLE>

<TABLE>
<CAPTION>
WITHOUT REDEMPTION AT THE END
OF PERIOD:
- -------------------------------
<S> <C> <C> <C> <C>
Class A Shares................. $ 59 $ 84 $110 $ 186
Class B Shares................. $ 21 $ 63 $109 $ 194*
Class C Shares................. $ 21 $ 63 $109 $ 235
</TABLE>

- ------------------------------------------------------------------------------
* Class B Shares convert to Class A Shares at the end of six years after
purchase; ten-year amounts reflect lower expenses applicable to such shares
after conversion.

4
<PAGE> 8

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

FINANCIAL HIGHLIGHTS (for a share outstanding throughout the periods)

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

The following schedule presents financial highlights for one Class A Share, one
Class B Share and one Class C Share of the Fund outstanding throughout each of
the periods indicated. The financial highlights have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, for each of the periods
indicated and their report thereon appears in the Statement of Additional
Information. This information should be read in conjunction with the financial
statements and related notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
CLASS A SHARES
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $ 13.698 $ 15.662 $ 15.720 $ 16.130 $ 15.253 $ 15.280 $ 14.695
-------- -------- -------- -------- -------- -------- --------
Net Investment Income...................................... 1.111 1.177 1.286 1.365 1.390 1.407 1.404
Net Realized and Unrealized Gain/Loss on Investments....... 1.233 (1.965) (0.060) (0.407) 0.897 (0.024) 0.558
-------- -------- -------- -------- -------- -------- --------
Total from Investment Operations............................. 2.344 (0.788) 1.226 0.958 2.287 1.383 1.962
-------- -------- -------- -------- -------- -------- --------
Less:
Distributions from and in Excess of Net Investment
Income................................................... 1.092 1.176 1.284 1.368 1.410 1.410 1.377
Distributions from Net Realized Gain on Investments........ -- -- -- -- -- -- --
Return of Capital Distribution............................. -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total Distributions.......................................... 1.092 1.176 1.284 1.368 1.410 1.410 1.377
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period............................... $ 14.950 $ 13.698 $ 15.662 $ 15.720 $ 16.130 $ 15.253 $ 15.280
======== ======== ======== ======== ======== ======== ========
Total Return(1).............................................. 17.61% (5.10%) 7.95% 6.27% 15.80% 9.62% 13.88%
Net Assets at End of Period (in millions).................... $2,962.9 $2,924.4 $3,653.6 $3,571.7 $3,505.9 $3,329.0 $3,550.5
Ratio of Operating Expenses to Average Net Assets
(annualized)............................................... 0.93%(2) 0.92% 0.87% 0.77% 0.68% 0.72% 0.65%
Ratio of Interest Expense to Average Net Assets
(annualized)(3)............................................ 0.27% 0.08% N/A N/A N/A N/A N/A
Ratio of Net Investment Income to Average Net Assets
(annualized)............................................... 7.68%(2) 8.13% 8.08% 8.64% 8.97% 9.38% 9.37%
Portfolio Turnover (excluding dollars rolls and forward
transactions).............................................. 63.18% 43.69% 67.04% 110.94% 26.87% 56.16% 101.12%

CLASS A SHARES
-----------------------------
YEAR ENDED DECEMBER 31
-----------------------------
1988 1987 1986
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $ 15.046 $ 16.568 $ 16.253
-------- -------- --------
Net Investment Income...................................... 1.319 1.384 1.510
Net Realized and Unrealized Gain/Loss on Investments....... (0.221) (1.264) 0.634
-------- -------- --------
Total from Investment Operations............................. 1.098 0.120 2.144
-------- -------- --------
Less:
Distributions from and in Excess of Net Investment
Income................................................... 1.319 1.400 1.498
Distributions from Net Realized Gain on Investments........ -- .081 0.331
Return of Capital Distribution............................. .130 .161 --
-------- -------- --------
Total Distributions.......................................... 1.449 1.642 1.829
-------- -------- --------
Net Asset Value, End of Period............................... $ 14.695 $ 15.046 $ 16.568
======== ======== ========
Total Return(1).............................................. 7.50% 1.45% 14.09%
Net Assets at End of Period (in millions).................... $3,825.6 $4,814.6 $4,450.3
Ratio of Operating Expenses to Average Net Assets
(annualized)............................................... 0.71% 0.60% 0.56%
Ratio of Interest Expense to Average Net Assets
(annualized)(3)............................................ N/A N/A N/A
Ratio of Net Investment Income to Average Net Assets
(annualized)............................................... 8.85% 8.96% 8.97%
Portfolio Turnover (excluding dollars rolls and forward
transactions).............................................. 166.70% 124.19% 154.33%
</TABLE>

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

(1)Total return for periods of less than one full year are not annualized. Total
return does not consider the effect of sales charges.

(2)The Ratios of Expenses to Average Net Assets and Net Investment Income to
Average Net Assets were not affected by the assumption of certain expenses.

(3)See Note 4 to the Financial Statements.

N/A -- Prior to 1994, interest expense was immaterial and subsequently netted
against interest income.

See Financial Statements and Notes Thereto

5
<PAGE> 9

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

FINANCIAL HIGHLIGHTS -- continued (for a share outstanding throughout the
periods)

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

<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
---------------------------------------------- -----------------------------------------
AUGUST 24, AUGUST 13,
1992 1993
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED OF YEAR ENDED OF
DEC. 31 DISTRIBUTION) DEC. 31 DISTRIBUTION)
----------------------------- TO DEC. 31, ------------------------ TO DEC. 31,
1995 1994 1993 1992 1995 1994 1993
------- ------- ------- ------------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $13.694 $15.643 $15.709 $ 15.983 $13.693 $15.626 $ 16.000
------- ------- ------- --------- ------- ------- ---------
Net Investment Income............ 0.991 1.055 1.149 0.425 0.996 1.063 0.433
Net Realized and Unrealized
Gain/Loss on Investments....... 1.241 (1.964) (0.063) (0.263) 1.237 (1.956) (0.364)
------- ------- ------- --------- ------- ------- ---------
Total from Investment Operations... 2.232 (0.909) 1.086 0.162 2.233 (0.893) 0.069
------- ------- ------- --------- ------- ------- ---------
Less Distributions from and in
Excess of Net Investment Income.. 0.978 1.04 1.152 0.436 0.978 1.040 0.443
------- ------- ------- --------- ------- ------- ---------
Net Asset Value, End of Period..... $14.948 $13.694 $15.643 $ 15.709 $14.948 $13.693 $ 15.626
======= ======= ======= ========= ======= ======= =========
Total Return(1).................... 16.78% (5.93%) 7.01% 1.64%(2) 16.78% (5.86%) 0.46%(2)
Net Assets at End of Period (in
millions)........................ $ 466.7 $ 436.3 $ 474.7 $ 103.1 $ 13.3 $ 11.4 $ 9.6
Ratio of Operating Expenses to
Average Net Assets
(annualized)..................... 1.75%(4) 1.74% 1.73% 1.61% 1.75%(4) 1.74% 1.71%
Ratio of Interest Expense to
Average Net Assets
(annualized)(3).................. 0.27% 0.09% N/A N/A 0.27% 0.10% N/A
Ratio of Net Investment Income to
Average Net Assets
(annualized)..................... 6.85%(4) 7.29% 7.00% 6.16% 6.86%(4) 7.29% 6.42%
Portfolio Turnover (excluding
dollar rolls and forward
transactions).................... 63.18% 43.69% 67.04% 110.94% 63.18% 43.69% 67.04%
</TABLE>

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

(1)Total return for periods of less than one full year are not annualized. Total
return does not consider the effect of sales charges.

(2)Non-Annualized

(3)See Note 4 to the Financial Statements

(4)The Ratios of Expenses to Average Net Assets and Net Investment Income to
Average Net Assets were not affected by the assumption of certain expenses.

N/A -- Prior to 1994, interest expense was immaterial and subsequently netted
against interest income.

See Financial Statements and Notes Thereto

6
<PAGE> 10

- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------

The Fund's investment objective is to provide a high level of current income,
with liquidity and safety of principal. This objective is fundamental and cannot
be changed without shareholder approval. There are risks inherent in all
securities investments and there can be no assurance that the Fund will achieve
its objective. 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 with respect to the Fund. An investment in
the Fund is intended to be a long-term investment and should not be used as a
trading vehicle.
- ------------------------------------------------------------------------------
HOW THE FUND SEEKS ITS INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------

The Fund seeks to achieve its investment objective by investing at least 65%
of its assets in obligations issued or guaranteed by the U.S. Government or in
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government (collectively, "U.S. Government Securities"). This policy is
fundamental and cannot be changed without shareholder approval. U.S. Government
Securities are considered among the most creditworthy of fixed income
investments; however, the yields on U.S. Government securities generally are
lower than yields available from corporate debt securities. The value of U.S.
Government Securities (as with most fixed income securities) generally varies
inversely with changes in prevailing interest rates. The magnitude of these
fluctuations generally is greater for securities with longer maturities. The
fluctuating value of U.S. Government Securities affects the Fund's net asset
value but will not affect investment income from those securities.

U.S. Government Securities include: (1) U.S. Treasury obligations and (2)
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities ("Agencies") which are supported by: (a) the full faith and
credit of the U.S. Government; (b) the right of the issuer or guarantor to
borrow an amount from a line of credit with the U.S. Treasury; (c) discretionary
power of the U.S. Government to purchase obligations of the Agencies or (d) the
credit of the Agencies. U.S. Government Securities also may include: (1) real
estate mortgage investment conduits ("REMICs"), collateralized mortgage
obligations ("CMOs") and other mortgage-backed securities ("Mortgage-Backed
Securities") issued or guaranteed by an Agency, (2) "when-issued" commitments
relating to the foregoing and (3) repurchase agreements ("Repos") collateralized
by U.S. Government Securities. The Fund invests in U.S. Government Securities of
varying maturities and interest rates, including investments in obligations
issued or guaranteed in zero coupon securities ("Zero Coupon Securities").

The Fund historically has invested substantially all of its assets in
Mortgage-Backed Securities that directly or indirectly represent a participation
in, or are

7
<PAGE> 11

secured by and payable from, mortgage loans secured by real property. Mortgage
Backed Securities are issued or guaranteed by U.S. Government agencies or
instrumentalities, such as certificates issued by the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). Mortgage-
Backed Securities also include mortgage pass-through certificates representing
participation interests in pools of mortgage loans originated by the U.S.
Government or private lenders and guaranteed by U.S. Government agencies such as
GNMA, FNMA or FHLMC. Guarantees by GNMA are backed by the full faith and credit
of the United States. Guarantees by other agencies or instrumentalities of the
U.S. Government, such as FNMA or FHLMC, are not backed by the full faith and
credit of the United States, although FNMA and FHLMC are authorized to borrow
from the U.S. Treasury to meet their obligations.

The yield and payment characteristics of Mortgage-Backed Securities differ
from traditional debt securities. Interest and principal payments are made
regularly and frequently, usually monthly, over the life of the mortgage loans
unlike traditional debt securities and principal may be prepaid at any time
because the underlying mortgage loans generally may be prepaid at any time.
Faster or slower prepayments than expected on underlying mortgage loans can
dramatically alter the yield to maturity of a Mortgage-Backed Security. The
value of most Mortgage-Backed Securities, like traditional debt securities,
tends to vary inversely with changes in interest rates (i.e., as interest rates
increase, the value of such securities decrease). Mortgage-Backed Securities,
however, may benefit less than traditional debt securities from declining
interest rates because prepayment of mortgages tends to accelerate during
periods of declining interest rates. When mortgage loans underlying
Mortgage-Backed Securities held by the Fund are prepaid, the Fund reinvests the
prepaid amounts in other income-producing securities, the yields of which will
reflect interest rates prevailing at the time. Therefore, the Fund's ability to
maintain a portfolio of higher-yielding Mortgage-Backed Securities will be
adversely affected to the extent that prepayments must be reinvested in
securities which have lower yields. A more complete description of
Mortgage-Backed Securities is contained in the Statement of Additional
Information.

The Fund may invest in CMOs, which are debt obligations collateralized by
mortgage loans or mortgage pass-through securities and multiclass pass-through
securities, which are equity interests in a trust composed of mortgage assets.
Payments of principal and interest on the mortgage assets, and any reinvestment
income thereon, provide the funds to pay debt service on the CMOs or make
scheduled distributions on the multiclass pass-through securities. A more
complete description of CMOs is contained in the Statement of Additional
Information.

The Fund may invest in Zero Coupon Securities. Zero Coupon Securities are U.S.
Treasury notes and bonds which are stripped of their unmatured interest coupons
and therefore pay no interest to its holder during the life thereof. Because
Zero Coupon Securities do not pay interest prior to maturity, such securities
usually

8
<PAGE> 12

trade at a deep discount from their face or par value and such securities are
subject to greater fluctuations of market value in response to changing interest
rates than debt obligations of comparable maturities which make current
distributions of interest. Even though the holder of a Zero Coupon Security does
not receive interest payments prior to maturity, a portion of the purchase price
discount must be accrued as income each year under current federal tax law. A
more complete description of Zero Coupon Securities is contained in the
Statement of Additional Information. In order to generate sufficient cash to
make distributions, the Fund may have to dispose of securities that it would
otherwise continue to hold, which, in some cases, may be disadvantageous to the
Fund. See "Distributions and Taxes."

The Fund may engage in strategic transactions, purchase and sell securities on
a "when issued" and "delayed delivery" basis, enter into Repos and reverse
repurchase agreements, and lend portfolio securities in certain circumstances,
in each case subject to the limitations set forth below.

The Fund may purchase and sell derivative instruments such as exchange-listed
and over-the-counter put and call options on securities, financial futures,
equity and fixed-income indices, and other financial instruments, purchase and
sell financial futures contracts and options thereon, and enter into various
interest rate transactions such as swaps, caps, floors or collars. Collectively,
all of the above are referred to as "Strategic Transactions". The Fund generally
seeks to use Strategic Transactions as a hedging technique to seek to protect
against possible adverse changes in the market value of the Fund's securities,
protect the Fund's unrealized gains, facilitate the sale of certain securities
for investment purposes, manage the effective maturity or duration of the Fund's
portfolio, or establish positions in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. The Fund may use
some Strategic Transactions to seek to enhance income, although no more than 25%
of the Fund's assets will be committed to Strategic Transactions entered into
for non-hedging purposes.

Strategic Transactions have risks including the possible default or
illiquidity of the other party to the transaction. Furthermore the ability to
successfully use Strategic Transactions depends on the Adviser's ability to
predict pertinent market movements, which cannot be assured. Thus, the use of
such Strategic Transactions may result in losses greater than if they had not
been used, require the Fund to sell or purchase portfolio securities at
inopportune times or for prices other than current market values, limit the
amount of appreciation the Fund can realize on an investment, or cause the Fund
to hold a security it might otherwise sell. Money paid by the Fund as premium
and money or other assets placed in margin accounts in connection with entering
into Strategic Transactions are not otherwise available to the Fund for
investment purposes. The Strategic Transactions that the Fund may use and some
of their risks are described more fully in the Fund's Statement of Additional
Information.

The Fund may purchase and sell "when issued" and "delayed delivery"
securities. The Fund accrues no income on such securities until the Fund
actually takes

9
<PAGE> 13

delivery of such securities. These transactions are subject to market
fluctuation; the value of the securities at delivery may be more or less than
their purchase price. The yields generally available on comparable securities
when delivery occurs may be higher than yields on the securities obtained
pursuant to such transactions. Because the Fund relies on the buyer or seller to
consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. The Fund will engage in when issued and
delayed delivery transactions for the purpose of acquiring securities consistent
with the Fund's investment objective and policies and not for the purpose of
investment leverage.

The Fund may enter into Repos whereby the Fund acquires securities and agrees
to resell the securities at an agreed upon time and at an agreed upon price. The
difference between the purchase amount and resale amount is accrued as interest
in the Fund's net income. Failure of the seller to repurchase the securities may
cause losses for the Fund. Thus, the Fund must consider the credit-worthiness of
such party. In the event of default by such party, the Fund may not have a right
to the underlying security and there may be possible delays and expenses in
liquidating the security purchased, resulting in a decline in its value and loss
of interest. The Fund will use Repos for short-term investments. The Fund
generally will not invest more than 15% of its total assets in Repos with a term
of seven days or more.

The Fund is authorized to borrow money from banks and to engage in reverse
repurchase agreements and dollar rolls in an aggregate amount up to 33 1/3% of
the Fund's total assets (after giving effect to any such borrowing); provided,
however, that with respect to such amount no more than 5% may be invested in
bank borrowings and reverse repurchase agreements. The use of such transactions
to purchase additional securities is known as "leverage". Leverage transactions
create an opportunity for increased net income but, at the same time, may
increase the volatility of the Fund's net asset value as a result of
fluctuations in market interest rates and increase the risk of the Fund's
portfolio. The principal amount of these transactions is fixed when the
transaction is opened, but the Fund's assets may change in value during the time
these transactions are outstanding. As a result, interest expenses and other
costs from these transactions may exceed the interest income and other revenues
earned from portfolio assets, and the net income of the Fund may be less than if
these transactions were not used. Reverse repurchase agreements are transactions
whereby the Fund sells certain securities concurrently with an agreement to
repurchase the same securities at a later date at a fixed price. During the
reverse repurchase agreement period, the Fund continues to receive principal and
interest payments on these securities. Dollar rolls are transactions whereby the
Fund sells securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
such securities. Reverse repurchase agreements and dollar rolls involve the risk
that the market value of the securities retained by the Fund may decline below
the price of the securities the Fund has sold but is obligated to repurchase
under the agreement.

10
<PAGE> 14

The Fund may lend its portfolio securities to banks or broker-dealers, to a
maximum of 25% of the total assets of the Fund, provided such loans are callable
at any time and are continuously secured by collateral consisting of cash or
U.S. Government Securities equal to at least 100% of the value of the securities
loaned, including accrued interest. The Fund will receive income for having made
the loan. The Fund is the beneficial owner of the loaned securities so that any
gain or loss in the market price during the loan inures to the Fund and its
shareholders.

- ------------------------------------------------------------------------------
HOW THE FUND IS MANAGED
- ------------------------------------------------------------------------------

THE ADVISER. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") is the investment adviser for the Fund. The Adviser is a wholly-owned
subsidiary of Van Kampen American Capital, Inc. ("Van Kampen American Capital").
Van Kampen American Capital is a diversified asset management company with more
than two million retail investor accounts, extensive capabilities for managing
institutional portfolios, and more than $50 billion under management or
supervision. Van Kampen American Capital's more than 40 open-end and 38
closed-end funds and more than 2,800 unit investment trusts are professionally
distributed by leading financial advisers nationwide. Van Kampen American
Capital Distributors, Inc., the distributor of the Fund and the sponsor of the
funds mentioned above, is also a wholly-owned subsidiary of Van Kampen American
Capital.

Van Kampen American Capital is a wholly-owned subsidiary of VK/AC Holding,
Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial
majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is
managed by Clayton, Dubilier & Rice, Inc. a New York based private investment
firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV
Limited Partnership ("C&D Associates L.P."). The general partners of C&D
Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and
Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice,
Inc. In addition, certain officers, directors and employees of Van Kampen
American Capital own, in the aggregate, not more than 7% of the common stock of
VK/AC Holding Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 13% of the common stock of VK/AC Holding, Inc.
Presently, and after giving effect to the exercise of such options, no officer
or trustee of the Fund owns or would own 5% or more of the common stock of VK/AC
Holding, Inc.

ADVISORY AGREEMENT. The business and affairs of the Fund will be managed under
the direction of the Board of Trustees of the Trust, of which the Fund is a
series. Subject to the Trustees' authority, the Adviser and the Fund's officers
supervise and implement the Fund's investment activities. The Fund pays the
Adviser a fee

11
<PAGE> 15

(accrued daily and paid monthly) equal to a percentage of the average daily net
assets of the Fund as follows:

<TABLE>
<CAPTION>
AVERAGE DAILY
NET ASSETS
(MILLIONS) % PER ANNUM
------------------------------------------------ -----------
<S> <C>
First $500...................................... 0.550%
Next $500....................................... 0.525%
Next $2,000..................................... 0.500%
Next $2,000..................................... 0.475%
Next $2,000..................................... 0.450%
Next $2,000..................................... 0.425%
Thereafter...................................... 0.400%
</TABLE>

Under its investment advisory agreement, the Fund has agreed to assume and pay
the charges and expenses of the Fund's operations, including the compensation of
the Trustees of the Trust (other than those who are affiliated persons, as
defined in the Investment Company Act of 1940 (the "1940 Act"), of the Adviser,
the Distributor or Van Kampen American Capital), the charges and expenses of
independent accountants, legal counsel, any transfer or dividend disbursing
agent and the custodian (including fees for safekeeping of securities), costs of
calculating net asset value, costs of acquiring and disposing of portfolio
securities, interest (if any) on obligations incurred by the Fund, costs of
share certificates, membership dues in the Investment Company Institute or any
similar organization, reports and notices to shareholders, costs of registering
shares of the Fund under the federal securities laws, miscellaneous expenses and
all taxes and fees to federal, state or other governmental agencies.

PERSONAL INVESTING 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 permit trustees/directors, officers and
employees to buy and sell securities for their personal accounts subject to
procedures designed to prevent conflicts of interest including, in some
instances, preclearance of trades.

PORTFOLIO MANAGER. John E. Doyle, Senior Vice President of the Adviser, has
been primarily responsible for the day to day management of the Fund's portfolio
since October, 1984. Mr. Doyle has been employed by the Adviser since October,
1984.

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. The securities in which the Fund invests are traded
principally in the over-the-counter market. Over-the-counter securities
generally are traded on a net basis with dealers acting as principal for their
own accounts without a stated commission, although the price of the security
usually includes a mark-up to the dealer. Securities purchased in underwritten
offerings generally include, in the price, a fixed

12
<PAGE> 16

amount of compensation for the advisers, underwriters and dealers. The Fund may
also purchase certain money market instruments directly from an issuer, in which
case no commissions or discounts are paid. Purchases and sales of securities on
a stock exchange are effected through brokers who charge a commission for their
services.

The Adviser's primary considerations in selecting the manner of executing
securities transactions for the Fund will be prompt execution of orders, the
size and breadth of the market for the security, the reliability, integrity and
financial condition and execution capability of the firm, 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 is
given to those firms which supply research and other services in addition to
execution services. For more information, see "Portfolio Transactions and
Brokerage Allocation" in the Statement of Additional Information.

In effecting purchases and sales of the Fund's portfolio securities, the
Adviser and the Fund may place orders with and pay brokerage commissions to
brokers, including brokers which may be affiliated with the Fund, the Adviser
and the Distributor or dealers participating in the offering of the Fund's
shares.
- ------------------------------------------------------------------------------
HOW TO BUY SHARES
- ------------------------------------------------------------------------------

The Fund currently offers three classes of shares, designated Class A Shares,
Class B Shares and Class C Shares. Shares of each class are offered at a price
equal to their net asset value per share plus a sales charge which, at the
election of the purchaser, may be imposed (a) at the time of purchase ("Class A
Shares") or (b) on a contingent deferred basis (Class A Share accounts over $1
million, "Class B Shares" and "Class C Shares"). The three classes of shares
permit an investor to choose the method of purchasing shares that is most
beneficial to the investor, taking into account the amount of the purchase, the
length of time the investor expects to hold the shares, whether the investor
wishes to receive dividends in cash or to reinvest them in additional shares of
the Fund, and other circumstances. Class A Share accounts over $1 million or
otherwise subject to a contingent deferred sales charge ("CDSC"), Class B Shares
and Class C Shares sometimes are referred to herein collectively as "Contingent
Deferred Sales Charge Shares" or "CDSC Shares." The minimum initial investment
with respect to each class of shares is $500 and the minimum subsequent
investment with respect to each class of shares is $25. It is presently the
policy of the Distributor to accept any order in an amount of $500,000 or more
for Class B Shares or any order of Class C Shares in an amount in excess of $1
million or more because it ordinarily will be more advantageous for an investor
making such an investment to purchase Class A Shares.

Each class of shares represents an interest in the same portfolio of
investments of the Fund and has the same rights, except each class of shares
has: (i) distribution

13
<PAGE> 17

fees, service fees and administrative expenses unique to its respective class of
shares, (ii) exclusive voting rights on certain provisions of the Fund's Rule
12b-1 distribution plan which relate only to such class and (iii) different
exchange privileges. Furthermore, the Class B Shares and Class C Shares have a
conversion feature (discussed below).

The Fund offers its three classes of shares to the public on a continuous
basis through Van Kampen American Capital Distributors, Inc. (the
"Distributor"), as principal underwriter, which is located at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181. Shares also are offered through members
of the National Association of Securities Dealers, Inc. ("NASD") acting as
securities dealers ("dealers") and through NASD members acting as brokers for
investors ("brokers") or eligible non-NASD members acting as agents for
investors ("financial intermediaries"). The Fund reserves the right to suspend
or terminate the continuous public offering at any time and without prior
notice. ACCESS Investor Services, Inc. ("ACCESS"), transfer agent for the Fund
and a wholly-owned subsidiary of Van Kampen American Capital, performs
bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts.

CLASS A SHARES

The public offering price of Class A Shares is equal to the net asset value
per share plus an initial sales charge which varies depending upon the total
amount of the sale. The table below shows sales charges and the aggregate amount
of the sales charges which are paid as dealer concessions or broker agency
commissions on sales of Class A Shares. The sales charges collected from the
investor are allocated between the investor's broker, dealer or financial
intermediary and the Distributor.

SALES CHARGE TABLE

<TABLE>
<CAPTION>
DEALER
CONCESSIONS
OR AGENCY
TOTAL SALES CHARGE COMMISSION
------------------------- -----------
PERCENTAGE PERCENTAGE PERCENTAGE
SIZE OF TRANSACTION OF OFFERING OF NET OF OFFERING
AT OFFERING PRICE PRICE ASSET VALUE 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 for such investments the Fund imposes a
contingent deferred sales charge of 1.00% on redemptions made within
one year of the purchase. See "How to Buy Shares -- Deferred Sales
Charge Alternatives" for additional information.

14
<PAGE> 18

QUANTITY DISCOUNTS AND OTHER PURCHASE PROGRAMS. The Fund's Statement of
Additional Information contains more detailed information about quantity
discounts and other purchase programs available to purchasers of Class A Shares.
Interested investors may obtain a free copy of the Fund's Statement of
Additional Information by calling (800) 421-5666 (or (800) 772-8889 for the
hearing impaired).

DEFERRED SALES CHARGE ALTERNATIVES

Investors choosing the deferred sales charge alternative may purchase Class A
Shares in an amount of $1 million or more, Class B Shares or Class C Shares. The
public offering price of these CDSC Shares is equal to the net asset value per
share. The investor incurs no initial sales charge at the time of purchase.
However, as discussed below, the investor may be subject to a contingent
deferred sales charge upon disposition of such shares depending on the length of
time the investor holds such shares. The Distributor compensates brokers,
dealers and financial intermediaries for participating in the continuous public
offering of the CDSC Shares but does so out of its own assets and not out of the
assets of the Fund. The amount paid to brokers, dealers and financial
intermediaries varies as a percentage of the dollar value of the CDSC Shares
purchased from the Fund by such brokers, dealers and financial intermediaries.
The percentage rate equals: (i) with respect to Class A Shares, 1.00% on sales
to $2 million, plus 0.80% on the next million, plus 0.20% on the next $2 million
and 0.08% on the excess over $5 million; (ii) 4.00% with respect to the Class B
Shares and (iii) 1.00% with respect to the Class C Shares. When an investor
sells its CDSC Shares, any applicable CDSC is paid to the Distributor and used
by the Distributor to defray its expenses related to providing distribution-
related services to the Fund in connection with the sale of such CDSC Shares,
including the payment of compensation to dealers and agents for selling such
shares. The discussions of Class A Shares, Class B Shares and Class C Shares
below summarize an investor's contingent deferred sales charge. The contingent
deferred sales charge and the distribution and service fees (see "Distribution
and Service Plans" below) enable the Fund to sell such CDSC Shares without an
initial sales charge.

15
<PAGE> 19

CLASS B SHARES. Class B Shares redeemed within six years of purchase generally
will be subject to a contingent deferred sales charge at the rates set forth
below, charged as a percentage of the dollar amount redeemed:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------
<S> <C>
First....................................... 4.00%
Second...................................... 3.75%
Third....................................... 3.50%
Fourth...................................... 2.50%
Fifth....................................... 1.50%
Sixth....................................... 1.00%
Seventh and after........................... 0.00%
- ------------------------------------------------------------------------------
</TABLE>

CLASS C SHARES. Class C Shares redeemed within the first twelve months of
purchase generally will be subject to a contingent deferred sales charge of
1.00% of the dollar amount subject thereto. Class C Shares redeemed thereafter
will not be subject to a contingent deferred sales charge.

CONVERSION FEATURE. Six years or ten years after the end of the month in which
a shareholder's order to purchase a Class B Share or Class C Share,
respectively, of the Fund was accepted, such Class B Share and Class C Share
automatically converts to a Class A Share and will no longer be subject to the
higher aggregate distribution and service fees. The purpose of the conversion
feature is to relieve the holders of Class B Shares and Class C Shares that have
been outstanding for a period of time sufficient for the Distributor to have
been compensated for distribution expenses related to the Class B Shares and
Class C Shares from most of the burden of such distribution-related expenses.
The conversion feature is subject to the continuing availability of an opinion
of counsel to the Fund regarding certain tax matters and the Fund may suspend
such conversion feature in the absence of such opinion.

WAIVERS OF CONTINGENT DEFERRED SALES CHARGE. The Fund's Statement of
Additional Information contains more detailed information about waivers of
contingent deferred sales charges available to purchasers of CDSC Shares.
Interested investors may obtain a free copy of the Fund's Statement of
Additional Information by calling (800) 421-5666 (or (800) 772-8889 for the
hearing impaired).

NET ASSET VALUE

The net asset value per share of the Fund will be determined separately for
each class of shares. The net asset value per share of a given class of shares
of the Fund is determined by calculating the total value of the Fund's assets
attributable to such class of shares, deducting the total liabilities
attributable to such class of shares, and dividing the result by the number of
shares of such class outstanding. Generally, the

16
<PAGE> 20

net asset value for the Fund is computed once daily as of 5:00 p.m. Eastern time
Monday through Friday.

Portfolio securities are valued by using market quotations, prices provided by
market makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics in accordance with
procedures established in good faith by the Board of Trustees of the Trust, of
which the Fund is a series.

OTHER PURCHASE INFORMATION

Purchases of a Fund's shares will be made in full and fractional shares. In
the interest of economy and convenience, certificates for shares will generally
not be issued.

The Distributor may from time to time implement special programs or contests
which are intended to result in sales of shares of the Fund. Such programs,
which will be conducted pursuant to objective criteria established by the
Distributor, generally will result in brokers, dealers and financial
intermediaries being paid additional amounts than those described above with
respect to sales of shares of the Fund. Such payments to brokers, dealers and
financial intermediaries for such programs are made by the Distributor out of
its own assets and not out of the assets of the Fund. These programs will not
change the price an investor pays for shares or the amount the Fund will receive
from such sale.

DIVIDEND REINVESTMENT PROGRAM

The Fund will automatically credit monthly and annual distributions to a
shareholder's account in additional shares of the Fund, without a sales charge.
Unless a shareholder instructs otherwise, the reinvestment plan is automatic.
This instruction may be made by telephone by calling (800) 421-5666 (or (800)
772-8889 for the hearing impaired) or in writing to Van Kampen American Capital
Funds, c/o ACCESS, P.O. Box 418256, Kansas City, MO 64141-9256.

- ------------------------------------------------------------------------------
HOW TO SELL SHARES
- ------------------------------------------------------------------------------

Shareholders may redeem for cash some or all of their shares without charge by
the Fund (other than, with respect to CDSC Shares, the applicable contingent
deferred sales charge) at any time by sending a written request in proper form
directly to ACCESS, P. O. Box 418256, Kansas City, MO 64141-9256, by placing the
redemption request through an authorized dealer or by calling the Fund.

17
<PAGE> 21

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.
If certificates are held for the shares being redeemed, such certificates must
be endorsed for transfer or accompanied by an endorsed stock power and sent with
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 60
days must accompany the redemption request. The redemption price is the net
asset value per share next determined after the request is received by ACCESS in
proper form. Payment for shares redeemed (less any sales charge, if applicable)
will ordinarily be made by check mailed within three business days after
acceptance by ACCESS of the request and any other necessary documents in proper
order. Such payments may be postponed or the right of redemption suspended as
provided by the rules of the Securities and Exchange Commission ("SEC"). If the
shares to be redeemed have been recently purchased by check, ACCESS may delay
mailing a redemption check until it confirms that the purchase check has
cleared, usually a period of up to 15 days. Any gain or loss realized on the
redemption of shares is a taxable event.

DEALER REDEMPTION REQUESTS. Shareholders may sell shares through their
securities dealer, who will telephone the request to the Distributor. Orders
received from dealers must be at least $500 unless transmitted via the FUNDSERV
network. The redemption price for such shares is the net asset value next
calculated after an order is received by a 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 dealers to transmit redemption requests
received by them to the Distributor so they will be received prior to such time.
Any change in the redemption price due to failure of the Distributor to receive
a sell order prior to such time must be settled between the shareholder and
dealer. Shareholders must submit a written redemption request in proper form (as
described above under "Written Redemption Requests") to the dealer within three
business days after calling the dealer with the sell order. Payment for shares
redeemed (less any sales charge, if applicable) will ordinarily be made by check
mailed within three business days to the dealer.

18
<PAGE> 22

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, a shareholder agrees that neither VKAC nor the Fund
will be liable for following instructions which it reasonably believes to be
genuine. VKAC and the Fund may be liable for any losses due to unauthorized or
fraudulent instructions if reasonable procedures are not followed. Telephone
redemptions may not be available if the shareholder cannot reach ACCESS 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
procedures previously described. Requests received by ACCESS prior to 4:00 p.m.,
New York time, on a regular business day will be processed at the net asset
value per share determined that day. These privileges are available for all
accounts other than retirement accounts. The telephone redemption privilege is
not available for shares represented by certificates. If the shares to be
redeemed have been recently purchased by check, ACCESS may delay mailing a
redemption check or wiring redemption proceeds until it confirms that the
purchase check has cleared, usually a period of up to 15 days. If an account has
multiple owners, ACCESS 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 sent to the shareholders'
address of record and amounts of at least $1,000 and up to $1 million may be
redeemed daily if the proceeds are to be paid by wire sent to the shareholder's
bank account of record. The proceeds must be payable to the shareholder(s) of
record. Proceeds from redemptions to be paid by check will ordinarily be mailed
within three business days to the shareholder's address of record. Proceeds from
redemptions to be paid by wire will ordinarily be wired on the next business day
to the shareholder's bank account of record. This privilege is not available if
the address of record has been changed within 30 days prior to a telephone
redemption request. The Fund reserves the right at any time to terminate, limit
or otherwise modify this telephone redemption privilege.

GENERAL REDEMPTION INFORMATION. The Fund may redeem any shareholder account
with a net asset value on the date of the notice of redemption less than the
minimum investment as specified by the Trustees. At least 60 days advance
written notice of any such involuntary redemption is required and the
shareholder is given an opportunity to purchase the required value of additional
shares at the next determined net asset value without sales charge. Any
applicable contingent deferred sales charge will be deducted from the proceeds
of this redemption. Any involuntary redemption may only occur if the shareholder
account is less than the minimum investment due to shareholder redemptions.

Further information regarding redemptions from the Fund is contained in the
Fund's Statement of Additional Information.

19
<PAGE> 23

- ------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS
- ------------------------------------------------------------------------------

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 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 each class. The Fund may spend up to 0.25% per year
of the Fund's average daily net assets attributable to each class of shares
pursuant to the Service Plan in connection with the ongoing provision of
services to holders of such shares by the Distributor and brokers, dealers or
financial intermediaries in connection with the maintenance of such
shareholders' accounts. The Distribution Plan and the Service Plan are
implemented through an agreement with the Distributor and sub-agreements between
the Distributor and brokers, dealers or financial intermediaries (collectively,
"Selling Agreements") that may provide customers certain services or assistance.

CLASS A SHARES. The Fund may spend an aggregate amount up to 0.25% per year of
the average daily net assets attributable to the Class A Shares of the Fund
pursuant to the Distribution Plan and the Service Plan. The Fund pays the
Distributor the lesser of the balance of the 0.25% not paid to brokers, dealers
or financial intermediaries or the amount of the Distributor's actual
distribution-related expenses.

CLASS B SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class B Shares of the Fund pursuant to the
Distribution Plan. In addition, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets attributable to the Class B Shares pursuant to
the Service Plan in connection with the ongoing provision of services to holders
of such shares by the Distributor and by brokers, dealers or financial
intermediaries and in connection with the maintenance of such shareholders'
accounts.

CLASS C SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class C Shares of the Fund pursuant to the
Distribution Plan. From such amount, the Fund, or the Distributor as agent for
the Fund, pays brokers, dealers or financial intermediaries in connection with
the distribution of the Class C Shares up to 0.75% of the Fund's average daily
net assets attributable to Class C Shares maintained in the Fund more than one
year by such broker's, dealer's or financial intermediary's customers. The Fund
pays the Distributor the lesser of the balance of 0.75% not paid to such
brokers, dealers or financial intermediaries or the amount of the Distributor's
actual distribution-related expense attributable to the Class C Shares. In
addition, the Fund may spend up to 0.25% per year of the Fund's average daily
net assets attributable to the Class C Shares pursuant to the Service Plan in
connection with the ongoing provision of services to

20
<PAGE> 24

holders of such shares by the Distributor and by brokers, dealers or financial
intermediaries and in connection with the maintenance of such shareholders'
accounts.

OTHER INFORMATION. Amounts payable to the Distributor with respect to the
Class A Shares under the Distribution Plan in a given year may not fully
reimburse the Distributor for its actual distribution-related expenses during
such year. In such event, there is no carryover of such reimbursement
obligations to succeeding years.

The Distributor's expenses with respect to a class of CDSC Shares (for
purposes of this paragraph excluding any Class A Shares that may be subject to a
CDSC) for any given year may exceed the amounts payable to the Distributor with
respect to such class of CDSC Shares under the Distribution Plan, the Service
Plan and payments received pursuant to the contingent deferred sales charge. Any
unreimbursed expenses will be carried forward and paid by the Fund (up to the
amount of the actual expenses incurred) in future years so long as such
Distribution Plan is 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. Because such expenses
are accounted on a Fund level basis, in periods of extreme net asset value
fluctuation, amounts paid to the Distributor with respect to a particular CDSC
Share may be greater or less than the amount of the initial commission
(including carrying cost) paid by the Distributor with respect to such CDSC
Share. In such circumstances, the holder of such CDSC Share may be deemed to
incur expenses attributable to other shareholders of such class. As of December
31, 1995, there were $11,866,155 and $6,766 of unreimbursed distribution
expenses with respect to Class B Shares and Class C Shares, respectively,
representing 2.55% and 0.05% of the Fund's net assets attributable to Class B
Shares and Class C Shares, respectively. If the Distribution Plan was terminated
or not continued, the Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund or recovered
through contingent deferred sales charges.

Because the Fund is a series of the Trust, amounts paid to the Distributor as
reimbursement for expenses of one series of the Trust may indirectly benefit the
other funds which are series of the Trust. The Distributor will endeavor to
allocate such expenses among such funds in an equitable manner. The Distributor
will not use the proceeds from the contingent deferred sales charge applicable
to a particular class of CDSC Shares to defray distribution-related expenses
attributable to any other class of CDSC Shares. Various federal and state laws
prohibit national banks and some state-chartered commercial banks from
underwriting or dealing in the Fund's shares. In addition, state securities laws
on this issue may differ from the interpretations of federal law, and banks and
financial institutions may be required to register as dealers pursuant to state
law. In the unlikely event that a court were to find that these laws prevent
such banks from providing such services described above, the Fund would seek
alternate providers and expects that shareholders would not experience any
disadvantage.

21
<PAGE> 25

- ------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------

The Fund will declare distributions on a daily basis and will pay such
distributions from net investment income and net realized short-term capital
gains on a monthly basis. The Fund will distribute annually any remaining
short-term capital gains together with long-term capital gains, if any.
Distributions with respect to each class of shares will be calculated in the
same manner on the same day and will be in the same amount, except that the
different distribution and service fees and any incremental administrative
expenses relating to each class of shares will be borne exclusively by the
respective class and may cause the distributions relating to the different
classes of shares to differ.

In order to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended, the Fund intends to distribute substantially
all of its net investment income and capital gains at least annually. Any
distributions in excess of the Fund's net investment income and capital gains
will be a return of principal, which will reduce the investor's tax basis in the
shares. Distributions of the Fund's net investment income are taxable to
shareholders as ordinary income whether received in shares or in cash.
Distributions of the Fund's net capital gains ("capital gains dividends") are
taxable to shareholders as long-term capital gains regardless of the length of
time the shares of the Fund have been held by such shareholders.

Redemption or resale of shares of the Fund will be a taxable transaction for
federal income tax purposes. For further information with respect to taxes, see
the Statement of Additional Information.

- ------------------------------------------------------------------------------
FUND PERFORMANCE
- ------------------------------------------------------------------------------

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information will include the average total return of the Fund calculated on a
compounded basis for specified periods of time. 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.

Further information about the Fund's performance is contained in the Fund's
Annual Report and the Fund's Statement of Additional Information, each of which
can be obtained without charge by calling (800) 421-5666 (or (800) 772-8889 for
the hearing impaired).

22
<PAGE> 26

- ------------------------------------------------------------------------------
FUND ORGANIZATION
- ------------------------------------------------------------------------------

The Fund is a diversified, open-end management investment company. The Fund is
a series of the Van Kampen American Capital U.S. Government Trust, a Delaware
business trust organized as of May 10, 1995 (the "Trust"). To date, the Fund is
the only series of the Trust, although the Trustees of the Trust are empowered
to organize and designate other series in the future. 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. The Trust does not
contemplate holding regular meetings of shareholders to elect Trustees or
otherwise. However, the holders of 10% or more of the outstanding Shares may by
written request require a meeting to consider the removal of Trustees by a vote
of two-thirds of the shares then outstanding cast in person or by proxy at such
meeting. More detailed information concerning the Trust is set forth in the
Statement of Additional Information.

The authorized capitalization of the Fund consists of an unlimited number of
shares of beneficial interest, par value $.01 per share, divided into classes.
The Fund currently offers three classes of shares, designated Class A Shares,
Class B Shares and Class C Shares. Each class of shares represents an interest
in the same assets of the Fund and are identical in all respects except that
each class bears certain distribution expenses and has exclusive voting rights
with respect to its distribution fee.

The Fund issues multiple classes of shares pursuant to a plan adopted under
Rule 18f-3 of the 1940 Act. Each class of shares is equal as to earnings, assets
and voting privileges, except as noted herein, and each class bears the expenses
related to the distribution of its shares. There are no conversion, preemptive
or other subscription rights, except with respect to the conversion of Class B
Shares into Class A Shares as described above. 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 debt and expenses of the Fund have been paid. Since Class B
Shares and Class C Shares pay higher distribution expenses, the liquidation
proceeds to holders of Class B Shares and Class C Shares are likely to be lower
than to other shareholders. The fiscal year end of the Fund is December 31.

23
<PAGE> 27

- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------

This Prospectus and the Statement of Additional Information do not contain all
the information set forth in the Registration Statement filed by the Fund with
the SEC under the Securities Act of 1933. Copies of the Registration Statement
may be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the office of the SEC in Washington, D.C.

Shareholder inquiries should be directed to: Van Kampen American Capital U.S.
Government Fund, One Parkview Plaza, Oakbrook Terrace, Illinois 60181, Attn:
Correspondence. The telephone number is (800) 421-5666 (or (800) 772-8889 for
the hearing impaired).

24
<PAGE> 28

EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE
CALL THE FUND'S TOLL-FREE
NUMBER--(800) 421-5666.

PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 421-5666.

DEALERS--FOR DEALER
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS,
OR REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE
NUMBER--(800) 421-5666.

FOR SHAREHOLDER AND
DEALER INQUIRIES THROUGH
TELECOMMUNICATIONS
DEVICE FOR THE DEAF (TDD)
DIAL (800) 772-8889.

FOR AUTOMATED TELEPHONE

SERVICES DIAL (800) 421-5684.

VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181

Investment Adviser

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, IL 60181

Distributor

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181

Transfer Agent

ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen American Capital

U.S. Government Fund

Custodian

STATE STREET BANK AND
TRUST COMPANY
225 Franklin Street, P.O. Box 1713
Boston, MA 02105-1713
Attn: Van Kampen American Capital

U.S. Government Fund

Legal Counsel

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, IL 60606

Independent Auditors

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 29

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

U.S. GOVERNMENT
FUND

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

P R O S P E C T U S

APRIL 29, 1996

------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 30

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

Van Kampen American Capital U.S. Government Fund, formerly known as Van Kampen
Merritt U.S. Government Fund (the "Fund"), is a mutual fund organized as a
diversified series of Van Kampen American Capital U.S. Government Trust, a
Delaware business trust (the "Trust"). The Trust is an open-end management
investment company. The Fund's investment objective is to provide a high level
of current income with liquidity and safety of principal. The Fund invests in
obligations issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities. The net asset value and the return of the Fund will fluctuate
depending on market conditions and other factors.

This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Prospectus for the Fund dated April 29, 1996 (the
"Prospectus"). This Statement of Additional Information does not include all of
the information that a prospective investor should consider before purchasing
shares of the Fund, and investors should obtain and read the Prospectus prior to
purchasing shares. A copy of the Prospectus may be obtained without charge by
calling the Fund's toll-free number: (800) 421-5666 (or (800) 772-8889 for the
hearing impaired).

The Prospectus and this Statement of Additional Information omit certain of
the information contained in the registration statement filed with the
Securities and Exchange Commission, Washington, D.C. (the "SEC"). These items
may be obtained from the SEC upon payment of the fee prescribed, or inspected at
the SEC's office at no charge.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund and the Trust............................................................... B-2

Investment Policies and Restrictions................................................. B-2

U.S. Government Securities........................................................... B-4

Additional Investment Considerations................................................. B-6

Trustees and Officers................................................................ B-13

Investment Advisory and Other Services............................................... B-21

Custodian and Independent Auditors................................................... B-23

Portfolio Transactions and Brokerage Allocation...................................... B-23

Tax Status of the Fund............................................................... B-24

The Distributor...................................................................... B-25

Legal Counsel........................................................................ B-27

Performance Information.............................................................. B-27

Alternative Sales Arrangements....................................................... B-29

Purchase of Shares................................................................... B-30

Shareholder Services................................................................. B-36

Redemptions.......................................................................... B-39

Distributions from the Fund.......................................................... B-41

Independent Auditors' Report......................................................... B-42

Financial Statements................................................................. B-43

Notes to Financial Statements........................................................ B-51
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED APRIL 29, 1996

B-1
<PAGE> 31

THE FUND AND THE TRUST

The Fund is an open-end diversified management investment company. Currently,
the Fund is the only series of the Trust. Other series may be organized and
offered in the future. The Fund was originally organized in 1984 under the name
Van Kampen Merritt U.S. Government Fund Inc. as a Maryland corporation and was
reorganized in 1988 under the name Van Kampen Merritt U.S. Government Fund as a
sub-trust of Van Kampen Merritt U.S. Government Trust, a Massachusetts business
trust. The Fund was again reorganized as of July 31, 1995 as a series of the
Trust.

The Trust is an unincorporated business trust established under the laws of
the state of Delaware by an Agreement and Declaration of Trust dated as of May
10, 1995 (the "Declaration of Trust"). The Declaration of Trust permits the
Trustees to create one or more separate investment portfolios and issue a series
of shares for each portfolio. The Trustees can further sub-divide each series of
shares into one or more classes of shares for each portfolio. The Trust can
issue an unlimited number of shares, par value $.01 per share (prior to July 31,
1995, the shares had no par value). 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.

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. For example, a change in investment policy for a series would be voted
upon by shareholders of only the series involved. Shares do not have cumulative
voting rights, preemptive rights or any conversion or exchange rights. The Trust
does not contemplate holding regular meetings of shareholders to elect Trustees
or otherwise. However, the holders of 10% or more of the outstanding shares may
by written request require a meeting to consider the removal of Trustees by a
vote of two-thirds of the shares then outstanding cast in person or by proxy at
such meeting.

The 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 Investment Company Act of 1940, as amended (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.

INVESTMENT POLICIES AND RESTRICTIONS

The investment objective of the Fund is to provide a high level of current
income, with liquidity and safety of principal. The Fund will invest at least
65% and up to 100% of its assets in obligations issued or guaranteed by the U.S.
Government or by its agencies or instrumentalities, including Government
National Mortgage Association Certificates of the modified pass-through type.
The Fund may also make other investments described in the Prospectus. The net
asset value and return of the Fund may vary.

Fundamental investment restrictions limiting the investments of the Fund
provide that the Fund may not:

1. Purchase any securities (other than obligations issued or guaranteed by
the United States Government or by its agencies or instrumentalities), if,
as a result, more than 5% of the Fund's total assets (taken at current
value) would then be invested in securities of a single issuer or, if, as
a result, the Fund would hold more than 10% of the outstanding voting
securities of an issuer. (There is no limit on the amount of the Fund's
assets which may be invested in the securities of any one issuer of
obligations issued or guaranteed by the United States Government or by its
agencies or instrumentalities.)

B-2
<PAGE> 32

2. Issue senior securities, borrow money or enter into reverse repurchase
agreements or dollar rolls in the aggregate in excess of 33 1/3 of the
Fund's total assets (after giving effect to any such borrowing); provided,
however, that with respect to such amount no more than 5% may be invested
in bank borrowings and reverse repurchase agreements. The Fund will not
mortgage, pledge or hypothecate any assets other than in connection with
issuances, borrowings, hedging transactions and risk management
techniques.

3. Buy any securities "on margin" or sell any securities "short."

4. Make investments for the purpose of exercising control or management.

5. Write, purchase or sell puts, calls or combinations thereof, or purchase
or sell interest rate futures contracts or related options, except that
the Fund may purchase or sell puts, calls or combinations thereof and may
purchase or sell commodities futures contracts on related put and call
options on such contracts for hedging purposes, in accordance with
applicable requirements of the SEC and the Commodity Futures Trading
Commission.

6. Invest in securities of other investment companies, except as part of a
merger, consolidation or other acquisition.

7. Invest in interests in oil, gas or other mineral exploration or
development programs.

8. Purchase or retain securities of any company if, to the knowledge of the
Fund, its officers and directors and officers and directors of the Fund's
investment adviser who individually own more than 1/2 of 1% of the
securities of such company together own beneficially more than 5% of such
securities.

9. Make loans, except that the Fund may purchase or hold debt obligations in
accordance with the investment restrictions set forth in paragraph 1
above, may enter into repurchase agreements, and may lend its portfolio
securities against collateral consisting of cash or of securities issued
or guaranteed by the U.S. Government or its agencies, which collateral is
equal at all times to at least 100% of the value of the securities loaned,
including accrued interest.

10. Act as an underwriter of securities, except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of securities held
in its portfolio.

11. Purchase or sell real estate, commodities or commodity contracts, except
as set forth in 5 above.

12. Purchase or retain securities of issuers having a record of less than
three years continuous operation (such period of three years may include
the operation of predecessor companies or enterprises if the issuer came
into existence as a result of merger, consolidation or reorganization, or
the purchase of substantially all of the assets of the predecessor
companies or enterprises).

13. Invest more than 25% of its assets in a single industry. (Neither the U.S.
Government nor any of its agencies or instrumentalities will be considered
an industry for purposes of this restriction.)

The Fund may not change any of these investment restrictions without the
approval of the lesser of (i) more than 50% of the Fund's outstanding shares or
(ii) 67% of the Fund's shares present at a meeting at which the holders of more
than 50% of the outstanding shares are present in person or by proxy. As long as
the percentage restrictions described above are satisfied at the time of the
investment or borrowing, the Fund will be considered to have abided by those
restrictions even if, at a later time, a change in values or net assets causes
an increase or decrease in percentage beyond that allowed.

The Fund may invest up to 15% of its total assets in illiquid securities,
securities the disposition of which is subject to substantial legal or
contractual restrictions on resale and securities that are not readily
marketable. The sale of restricted and illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Restricted securities salable among qualified
institutional buyers without restriction pursuant to Rule 144A under the
Securities Act of 1933, as amended, that are determined to be liquid by the
Adviser under guidelines adopted by the Board of Trustees of the Trust

B-3
<PAGE> 33

(under which guidelines the Adviser will consider factors such as trading
activities and the availability of price quotations), will not be treated as
restricted securities by the Fund pursuant to such rules. The Fund may, from
time to time, adopt a more restrictive limitation with respect to investment in
illiquid and restricted securities in order to comply with the most restrictive
state securities law, currently 10%. This policy does not include restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended, which the Board of Trustees or the Fund's investment adviser
has determined under Board-approved guidelines to be liquid. The Fund's policy
with respect to investment in illiquid and restricted securities is not a
fundamental policy and may be changed by the Board of Trustees, in consultation
with the adviser, without obtaining shareholder approval.

The Fund will not generally engage in the trading of securities for the
purpose of realizing short-term profits, but it will adjust its portfolio as it
deems advisable in view of prevailing or anticipated market conditions to
accomplish the Fund's investment objective. For example, the Fund may sell
portfolio securities in anticipation of a movement in interest rates or to avoid
loss of premiums paid and unrealized capital gains earned on GNMA Certificates
selling at a substantial premium. Frequency of portfolio turnover will not be a
limiting factor if the Fund considers it advantageous to purchase or sell
securities. The Fund anticipates that the portfolio turnover rate of the Fund
will normally be less than 200%, and may be significantly less in a period of
stable or rising interest rates.

U.S. GOVERNMENT SECURITIES

U.S. Treasury Securities. The Fund may invest in U.S. Treasury securities,
including bills, notes and bonds issued by the U.S. Treasury. These instruments
are direct obligations of the U.S. Government and, as such, are backed by the
full faith and credit of the United States. They differ primarily in their
interest rates, the lengths of their maturities and the dates of their
issuances.

Obligations Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities. The Fund may invest in obligations issued by agencies of the
U.S. Government or instrumentalities established or sponsored by the U.S.
Government. These obligations, including those that are guaranteed by federal
agencies or instrumentalities, may or may not be backed by the full faith and
credit of the United States. Obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Export-Import Bank
are backed by the full faith and credit of the United States. Securities in
which the Fund may invest that are not backed by the full faith and credit of
the United States include, among others, obligations issued by the Tennessee
Valley Authority, the Resolution Trust Corporation, the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation
("FHLMC") and the United States Postal Service, each of which has the right to
borrow from the United States Treasury to meet its obligations, and obligations
of the Federal Farm Credit Bank and the Federal Home Loan Bank, the obligations
of which may be satisfied only by the individual credit of the issuing agency.
Investments in FHLMC, FNMA and other obligations may include collateralized
mortgage obligations and real estate mortgage investment conduits issued or
guaranteed by such entities. In the case of securities not backed by the full
faith and credit of the United States, the Fund must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment and may not
be able to assert a claim against the U.S. if the agency or instrumentality does
not meet its commitments.

Mortgage-Backed Securities Issued or Guaranteed by U.S. Government
Instrumentalities. The Fund may invest in mortgage-backed securities issued or
guaranteed by U.S. Government agencies such as GNMA, FNMA or FHLMC and
representing undivided ownership interests in pools of mortgages. The mortgages
backing these securities may include conventional 30-year fixed rate mortgages,
15-year fixed rate mortgages, graduated payment mortgages and adjustable rate
mortgages. The U.S. Government or the issuing agency guarantees the payment of
the interest on and principal of these securities. However, the guarantees do
not extend to the securities' yield or value, which are likely to vary inversely
with fluctuations in interest rates, nor do the guarantees extend to the yield
or value of the Fund's shares. These securities are in most cases "pass-through"
instruments, through which the holders receive a share of all interest and
principal payments from the mortgages underlying the securities, net of certain
fees. Because the principal amounts of such underlying mortgages may generally
be prepaid in whole or in part by the mortgagees at any time without penalty and
the

B-4
<PAGE> 34

prepayment characteristics of the underlying mortgages vary, it is not possible
to predict accurately the average life of a particular issue of pass-through
securities. Mortgage-backed securities are subject to more rapid repayment than
their stated maturity date would indicate as a result of the pass-through of
prepayments of principal on the underlying mortgage obligations. The remaining
maturity of a mortgage-backed security will be deemed to be equal to the average
maturity of the mortgages underlying such security determined by the Adviser on
the basis of assumed prepayment rates with respect to such mortgages. The
remaining expected average life of a pool of mortgages underlying a
mortgage-backed security is a prediction of when the mortgages will be repaid
and is based upon a variety of factors such as the demographic and geographic
characteristics of the borrowers and the mortgaged properties, the length of
time that each of the mortgages has been outstanding, the interest rates payable
on the mortgages and the current interest rate environment. While the timing of
prepayments of graduated payment mortgages differs somewhat from that of
conventional mortgages, the prepayment experience of graduated payment mortgages
is basically the same as that of the conventional mortgages of the same maturity
dates over the life of the pool. During periods of declining interest rates,
prepayment of mortgages underlying mortgage-backed securities can be expected to
accelerate. When the mortgage obligations are prepaid, the Fund reinvests the
prepaid amounts in other income producing securities, the yields of which
reflect interest rates prevailing at the time. Therefore, the Fund's ability to
maintain a portfolio of high-yielding mortgage- backed securities will be
adversely affected to the extent that prepayments of mortgages must be
reinvested in securities which have lower yields than the prepaid
mortgage-backed securities. Moreover, prepayments of mortgages which underlie
securities purchased by the Fund at a premium would result in capital losses.

Collateralized Mortgage Obligations and Multiclass Pass-Through
Securities. The Fund may invest in collateralized mortgage obligations
("CMOs"). CMOs are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by Ginnie Mae,
Fannie Mae or Freddie Mac Certificates, but also may be collateralized by whole
loans or private pass-through securities (such collateral collectively
hereinafter referred to as "Mortgage Assets"). Multiclass pass-through
securities are equity interests in a trust composed of Mortgage Assets. Unless
the context indicates otherwise, all references herein to CMOs include
multiclass pass-through securities. Payments of principal of and interest on the
Mortgage Assets, and any reinvestment income thereon, provide the funds to pay
debt service on the CMOs or make scheduled distributions on the multiclass
pass-through securities. CMOs deemed to be U.S. government securities are those
issued or guaranteed as to principal and interest by a person controlled or
supervised by and acting as an agency or instrumentality of the U.S. government.
The issuer of a series of CMOs may elect to be treated as a Real Estate Mortgage
Investment Conduit (a "REMIC").

In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates. Interest is paid or accrues on all classes of the CMOs on a monthly,
quarterly or semi-annual basis. The principal of and interest on the Mortgage
Assets may be allocated among the several classes of a series of a CMO in
innumerable ways.

The Fund may invest in, among others, parallel pay CMOs and Planned
Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or final distribution
date but may be retired earlier. PAC Bonds generally require payments of a
specified amount of principal on each payment date. PAC Bonds are always
parallel pay CMOs with the required principal payment on such securities having
the highest priority after interest has been paid to all classes. Substantially
all of the CMOs in which the Fund invests are PAC Bonds.

Stripped Mortgage-Backed Securities. The Fund also may invest in stripped
mortgage-backed securities ("SMBS") An SMBS is a derivative multiclass mortgage
security. SMBS usually are structured with two classes that receive different
proportions of the interest and principal distribution on a pool of Mortgage
Assets. In the most extreme case, one class will receive all of the interest
(the interest-only or "IO" class), while the other class will receive all of the
principal (the principal-only or "PO" class). The yield to maturity

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<PAGE> 35

on an IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on such security's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities. Conversely, if the underlying mortgage
assets experience less than anticipated prepayments of principal, the yield of
POs could be materially adversely affected. The market values of IOs and POs are
subject to greater risk of fluctuation in response to changes in market rates of
interest than many other types of government securities and, to the extent the
Fund invests in IOs and POs, increases the risk of fluctuations in the net asset
value of the Fund. The Adviser will seek to manage these risks (and potential
benefits) by investing in a variety of such securities and through the use of
Strategic Transactions (described below).

ADDITIONAL INVESTMENT CONSIDERATIONS

The Fund may also engage in strategic transactions, purchase and sell
securities on a "when issued" and "delayed delivery" basis, enter into
repurchase and reverse repurchase agreements, and lend its portfolio securities
in certain circumstances, in each case subject to the limitations set forth
below. These investments entail risks.

Strategic Transactions. The Fund may, but is not required to, utilize various
other investment strategies as described below to hedge various market risks
(such as interest rates and broad or specific market movements), to manage the
effective maturity or duration of the Fund's fixed-income securities or to
enhance potential gain. Such strategies are generally accepted by modern
portfolio managers and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Fund may purchase
and sell derivative securities such as exchange-listed and over-the-counter put
and call options on securities, fixed-income indices and other financial
instruments, purchase and sell financial futures contracts and options thereon,
enter into various interest rate transactions such as swaps, caps, floors or
collars (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used to attempt to protect against possible
changes in the market value of securities held in or to be purchased for the
Fund's portfolio resulting from securities markets fluctuations, to protect the
Fund's unrealized gains in the value of its portfolio securities, to facilitate
the sale of such securities for investment purposes, to manage the effective
maturity or duration of the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities.

Some Strategic Transactions may also be used to enhance potential gain
although no more than 25% of the Fund's assets will be committed to Strategic
Transactions entered into for non-hedging purposes. When the Fund sells an
option, if the underlying securities do not increase (in the case of a call
option) or decrease (in the case of a put option) to a price level that would
make the exercise of the option profitable to the holder of the option, the
option generally will expire without being exercised and the Fund will realize
as profit the premium received for such option. When a call option of which the
Fund is the writer is exercised, the option holder purchases the underlying
security at the strike price and the Fund does not participate in any increase
in the price of such securities above the strike price. In addition, the Fund
would need to replace the underlying securities at prices which may not be
advantageous to the Fund. When a put option of which the Fund is the writer is
exercised, the Fund will be required to purchase the underlying securities at
the strike price, which may be in excess of the market value of such securities.

Any or all of these investment techniques may be used at any time and there is
no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of the Fund to utilize these Strategic
Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. The Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions involving financial futures
and options thereon will be purchased, sold or entered into only for bona fide
hedging, risk management or portfolio management purposes and not for
speculative purposes.

B-6
<PAGE> 36

Strategic Transactions have risks associated with them including possible
default by the other party to the transaction, illiquidity and, to the extent
the Adviser's view as to certain market movements is incorrect, the risk that
the use of such Strategic Transactions could result in losses greater than if
they had not been used. Use of put and call options may result in losses to the
Fund, force the sale or purchase of portfolio securities at inopportune times or
for prices other than current market values, limit the amount of appreciation
the Fund can realize on its investments or cause the Fund to hold a security it
might otherwise sell. The use of options and futures transactions entails
certain other risks. In particular, the variable degree of correlation between
price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures and options transactions for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position, at the same time they
tend to limit any potential gain which might result from an increase in value of
such position. Finally, the daily variation margin requirements for futures
contracts would create a greater ongoing potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been utilized. Income earned or deemed to be
earned, if any, by the Fund from its Strategic Transactions will generally be
taxable. See "Tax Status of the Fund."

General Characteristics of Options. Put options and call options typically
have similar structural characteristics and operational mechanics regardless of
the underlying instrument on which they are purchased or sold. Thus, the
following general discussion relates to each of the particular types of options
discussed in greater detail below. In addition, many Strategic Transactions
involving options require segregation of Fund assets in special accounts, as
described below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, or other instrument at the exercise price. For instance, the
Fund's purchase of a put option on a security might be designed to protect its
holdings in the underlying instrument (or, in some cases, a similar instrument)
against a substantial decline in the market value by giving the Fund the right
to sell such instrument at the option exercise price. A call option, upon
payment of a premium, gives the purchaser of the option the right to buy, and
the seller the obligation to sell, the underlying instrument at the exercise
price. The Fund's purchase of a call option on a security, financial future,
index, or other instrument might be intended to protect the Fund against an
increase in the price of the underlying instrument that it intends to purchase
in the future by fixing the price at which it may purchase such instrument. An
American style put or call option may be exercised at any time during the option
period while a European style put or call option may be exercised only upon
expiration or during a fixed period prior thereto. The Fund is authorized to
purchase and sell exchange listed options and over-the-counter options ("OTC
options"). Exchange listed options are issued by a regulated intermediary such
as the Options Clearing Corporation ("OCC"), which guarantees the performance of
the obligations of the parties to such options. The discussion below uses the
OCC as a paradigm, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally
settle by physical delivery of the underlying security or currency, although in
the future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

The Fund's ability to close out its position as a purchaser or seller of an
OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the

B-7
<PAGE> 37

absence of a liquid option market on an exchange are: (i) insufficient trading
interest in certain options; (ii) restrictions on transactions imposed by an
exchange; (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities
including reaching daily price limits; (iv) interruption of the normal
operations of the OCC or an exchange; (v) inadequacy of the facilities of an
exchange or OCC to handle current trading volume; or (vi) a decision by one or
more exchanges to discontinue the trading of options (or a particular class or
series of options), in which event the relevant market for that option on that
exchange would cease to exist, although outstanding options on that exchange
would generally continue to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options that are subject to a buy-back provision
permitting the Fund to require the Counterparty to sell the option back to the
Fund at a formula price within seven days. The Fund expects generally to enter
into OTC options that have cash settlement provisions, although it is not
required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, or other instrument underlying an OTC option it
has entered into with the Fund or fails to make a cash settlement payment due in
accordance with the terms of that option, the Fund will lose any premium it paid
for the option as well as any anticipated benefit of the transaction.
Accordingly, the Adviser must assess the creditworthiness of each such
Counterparty or any guarantor or credit enhancement of the Counterparty's credit
to determine the likelihood that the terms of the OTC option will be satisfied.
The Fund will engage in OTC option transactions only with United States
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers", or broker dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of "A-1" from Standard &
Poor's Ratings Group ("S&P") or "P-1" from Moody's Investor Services, Inc.
("Moody's") or an equivalent rating from any other nationally recognized
statistical rating organization ("NRSRO"). 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"
the amount of the Fund's obligation pursuant to an OTC option sold by it (the
cost of the sell-back plus the in-the-money amount, if any) are illiquid, and
are subject to the Fund's limitation on investing no more than 15% of its assets
in illiquid securities.

If the Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may purchase and sell call options on securities, including U.S.
Treasury and agency securities, municipal obligations, mortgage-backed
securities and Eurodollar instruments that are traded on U.S. and foreign
securities exchanges and in the over-the-counter markets. All calls sold by the
Fund must be "covered" (i.e., the Fund must own the securities or futures
contract subject to the call) or must meet the asset segregation requirements
described below as long as the call is outstanding. Even though the Fund will
receive the option premium to help protect it against loss, a call sold by the
Fund exposes the Fund during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the underlying
security or instrument and may require the Fund to hold a security or instrument
which it might otherwise have sold.

The Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, municipal
obligations and Eurodollar instruments (whether or not it holds the

B-8
<PAGE> 38

above securities in its portfolio.) The Fund will not sell put options if, as a
result, more than 50% of the Fund's assets would be required to be segregated to
cover its potential obligations under such put options other than those with
respect to futures and options thereon. In selling put options, there is a risk
that the Fund may be required to buy the underlying security at a
disadvantageous price above the market price.

General Characteristics of Futures. The Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate or fixed-income market changes, for duration
management and for risk management purposes. Futures are generally bought and
sold on the commodities exchanges where they are listed with payment of initial
and variation margin as described below. The purchase of a futures contract
creates a firm obligation by the Fund, as purchaser, to take delivery from the
seller the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect index futures and
Eurodollar instruments, the net cash amount). The sale of a futures contract
creates a firm obligation by the Fund, as seller, to deliver to the buyer the
specific type of financial instrument called for in the contract at a specific
future time for a specified price (or, with respect to index futures and
Eurodollar instruments, the net cash amount). Options on futures contracts are
similar to options on securities except that 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 and obligates the seller to deliver such option.

The Fund's use of financial futures and options thereon will in all cases be
consistent with applicable regulatory requirements and in particular the rules
and regulations of the Commodity Futures Trading Commission and will be entered
into only for bona fide hedging, risk management (including duration management)
or other portfolio management purposes. Typically, maintaining a futures
contract or selling an option thereon requires the Fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of options on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price nor that delivery will occur.

The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

B-9
<PAGE> 39

Combined Transactions. The Fund may enter into multiple transactions,
including multiple options transactions, multiple futures transactions and
multiple interest rate transactions and any combination of futures, options and
interest rate transactions ("component" transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Adviser, it is in the best interests of the Fund to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which
the Fund may enter are interest rate and index swaps and the purchase or sale of
related caps, floors and collars. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, as a duration management technique or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Fund intends to use these transactions as hedges and not as
speculative investments and will not sell interest rate caps or floors where it
does not own securities or other instruments providing the income stream the
Fund may be obligated to pay. Interest rate swaps involve the exchange by the
Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments
with respect to a notional amount of principal. An index swap is an agreement to
swap cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of a floor entitles the purchaser to receive payments on a notional
principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates or values.

The Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Fund believe such obligations do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to its
borrowing restrictions. The Fund will not enter into any swap, cap, floor or
collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least "A" by S&P or Moody's or has an equivalent
equity rating from an NRSRO or is determined to be of equivalent credit quality
by the Adviser. If there is a default by the Counterparty, the Fund may have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate liquid
high-grade assets with its custodian to the extent Fund obligations are not
otherwise "covered" through ownership of the underlying security, financial
instrument or currency. In general, either the full amount of any obligation by
the Fund to pay or deliver securities or assets must be covered at all times by
the securities, instruments or currency required to be delivered, or, subject to
any regulatory restrictions, an amount of cash or liquid high-grade securities
at least equal to the current amount of the obligation must be segregated with
the custodian. The segregated assets cannot be sold or transferred unless
equivalent assets are substituted in their place or it is no longer necessary to
segregate them. For example, a call option written by the Fund will require the
Fund to hold the securities subject to the call (or securities convertible into
the needed securities without additional consideration) or to segregate liquid
high-grade securities sufficient to purchase and deliver the securities if the
call is exercised. A call option sold by the Fund on an index will require the
Fund to own portfolio securities which correlate with the index or to segregate
liquid high-grade assets equal to the excess of the index value over the
exercise price on a current

B-10
<PAGE> 40

basis. A put option written by the Fund requires the Fund to segregate liquid,
high-grade assets equal to the exercise price.

OTC options entered into by the Fund, including those on securities, financial
instruments or indices and OCC issued and exchange listed index options, will
generally provide for cash settlement. As a result, when the Fund sells these
instruments it will only segregate an amount of assets equal to its accrued net
obligations, as there is no requirement for payment or delivery of amounts in
excess of the net amount. These amounts will equal 100% of the exercise price in
the case of a non cash-settled put, the same as an OCC guaranteed listed option
sold by the Fund, or the in-the-money amount plus any sell-back formula amount
in the case of a cash-settled put or call. In addition, when the Fund sells a
call option on an index at a time when the in-the-money amount exceeds the
exercise price, the Fund will segregate, until the option expires or is closed
out, cash or cash equivalents equal in value to such excess. OCC issued and
exchange listed options sold by the Fund other than those above generally settle
with physical delivery, and the Fund will segregate an amount of assets equal to
the full value of the option. OTC options settling with physical delivery, or
with an election of either physical delivery or cash settlement, will be treated
the same as other options settling with physical delivery.

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
assets sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index- based
futures contract. Such assets may consist of cash, cash equivalents, liquid debt
or equity securities or other acceptable assets.

With respect to swaps, the Fund will accrue the net amount of the excess, if
any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid high-grade securities
having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating assets if the Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.

The Fund's activities involving Strategic Transactions may be limited by the
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company. See "Tax
Status of the Fund."

"When Issued" and "Delayed Delivery" Transactions. The Fund may also purchase
and sell portfolio securities on a "when issued" and "delayed delivery" basis.
No income accrues to the Fund on securities in connection with such purchase
transactions prior to the date the Fund actually takes delivery of such
securities. These transactions are subject to market fluctuation; the value of
the securities at delivery may be more or less than their purchase price, and
yields generally available on comparable securities when delivery occurs may be
higher or lower than yields on the securities obtained pursuant to such
transactions. Because the Fund relies on the buyer or seller, as the case may
be, to consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. When the Fund is the buyer in such a
transaction, however, it will maintain, in a segregated account with its
custodian, cash or portfolio securities having an aggregate value equal to the
amount of such purchase commitments until payment is made. The Fund will make
commitments to purchase securities on such basis only with the intention of
actually acquiring these securities, but the Fund may sell such securities prior
to the settlement date if such sale is considered to be advisable. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage.

B-11
<PAGE> 41

Repurchase Agreements. The Fund may enter into repurchase agreements with
banks and broker-dealers, under which the Fund purchases securities and agrees
to resell the securities at an agreed upon time and at an agreed upon price.
Under the 1940 Act, repurchase agreements may be considered collateralized loans
by the Fund, and the difference between the amount the Fund pays for the
securities and the amount it receives upon resale is accrued as interest and
reflected in the Fund's net income. When the Fund enters into repurchase
agreements, it relies on the seller to repurchase the securities. Failure to do
so may result in a loss for the Fund if the market value of the securities is
less than the repurchase price. At the time the Fund enters into a repurchase
agreement, the value of the underlying security including accrued interest will
be equal to or exceed the value of the repurchase agreement and, for repurchase
agreements that mature in more than one day, the seller will agree that the
value of the underlying security including accrued interest will continue to be
at least equal to the value of the repurchase agreement. In determining whether
to enter into a repurchase agreement with a bank or broker-dealer, the Fund will
take into account the credit-worthiness of such party. In the event of default
by such party, the Fund may not have a right to the underlying security and
there may be possible delays and expenses in liquidating the security purchased,
resulting in a decline in its value and loss of interest. The Fund will use
repurchase agreements as a means of making short-term investments, and will
invest in repurchase agreements of duration of seven days or less in an amount
not exceeding 25% of the net assets of the Fund. The Fund's ability to invest in
repurchase agreements that mature in more than seven days is subject to an
investment restriction that limits the Fund's investment in "illiquid"
securities, including such repurchase agreements, to 15% of the Fund's net
assets.

Reverse Repurchase Agreements and Dollar Rolls. In order to seek a high level
of current income, the Fund may enter into reverse repurchase agreements with
respect to securities which could otherwise be sold by the Fund. Reverse
repurchase agreements involve sales by the Fund of portfolio assets concurrently
with an agreement by the Fund to repurchase the same assets at a later date at a
fixed price. During the reverse repurchase agreement period, the Fund continues
to receive principal and interest payments on these securities.

In order to seek a high level of current income, the Fund may enter into
dollar rolls in which the Fund sells securities for delivery in the current
month and simultaneously contracts to repurchase, typically in 30 or 60 days,
substantially similar (same type, coupon and maturity) securities on a specified
future date. During the roll period, the Fund forgoes principal and interest
paid on such securities. The Fund is compensated by the difference between the
current sales price and the forward price for the future purchase (often
referred to as the "drop") as well as by the interest earned on the cash
proceeds of the initial sale. A "covered roll" is a specific type of dollar roll
for which there is an offsetting cash position or cash equivalent security
position which matures on or before the forward settlement date of the dollar
roll transaction.

The Fund will establish a segregated account with its custodian in which it
will maintain cash, U.S. Government securities or other liquid high-grade debt
obligations equal in value to its obligations in respect of reverse repurchase
agreements and dollar rolls and, accordingly, the Fund will not treat such
obligations as senior securities for purposes of the 1940 Act. "Covered rolls"
are not subject to these segregation requirements. Reverse repurchase agreements
and dollar rolls involve the risk that the market value of the securities
retained by the Fund may decline below the price of the securities the Fund has
sold but is obligated to repurchase under the agreement. In the event the buyer
of securities under a reverse repurchase agreement or dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds of the agreement
may be restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.

The Fund is authorized to borrow money from banks or otherwise in an amount up
to 33 1/3% of the Fund's total assets (after giving effect to any such
borrowing). The Fund considers reverse repurchase agreements and dollar rolls to
be borrowings for purposes of such percentage limitation. No more than 5% of the
Fund's total assets may be invested in bank borrowings and reverse repurchase
agreements. The Fund will borrow only when the Adviser believes that such
borrowings will benefit the Fund.

Borrowing by the Fund creates an opportunity for increased net income but, at
the same time, increases the risk of the Fund's portfolio. Leveraging by the
Fund will generally increase the volatility of the Fund's net asset value in
response to fluctuations in market interest rates and accordingly may increase
the risk of the

B-12
<PAGE> 42

Fund's portfolio. Although the principal of such borrowings will be fixed, the
Fund's assets may change in value during the time the borrowing is outstanding.
Borrowing will create interest expenses for the Fund which can exceed the income
from the assets retained. To the extent the income derived from securities
purchased with borrowed funds exceeds the interest the Fund will have to pay,
the Fund's net income will be greater than if borrowing were not used.
Conversely, if the income from the assets retained with borrowed funds is not
sufficient to cover the cost of borrowing, the net income of the Fund will be
less than if borrowing were not used, and therefore the amount available for
distribution to stockholders as dividends will be reduced.

Loans of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to banks or
broker-dealers, to a maximum of 25% of the assets of the Fund, where such loans
are callable at any time and are continuously secured by collateral consisting
of cash or of securities issued or guaranteed by the U.S. Government or its
agencies, which collateral is equal at all times to at least 100% of the value
of the securities loaned, including accrued interest. The Fund will receive
amounts equal to earned income for having made the loan. Any cash collateral
pursuant to these loans will be invested in short-term instruments. The Fund is
the beneficial owner of the loaned securities in that any gain or loss in the
market price during the loan inures to the Fund and its shareholders. Thus, when
the loan is terminated, the value of the securities may be more or less than
their value at the beginning of the loan. In determining whether to lend its
portfolio securities to a bank or broker-dealer, the Fund will take into account
the credit-worthiness of such borrower and will monitor such credit-worthiness
on an ongoing basis inasmuch as default by the other party may cause delays or
other collection difficulties. The Fund may pay finders' fees in connection with
loans of its portfolio securities.

TRUSTEES AND OFFICERS

The tables below list the trustees and officers of the Trust (of which the
Fund is a separate series) and their principal occupations for the last five
years and their affiliations, if any, with Van Kampen American Capital
Investment Advisory Corp. (the "VK Adviser" or "Adviser"), Van Kampen American
Capital Asset Management, Inc. (the "AC Adviser"), Van Kampen American Capital
Management, Inc., McCarthy, Crisanti & Maffei, Inc., MCM Asia Pacific Company,
Limited, Van Kampen American Capital Distributors, Inc. (the "Distributor"), Van
Kampen American Capital, Inc. ("Van Kampen American Capital" or "VKAC") or VK/AC
Holding, Inc. For purposes hereof, the term "Van Kampen American Capital Funds"
includes each of the open-end investment companies advised by the VK Adviser
(excluding The Explorer Institutional Trust) and each of the open-end investment
companies advised by the AC Adviser (excluding the American Capital Exchange
Fund and the Common Sense Trust).

TRUSTEES

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and
Strafford Hall President of MDT Corporation, a company which develops,
Suite 200 manufactures, markets and services medical and scientific
1009 Slater Road equipment. A Trustee of each of the Van Kampen American
Harrisville, NC 27560 Capital Funds.
Date of Birth: 07/14/32
Linda Hutton Heagy................. Managing Partner, Paul Ray Berndston, an executive
10 South Riverside Plaza recruiting and management consulting firm. Formerly,
Suite 720 Executive Vice President of ABN AMRO, N.A., a Dutch bank
Chicago, IL 60606 holding company. Prior to 1992, Executive Vice President
Date of Birth: 06/03/49 of La Salle National Bank. A Trustee of each of the Van
Kampen American Capital Funds.
Roger Hilsman...................... Professor of Government and International Affairs
251-1 Hamburg Cove Emeritus, Columbia University. A Trustee of each of the
Lyme, CT 06371 Van Kampen American Capital Funds.
Date of Birth: 11/23/19
</TABLE>

B-13
<PAGE> 43

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
R. Craig Kennedy................... President and Director, German Marshall Fund of the
11 Du Pont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and member of the Investment Committee
of the Joyce Foundation, a private foundation. A Trustee
of each of the Van Kampen American Capital Funds.
Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the
One Parkview Plaza VK Adviser, the AC Adviser and Van Kampen American
Oakbrook Terrace, IL 60181 Capital Management, Inc. Executive Vice President and a
Date of Birth: 06/20/42 Director of VK/AC Holding, Inc. and Van Kampen American
Capital. Chief Executive Officer of McCarthy, Crisanti &
Maffei, Inc. Chairman and a Director of MCM Asia Pacific
Company, Ltd. Executive Vice President and a Trustee of
each of the Van Kampen American Capital Funds. President
of the closed-end investment companies advised by the VK
Adviser. Prior to December, 1991, Senior Vice President
of Van Kampen Merritt Inc.
Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company
415 North Adams in insurance related businesses. Formerly Vice Chairman
Hinsdale, IL 60521 and Director of Continental Illinois National Bank and
Date of Birth: 03/31/20 Trust Company of Chicago and Continental Illinois
Corporation. A Trustee of each of the Van Kampen American
Capital Funds and Chairman of each Van Kampen American
Capital Fund advised by the VK Adviser.
Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage
Date of Birth: 02/13/36 Services Inc., a member of the National Association of
Securities Dealers, Inc. ("NASD") and Securities
Investors Protection Corp. A Trustee of each of the Van
Kampen American Capital Funds.
Don G. Powell*..................... President, Chief Executive Officer and a Director of
2800 Post Oak Blvd. VK/AC Holding, Inc. and Van Kampen American Capital and
Houston, TX 77056 Chairman, Chief Executive Officer and a Director of the
Date of Birth: 10/19/39 Distributor, the VK Adviser, the AC Adviser, Van Kampen
American Capital Management, Inc. and Van Kampen American
Capital Advisors, Inc. Chairman, President and a Director
of Van Kampen American Capital Exchange Corporation,
American Capital Contractual Services, Inc. and American
Capital Shareholders Corporation. Chairman and a Director
of ACCESS Investor Services, Inc. ("ACCESS"), Van Kampen
Merritt Equity Advisors Corp., Van Kampen Merritt Equity
Holdings Corp., and VCJ Inc., McCarthy, Crisanti &
Maffei, Inc., McCarthy, Crisanti & Maffei Acquisition,
and Van Kampen American Capital Trust Company. Chairman,
President and a Director of Van Kampen American Capital
Services, Inc. President, Chief Executive Officer and a
Trustee of each of the Van Kampen American Capital Funds.
Director, Trustee or Managing General Partner of other
open-end investment companies and closed-end investment
companies advised by the VK Adviser or the AC Adviser.
Jerome L. Robinson................. President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Date of Birth:10/10/22 software programming company specializing in white collar
productivity. Director of Panasia Bank. A Trustee of each
of the Van Kampen American Capital Funds.
</TABLE>

B-14
<PAGE> 44

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean
Stevens Institute of Graduate School and Chairman, Department of Mechanical
of Technology Engineering, Stevens Institute of Technology. Director of
Castle Point Station Dynalysis of Princeton, a firm engaged in engineering
Hoboken, NJ 07030 research. A Trustee of each of the Van Kampen American
Date of Birth: 08/02/24 Capital Funds and Chairman of the Van Kampen American
Capital Funds advised by the AC Adviser.
Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom, legal counsel to the Van Kampen American Capital
Chicago, IL 60606 Funds. A Trustee of each of the Van Kampen American
Date of Birth: 08/22/39 Capital Funds. He also is a Trustee of The Explorer Trust
and closed-end investment companies advised by the VK
Adviser.
William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a
712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica
40th Floor Corporation (currently known as The Traveler's Inc.).
New York, NY 10019 Formerly, Director of James River Corporation, a producer
Date of Birth: 01/31/22 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. A Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>

- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Powell and McDonnell are interested persons of the
VK Adviser and the Fund by reason of their positions with the VK Adviser. Mr.
Whalen is an interested person of the Fund by reason of his firm having acted
as legal counsel to the Fund.

Messrs. Powell and McDonnell own, or have the opportunity to purchase, an
equity interest in VK/AC Holding, Inc., the parent company of VKAC and have
entered into employment contracts (for a term of five years) with VKAC.

The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso,
Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston, TX
77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and
Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181.

OFFICERS

B-15
<PAGE> 45

Curtis W. Morell........ Vice President and Vice President and Chief Accounting Officer
Date of Birth: Chief Accounting of each of the Van Kampen American Capital
08/04/46 Officer Funds. Vice President and Treasurer of
other investment companies advised by the
AC Adviser.

Ronald A. Nyberg........ Vice President and Executive Vice President, General Counsel
Date of Birth: Secretary and Secretary of Van Kampen American
07/29/53 Capital and VK/AC Holding, Inc. Executive
Vice President, General Counsel and a
Director of the Distributor. Executive Vice
President and General Counsel of the VK
Adviser and the AC Adviser, Van Kampen
American Capital Management, Inc., VSM Inc.
VCJ, Inc., Van Kampen Merritt Equity
Advisors Corp., and Van Kampen Merritt
Equity Holdings Corp. Executive Vice
President, General Counsel and Assistant
Secretary of Van Kampen American Capital
Advisors, Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS Investor Services, Inc., American
Capital Shareholders Corporation, and Van
Kampen American Capital Trust Company.
General Counsel of McCarthy, Crisanti &
Maffei, Inc. and McCarthy, Crisanti &
Maffei Acquisition Corp. Vice President and
Secretary of each of the Van Kampen
American Capital Funds. Secretary of the
closed-end funds advised by the VK Adviser.
Director of ICI Mutual Insurance Co., a
provider of insurance to members of the
Investment Company Institute.

Robert C. Peck, Jr...... Vice President Executive Vice President of the VK Adviser.
Date of Birth: Executive Vice President and Director of
10/01/46 the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.

Alan T. Sachtleben...... Vice President Executive Vice President of the VK Adviser.
Date of Birth: Executive Vice President and a Director of
04/20/42 the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.

Paul R. Wolkenberg...... Vice President Executive Vice President of the VK Adviser
Date of Birth: and the AC Adviser. President, Chief
11/10/44 Executive Officer and a Director of Van
Kampen American Capital Trust Company and
ACCESS. Vice President of each of the Van
Kampen American Capital Funds.
</TABLE>

B-16
<PAGE> 46

John L. Sullivan........ Treasurer First Vice President of the VK Adviser and
Date of Birth: AC Adviser. Treasurer of each of the Van
08/20/55 Kampen American Capital Funds. Controller
of the closed-end funds advised by the VK
Adviser. Formerly Controller of open-end
funds advised by VK Adviser.

Tanya M. Loden.......... Controller Controller of each of the Van Kampen
Date of Birth: American Capital Funds. Vice President and
11/19/59 Controller of other investment companies
advised by the AC Adviser. Formerly Tax
Manager/Assistant Controller of investment
companies advised by the AC Adviser.

Nicholas Dalmaso........ Assistant Secretary Assistant Vice President and Senior
Date of Birth: Attorney of VKAC. Assistant Vice President
03/01/65 and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, and Van
Kampen American Capital Management, Inc.
Assistant Vice President of Van Kampen
American Capital Advisors, Inc. Assistant
Secretary of each of the Van Kampen
American Capital Funds. Assistant Secretary
of the closed-end funds advised by the VK
Adviser. Prior to May 1992, attorney for
Cantwell & Cantwell, a Chicago law firm.

Huey P. Falgout, Jr..... Assistant Secretary Assistant Vice President and Senior
Date of Birth: Attorney of VKAC. Assistant Vice President
11/15/63 and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, Van Kampen
American Capital Management, Inc., Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS, and American Capital
Shareholders Corporation. Assistant
Secretary of each of the Van Kampen
American Capital Funds.
</TABLE>

B-17
<PAGE> 47

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------ ----------------------- -------------------------------------------
<S> <C> <C>
Scott E. Martin......... Assistant Secretary Senior Vice President, Deputy General
Date of Birth: Counsel and Assistant Secretary of VKAC.
08/20/56 Senior Vice President, Deputy General
Counsel and Secretary of the VK Adviser,
the AC Adviser and the Distributor, Van
Kampen American Capital Management, Inc.,
Van Kampen American Capital Advisers, Inc.,
VSM Inc., VCJ Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS Investor Services, Inc., Van Kampen
Merritt Equity Advisors Corp., Van Kampen
Merritt Equity Holdings Corp., American
Capital Shareholders Corporation. Secretary
and Deputy General Counsel of McCarthy,
Crisanti, & Maffei, Inc. and McCarthy,
Crisanti & Maffei Acquisition. Chief Legal
Officer of McCarthy, Crisanti & Maffei,
S.A. Assistant Secretary of each of the Van
Kampen American Capital Funds. Assistant
Secretary of the closed-end funds advised
by the VK Adviser.
Weston B. Wetherell..... Assistant Secretary Vice President, Associate General Counsel
Date of Birth: and Assistant Secretary of VKAC, the VK
06/15/56 Adviser, the AC Adviser and the
Distributor, Van Kampen American Capital
Management, Inc. and Van Kampen American
Capital Advisors, Inc. Assistant Secretary
of each of the Van Kampen American Capital
Funds. Assistant Secretary of closed-end
funds advised by VK Adviser.
Steven M. Hill.......... Assistant Treasurer Assistant Vice President of the VK Adviser
Date of Birth: and AC Adviser. Assistant Treasurer of each
10/16/64 of the Van Kampen American Capital Funds.
Assistant Treasurer of the closed-end funds
advised by the VK Adviser.
Robert Sullivan......... Assistant Controller Assistant Controller of each of the Van
Date of Birth: Kampen American Capital Funds.
03/30/33
</TABLE>

Each of the foregoing trustees and officers holds the same position with each
of 46 other Van Kampen American Capital mutual funds (the "Fund Complex"). Each
trustee who is not an affiliated person of the VK Adviser and the AC Adviser,
the Distributor or VKAC (each a "Non-Affiliated Trustee") is compensated by an
annual retainer and meeting fees for services to the funds in the Fund Complex.
Each fund in the Fund Complex provides a deferred compensation plan to its
Non-Affiliated Trustees that allows trustees to defer receipt of his or her
compensation and earn a return on such deferred amounts based upon the return of
the common shares of the funds in the Fund Complex as more fully described
below.

The compensation of each Non-Affiliated Trustee includes a retainer from the
Fund in an amount equal to $2,500 per calendar year, due in four quarterly
installments on the first business day of each calendar quarter. Each
Non-Affiliated Trustee receives a per meeting fee from the Fund in the amount of
$125 per regular quarterly meeting attended by the Non-Affiliated Trustee, due
on the date of such meeting, plus reasonable expenses incurred by the
Non-Affiliated Trustee in connection with his or her services as a trustee. Each
Non-Affiliated Trustee receives a per meeting fee from the Fund in the amount of
$125 per special meeting attended by the Non-Affiliated Trustee, due on the date
of such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee
in connection with his or her services as a trustee, provided that no
compensation will be paid in connection with certain telephonic special
meetings.

B-18
<PAGE> 48

The trustees have approved an aggregate compensation cap with respect to the
Fund Complex of $84,000 per Non-Affiliated Trustee per year (excluding any
retirement benefits) for the period July 22, 1995 through December 31, 1996,
subject to the net assets and the number of mutual funds in the Fund Complex as
of July 21, 1995 and certain other exceptions. In addition, the Adviser has
agreed to reimburse each fund in the Fund Complex through December 31, 1996 for
any increase in the trustee's aggregate compensation over the aggregate
compensation paid by such fund in its 1994 fiscal year, provided that if a fund
did not exist for the entire 1994 fiscal year appropriate adjustments will be
made.

Each Non-Affiliated Trustee 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 common shares of the Fund or other mutual funds in
the Fund Complex as selected by the respective Non-Affiliated Trustee. To the
extent permitted by the 1940 Act, the Fund will invest in securities of those
mutual 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 each Fund.

Under the Fund's retirement plan, a Non-Affiliated Trustee who is receiving
trustee's fees from the Fund prior to such Non-Affiliated Trustee's retirement,
has at least ten years of service and retires at or after attaining the age of
60, is eligible to receive a retirement benefit from the Fund equal to $2,500
per year for each of the ten years following such trustee's retirement. Under
certain conditions, reduced benefits are available for early retirement provided
the trustee has served at least five years. As of the date hereof, the
retirement plan contains a Fund Complex retirement benefit cap of $60,000 per
year.

Additional information regarding compensation before deferral from the Fund
and the other funds in the Fund Complex is set forth in the table below.

COMPENSATION TABLE(1)

<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR BEFORE
RETIREMENT DEFERRAL FROM
AGGREGATE BENEFITS ESTIMATED REGISTRANT
COMPENSATION ACCRUED AS ANNUAL AND FUND
BEFORE DEFERRAL PART OF BENEFITS COMPLEX PAID
FROM REGISTRANT UPON TO
NAME(2) REGISTRANT(3) EXPENSES(4) RETIREMENT(5) TRUSTEES(6)
- --------------------------------------------- ----------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
J. Miles Branagan............................ $ 1,500 $ -0- $2,250 $84,250
Dr. Richard E. Caruso........................ 750 -0- -0- 57,250
Philip P. Gaughan............................ 3,138 10,941 1,750 76,500
Linda Hutton Heagy........................... 1,500 -0- 2,500 38,417
Dr. Roger Hilsman............................ 1,500 -0- -0- 91,250
R. Craig Kennedy............................. 3,513 520 2,500 92,625
Donald C. Miller............................. 3,513 13,721 2,500 94,625
Jack E. Nelson............................... 3,513 5,785 2,500 93,625
David Rees................................... 1,500 -0- -0- 83,250
Jerome L. Robinson........................... 3,513 9,694 1,250 89,375
Lawrence J. Sheehan.......................... 1,500 -0- -0- 91,250
Dr. Fernando Sisto........................... 1,500 -0- 1,250 98,750
Wayne W. Whalen.............................. 3,500 3,415 2,500 93,375
William S. Woodside.......................... 1,375 -0- -0- 79,125
</TABLE>

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

(1) The "Registrant" is the Trust, which currently consists of eight operating
series. As indicated in the other explanatory notes, the amounts in the
table relate to the applicable trustees during the Registrant's last fiscal
year ended December 31, 1995 or the Fund Complex' last calendar year ended
December 31, 1995.

(2) Messrs. Powell and McDonnell, trustees of the Trust, are affiliated persons
of the VK Adviser, the AC Adviser and the Distributor and are not eligible
for compensation or retirement benefits from the Registrant. Messrs.
Branagan, Caruso, Hilsman, Powell, Rees, Sheehan, Sisto and Woodside were
elected by shareholders to the Board of Trustees on July 21, 1995. Ms. Heagy
was appointed to the Board of Trustees on September 7, 1995. Mr. Gaughan
retired from the Board of Trustees on January 26, 1996. Messrs. Caruso, Rees
and Sheehan were removed from the Board of Trustees effective September 7,
1995, January 29, 1996 and January 29, 1996, respectively.

B-19
<PAGE> 49

(3) The amounts shown in this column represent the sum of the Aggregate
Compensation before Deferral with respect to each series in operation during
the Registrant's fiscal year ended December 31, 1995. The following trustees
deferred compensation from the Trust during the fiscal year ended December
31, 1995: Mr. Gaughan, $3,138; Mr. Kennedy, $3,513; Mr. Miller, $3,513; Mr.
Nelson, $3,513; Mr. Rees, $1,375; Mr. Robinson, $3,513; and Mr. Whalen,
$3,500. Amounts deferred are retained by the Fund and earn a rate of return
determined by reference to the return on the common shares of the Fund or
other mutual funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee. To the extent permitted by the 1940 Act, its is
anticipated that the Fund will invest in securities of those mutual 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 from the Trust as of December
31, 1995 is as follows: Mr. Gaughan, $3,309; Mr. Kennedy, $5,157; Mr.
Miller, $5,004; Mr. Nelson, $5,157; Mr. Rees, $1,375; Mr. Robinson, $5,044;
and Mr. Whalen, $3,837. The deferred compensation plan is described above
the Compensation Table.

(4) The amounts shown in this column represent the sum of the Retirement
Benefits accrued by each series in operation during the Registrant's fiscal
year ended December 31, 1995. Retirement Benefits were not accrued for those
trustees elected or appointed during the Registrant's fiscal year ended
December 31, 1995 because such trustees were ineligible for retirement
benefits or such amounts are considered immaterial for the Registrant's
fiscal year ended December 31, 1995. The retirement plan is described above
the Compensation Table.

(5) The amounts shown in this column are the Estimated Annual Benefits payable
per year for the 10-year period commencing in the year of such trustee's
retirement from the Registrant (based on $2,500 per series for each series
of the Registrant in operation) assuming: the trustee has 10 or more years
of service on the Board of the respective series and retires at or after
attaining the age of 60. Trustees retiring prior to the age of 60 or with
fewer than 10 years but more than five years of service may receive reduced
retirement benefits from a series. The actual annual benefit may be less if
the trustee is subject to the Fund Complex retirement benefit cap.

(6) The amounts shown in this column represent the sum of the Aggregate
Compensation before Deferral with respect to each of the 46 mutual funds in
the Fund Complex as of December 31, 1995. The following trustees deferred
compensation from the Fund Complex (including the Registrant) during the
calendar year ended December 31, 1995 as follows: Dr. Caruso, $41,750; Mr.
Gaughan, $57,750; Ms. Heagy, $8,750; Mr. Kennedy, $65,875; Mr. Miller,
$65,875; Mr. Nelson, $65,875; Mr. Rees, $8,375; Mr. Robinson, $62,375; Dr.
Sisto, $30,260; and Mr. Whalen, $65,625. Amounts deferred are retained by
the respective fund and earn a rate of return determined by reference to the
return of the common shares of such fund or other mutual funds in the Fund
Complex as selected by the respective Non-Affiliated Trustee. To the extent
permitted by the 1940 Act, it is anticipated that each fund will invest in
securities of those mutual funds selected by the Non-Affiliated Trustees in
order to match the deferred compensation obligation. The trustees' Fund
Complex compensation cap commenced on July 22, 1995 and covered the period
between July 22, 1995 and December 31, 1995. Compensation received prior to
July 22, 1995 was not subject to the cap. For the calendar year ended
December 31, 1995, while certain trustees received compensation over $84,000
in the aggregate, no trustee received compensation in excess of the pro rata
amount of the Fund Complex cap for the period July 22, 1995 through December
31, 1995. In addition to the amounts set forth above, certain trustees
received lump sum retirement benefit distributions not subject to the cap in
1995 related to three mutual funds that ceased investment operations during
1995 as follows: Mr. Gaughan, $22,136; Mr. Miller, $33,205; Mr. Nelson,
$30,851; Mr. Robinson, $11,068; and Mr. Whalen, $27,332. The VK Adviser and
its affiliates also serve as investment adviser for other investment
companies; however, with the exception of Messrs. Powell, McDonnell and
Whalen, the trustees were not trustees of such investment companies.
Combining the Fund Complex with other investment companies advised by the VK
Adviser and its affiliates, Mr. Whalen received Total Compensation of
$268,857 during the calendar year ended December 31, 1995.

As of April 10, 1996, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund. As of April 10, 1996, no trustee or
officer of the Fund owns or would be able to acquire 5% or more of the common
stock of VK/AC Holding, Inc.

B-20
<PAGE> 50

As of April 10, 1996, no person was known by the Fund to own beneficially or
to hold of record as much as 5% 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 CLASS OF PERCENTAGE
NAME AND ADDRESS OF HOLDER APRIL 10, 1996 SHARES OWNERSHIP
- --------------------------------------------------------- -------------- -------- ---------
<S> <C> <C> <C>
Van Kampen American Capital Trust Company................ 21,940,657 A 11.33%
2800 Post Oak Blvd. 2,599,840 B 8.38%
Houston, TX 77056
Bishop of the Roman Catholic Diocese of Charlotte, NC.... 68,041 C 6.91%
c/o W. G. Weldon
P.O. Box 36776
Charlotte, NC 28236-6776
Martha J. Ruoff Estate................................... 63,809 C 6.48%
Russell Ruoff Conservator
435 North Alfred
Los Angeles, CA 90048-2504
Donaldson Lufkin Jenrette Securities Corporation Inc. ... 56,070 C 5.69%
P.O. Box 2052
Jersey City, NJ 07303-2052
Firefighters Credit Union................................ 51,830 C 5.26%
124 W. 1400 South
Salt Lake City, UT 84115-5227
</TABLE>

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

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

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISORY AGREEMENT

Van Kampen American Capital Investment Advisory Corp. (the "Adviser") is the
Fund's investment adviser. The Adviser was incorporated as a Delaware
corporation in 1982 (and through December 31, 1987 transacted business under the
name of American Portfolio Advisory Service Inc.). The Adviser's principal
office is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.

The Adviser is a wholly-owned subsidiary of Van Kampen American Capital, which
in turn is a wholly-owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc.
is controlled, through the ownership of a substantial majority of its common
stock by The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D
L.P."), a Connecticut limited partnership. C&D L.P. is managed by Clayton,
Dubilier & Rice, Inc., a New York based private investment firm. The General
Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership
("C&D Associates L.P."). The general partners of C&D Associates L.P. are Joseph
L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore, Donald J.
Gogel, Leon J. Hendrix, Jr., and Hubbard C. Howe and Andrall E. Pearson, each of
whom is a principal of Clayton, Dubilier & Rice, Inc. In addition, certain
officers, directors and employees of Van Kampen American Capital own, in the
aggregate, not more than 7% of the common stock of VK/AC Holding, Inc. and have
the right to acquire, upon the exercise of options, approximately an additional
13% of the common stock of VK/AC Holding, Inc. Presently, and after giving
effect to the exercise of such options, no officer or trustee of the Fund owns
or would own 5% or more of the common stock of VK/AC Holding, Inc.

The investment advisory agreement between the Adviser and the Fund provides
that the Adviser will supply investment research and portfolio management,
including the selection of securities for the Fund to purchase, hold or sell and
the selection of brokers through whom the Fund's portfolio transactions are
executed. The Adviser also administers the business affairs of the Fund,
furnishes offices, necessary facilities and equipment, provides administrative
services, and permits its officers and employees to serve without compensation
as officers of the Fund and trustees of the Trust if duly elected to such
positions.

B-21
<PAGE> 51

The agreement provides that the Adviser shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with the
matters to which the agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under the agreement.

The Adviser's activities are subject to the review and supervision of the
Board of Trustees of the Trust, of which the Fund is a series, to whom the
Adviser renders periodic reports of the Fund's investment activities.

The investment advisory agreement will remain in effect from year to year if
specifically approved by the Trustees of the Trust or the Fund's shareholders
and by the disinterested Trustees of the Trust in compliance with the
requirements of the 1940 Act. The agreement may be terminated without penalty
upon 60 days written notice by either party and will automatically terminate in
the event of assignment.

The agreement specifies that the Adviser will reimburse the Fund for annual
expenses of the Fund which exceed the most stringent limits prescribed by any
state in which the Fund shares are offered for sale. The most stringent limit as
of the date of this Statement of Additional Information, as affecting the Fund,
requires the Adviser to reimburse the Fund to the extent that aggregate expenses
of the Fund (excluding interest, taxes and other expenses which may be
excludable under applicable state law) exceed in any fiscal year 2 1/2% of the
average annual net assets of the Fund up to $30 million, 2% of the average
annual net assets of the Fund of the next $70 million, and 1 1/2% of the
remaining average annual net assets of the Fund. In addition to making any
required reimbursements, the Adviser may in its discretion, but is not obligated
to, waive all or any portion of its fee or assume all or any portion of the
expenses of the Fund.

For the years ended December 31, 1995, 1994 and 1993, the Fund recognized
advisory expenses of $17,475,740, $18,897,359 and $19,904,333, respectively.

OTHER AGREEMENTS

SUPPORT SERVICES AGREEMENT. Under a support services agreement with the
Distributor which terminated as of July 10, 1995 concurrent with the Fund's
change in transfer agent, the Fund received support services for shareholders,
including the handling of all written and telephonic communications, except
initial order entry and other distribution-related communications. Payment by
the Fund for such services was made on cost basis for the employment of the
personnel and the equipment necessary to render the support services. The Fund,
and the other Van Kampen American Capital mutual funds distributed by the
Distributor, shared such costs proportionately among themselves based upon their
respective net asset values.

For the years ended December 31, 1995, 1994 and 1993, the Fund recognized
expenses of approximately $625,000, $1,755,000 and $1,622,650, respectively,
representing the Distributor's cost of providing certain support services.

FUND ACCOUNTING AGREEMENT. The Fund has also entered into an accounting
services agreement pursuant to which the Adviser provides accounting services
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 shares together with the other Van Kampen American Capital mutual funds
distributed by the Distributor and advised by the Adviser in the cost of
providing such services, with 25% of such costs shared proportionately based on
the number of outstanding classes of securities per fund and with the remaining
75% of such cost being paid by the Fund and such other Van Kampen American
Capital funds based proportionally on their respective net assets.

For the years ended December 31, 1995, 1994 and 1993, the Fund recognized
expenses of approximately $137,300, $80,100 and $80,675, respectively,
representing the Adviser's cost of providing accounting services.

LEGAL SERVICES AGREEMENT. The Fund and each of the other Van Kampen American
Capital funds advised by the VK Adviser and distributed by the Distributor have
entered into Legal Services Agreements pursuant to which Van Kampen American
Capital provides legal services, including without limitation: accurate
maintenance of the fund's minute books and records, preparation and oversight of
the fund's regulatory reports, and other information provided to shareholders,
as well as responding to day-to-day legal issues on behalf of the funds. Payment
by the Fund for such services is made on a cost basis for the salary and salary

B-22
<PAGE> 52

related benefits, including but not limited to bonuses, group insurances and
other regular wages for the employment of personnel, as well as overhead and the
expenses related to the office space and the equipment necessary to render the
legal services. Other funds distributed by the Distributor also receive legal
services from Van Kampen American Capital. Of the total costs for legal services
provided to the funds distributed by the Distributor, one half of such costs are
allocated equally to each fund and the remaining one half of such costs are
allocated to specific funds based on monthly time records.

For the years ended December 31, 1995, 1994 and 1993, the Fund recognized
expenses of approximately $98,200, $62,900 and $60,300, respectively,
representing Van Kampen American Capital's cost of providing legal services.

CUSTODIAN AND INDEPENDENT AUDITORS

State Street Bank and Trust Company, 225 Franklin Street, P.O. Box 1713,
Boston, MA 02105-1713, is the custodian of the Fund and has custody of all
securities and cash of the Fund. The custodian, among other things, attends to
the collection of principal and income, and payment for and collection of
proceeds of securities bought and sold by the Fund.

The independent auditors for the Fund are KPMG Peat Marwick LLP, 303 East
Wacker Drive, Chicago, IL 60601. The selection of independent auditors will be
subject to ratification by the shareholders of the Fund at any annual meeting of
shareholders.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser will place orders for portfolio transactions for the Fund with
broker-dealer firms giving consideration to the quality, quantity and nature of
each firm's professional services. These services include execution, clearance
procedures, wire service quotations and statistical and other research
information provided to the Fund and the investment adviser, including
quotations necessary to determine the value of the Fund's net assets. Any
research benefits derived are available for all clients of the investment
adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to materially
reduce its expenses.

If it is believed to be in the best interests of the Fund, the Adviser may
place portfolio transactions with brokers who provide the types of research
service described above, even if it means the Fund will have to pay a higher
commission, (or, if the broker's profit is part of the cost of the security,
will have to pay a higher price for the security) than would be the case if no
weight were given to the broker's furnishing of those research services. This
will be done, however, only if, in the opinion of the Adviser, the amount of
additional commission or increased cost is reasonable in relation to the value
of such services.

In selecting among the firms believed to meet the criteria for handling a
particular transaction, the Adviser may take into consideration that certain
firms (i) provide market, statistical or other research information such as that
set forth above to the Fund and the Adviser, (ii) have sold or are selling
shares of the Fund and (iii) may select firms that are affiliated with the Fund,
its investment adviser or its distributor and other principal underwriters. If
purchases or sales of securities of the Fund and of one or more other investment
companies or clients supervised by the Adviser are considered at or about the
same time, transactions in such securities will be allocated among the several
investment companies and clients in a manner deemed equitable to all by the
Adviser, taking into account the respective sizes of the funds and the amount of
securities to be purchased or sold. Although it is possible that in some cases
this procedure could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned, it is also possible that the ability
to participate in volume transactions and to negotiate lower brokerage
commissions will be beneficial to the Fund.

While the Adviser will be primarily responsible for the placement of the
Fund's business, the policies and practices in this regard must be consistent
with the foregoing and will at all times be subject to review by the Trustees.

B-23
<PAGE> 53

The Trustees have adopted certain policies incorporating the standards of Rule
17e-1 issued by the SEC under the 1940 Act which requires that the commissions
paid to the Distributor and other 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 will be reduced by all or a portion of the
brokerage commission given to affiliated brokers.

State securities laws may differ from the interpretations of federal law
expressed herein, and banks and financial institutions may be required to
register as dealers pursuant to state law.

TAX STATUS OF THE FUND

The Trust and each of its series, including the Fund, will be treated as
separate corporations for income tax purposes. The Fund may be subject to tax if
it fails to distribute net capital gains, or if its annual distributions, as a
percentage of its income, are less than the distributions required by tax laws.

The Fund has qualified and intends to continue to qualify 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 if it distributes each year to its
shareholders at least 90% of its net investment income (which includes net
short-term capital gains, but not net capital gains, which are the excess of net
long-term capital gains over net short-term capital losses), it will not be
required to pay federal income taxes on the income distributed to shareholders.
The Fund intends to distribute at least the minimum amount of net investment
income to satisfy the 90% distribution requirement. The Fund will not be subject
to federal income tax on any net capital gains distributed to its shareholders.

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

Some of the Fund's investment practices are subject to special provisions of
the Code, that may, among other things, 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 gains or losses realized by the Fund. These provisions may also
require the Fund to mark-to-market some of the positions in its portfolio (i.e.,
treat them as if they were closed out), which may cause the Fund to recognize
income without receiving the cash with which to make distributions in amounts
necessary to satisfy the distribution requirements for avoiding federal 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 avoid income and excise taxes, the Fund may have to
dispose of securities that it would otherwise have continued to hold.

The Fund's ability to dispose of portfolio securities may be limited by the
requirement for qualification as a regulated investment company that less than
30% of the Fund's gross income be derived from the disposition of securities
held for less than three months.

B-24
<PAGE> 54

Distributions of the Fund's net investment income are taxable to shareholders
as ordinary income whether received in shares or in cash. Shareholders who
receive distributions in the form of additional shares will have a basis for
federal income tax purposes in each such share equal to the fair market value
thereof on the reinvestment date. Distributions of the Fund's net capital gains
("capital gains dividends") are taxable to shareholders as long-term capital
gains regardless of the length of time the shares of the Fund have been held by
such shareholders. Distributions in excess of the Fund's earnings and profits,
such as distributions of principal, first will reduce the adjusted tax basis of
the shares held by the shareholders and, after such adjusted tax basis is
reduced to zero, will constitute capital gains to such shareholders (assuming
such shares are held as a capital asset). The Fund will inform shareholders of
the source and tax status of such distributions promptly after the close of each
calendar year. Distributions from the Fund will not be eligible for the
dividends received deduction for corporations.

Redemption or resale of shares of the Fund will be a taxable transaction for
federal income tax purposes. Redeeming shareholders will recognize gain or loss
in an amount equal to the difference between their basis in such redeemed shares
of the Fund and the amount received. If such shares are held as a capital asset,
the gain or loss generally will be a capital gain or loss and will be long-term
if such shareholders have held their shares for more than one year. Any loss
realized on shares held for six months or less will be treated as long-term
capital loss to the extent of any amounts received by the shareholder as capital
gains dividends with respect to such shares.

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 months and paid in January of the following
year will be treated as having been distributed by the Fund and received by the
shareholders on the December 31 of the year in which the dividends were
declared. In addition, certain other distributions made after the close of a
taxable year of the Fund may be "spilled back" and treated as having been paid
by the Fund (except for purposes of the 4% excise tax) during such taxable year.
In such case, shareholders will be treated as having received such dividends in
the taxable year in which the distribution is actually made.

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) or who are otherwise subject to
backup withholding. Foreign shareholders, including shareholders who are
nonresident 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 any applicable treaty.

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

THE DISTRIBUTOR

The Distributor offers one of the industry's broadest lines of investments --
encompassing mutual funds, closed-end funds and unit investment trusts -- and is
currently the nation's 5th largest broker-sold mutual fund group according to
Strategic Insight. Van Kampen American Capital's roots in money management
extend back to 1926. Today, Van Kampen American Capital manages or supervises
more than $50 billion in mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to Van Kampen American Capital in
more than 2 million investor accounts. Van Kampen American Capital has one of
the largest research teams (outside of the rating agencies) in the country, more
than 80 analysts devoted to various specializations.

Shares of the Fund are offered on a continuous basis through Van Kampen
American Capital Distributors, Inc. (the "Distributor"), One Parkview Plaza,
Oakbrook Terrace, IL 60181. The Distributor is a wholly owned subsidiary of Van
Kampen American Capital, which is a subsidiary of VK/AC Holding, Inc., a
Delaware corporation that is controlled through an ownership of a substantial
majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C & D L.P."), a Connecticut limited

B-25
<PAGE> 55

partnership. In addition, certain officers, directors and employees of Van
Kampen American Capital, Inc., and its subsidiaries own, in the aggregate not
more than 7% of the common stock of VK/AC Holding, Inc. and have the right to
acquire, upon the exercise of options, approximately an additional 13% of the
common stock of VK/AC Holding, Inc. C & D L.P. is managed by Clayton, Dubilier &
Rice, Inc. Clayton & Dubilier Associates IV Limited Partnership ("C & D
Associates L.P.") is the general partner of C & D L.P. Pursuant to a
distribution agreement, the Distributor will purchase shares of the Fund for
resale to the public, either directly or through securities dealers, and is
obligated to purchase only those shares for which it has received purchase
orders. A discussion of how to purchase and redeem the Fund's shares and how the
Fund's shares are priced is contained in the Prospectus.

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 Service Plan sometimes are
referred to herein collectively 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 Plans are being implemented through an
agreement (the "Distribution and Service Agreement") with the Distributor,
sub-agreements between the Distributor and members of the NASD acting as
securities dealers and NASD members or eligible non-members acting as brokers or
agents for investors (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."

Under the Distribution and Service Agreement and the Selling Agreements,
financial intermediaries that sold shares prior to July 1, 1987, or prior to the
beginning of the calendar quarter in which the Selling Agreement between the
Fund and such financial intermediary was approved by the Fund's Board of
Trustees (an "Implementation Date") are not eligible to receive compensation
pursuant to such Distribution and Service Agreement and/or Selling Agreement. To
the extent that there remain outstanding shares of the Fund that were purchased
prior to all Implementation Dates, the percentage of the total average daily net
asset value of a class of shares that may be utilized pursuant to the
Distribution and Service Agreement will be less than the maximum percentage
amount permissible with respect to such class of shares under the Distribution
and Service Agreement.

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 Plans 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 either
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 either class of shares at any time
by a vote of a majority of the disinterested Trustees or by a vote of a majority
of the outstanding voting shares of such class.

For the year ended December 31, 1995, the Fund recognized expenses under the
Plans of $5,543,018, $4,537,659 and $116,637 for the Class A Shares, Class B
Shares and Class C Shares, respectively, of which $5,056,787, $1,086,701 and
$77,341 represent payments to financial intermediaries under the Selling
Agreements for Class A Shares, Class B Shares and Class C Shares, respectively.
For the year ended December 31, 1995, the Fund has reimbursed the Distributor
$567,086, $115,128 and $0 for advertising expenses, and $35,202, $17,153 and $0
for compensation of the Distributor's sales personnel for Class A Shares, Class
B Shares and Class C Shares, respectively.

B-26
<PAGE> 56

LEGAL COUNSEL

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

PERFORMANCE INFORMATION

The Fund's yield quotation is determined on a monthly basis with respect to
the immediately preceding 30 day period; yield is computed by first dividing the
Fund's net investment income per share of a given class earned during such
period by the Fund's maximum offering price (including, with respect to the
Class A Shares, the maximum sales charge) per share of such class on the last
day of such period. The Fund's net investment income per share is determined by
taking the interest attributable to a given class of shares earned by the Fund
during the period, subtracting the expenses attributable to a given class of
shares accrued for the period (net of any reimbursements), and dividing the
result by the average daily number of shares of each class outstanding during
the period that were entitled to receive dividends. The yield calculation
formula assumes net investment income is earned and reinvested at a constant
rate and annualized at the end of a six month period. Yield will be computed
separately for each class of shares. Class B Shares redeemed during the first
six years after their issuance and Class C Shares redeemed during the first year
after their issuance may be subject to a contingent deferred sales charge in a
maximum amount equal to 4.00% and 1.00%, respectively, of the lesser of the then
current net asset value of the shares redeemed or their initial purchase price
from the Fund. Yield quotations do not reflect the imposition of a contingent
deferred sales charge, and if any such contingent deferred sales charge imposed
at the time of redemption were reflected, it would reduce the performance
quoted.

The Fund calculates average compounded total return by determining the
redemption value (less any applicable contingent deferred sales charge) at the
end of specified periods (after adding back all dividends and other
distributions made during the period) of a $1,000 investment in a given class of
shares of the Fund (less the maximum sales charge, if any) at the beginning of
the period, annualizing the increase or decrease over the specified period with
respect to such initial investment and expressing the result as a percentage.
Average compounded total return will be computed separately for each class of
shares.

Total return figures utilized by the Fund are based on historical performance
and are not intended to indicate future performance. Total return and net asset
value per share of a given class can be expected to fluctuate over time, and
accordingly upon redemption a shareholder's shares may be worth more or less
than their original cost.

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 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, and if
applicable may include or exclude the sales charge or CDSC as indicated,
determining the value of all subsequent reinvested distributions, and dividing
the net change in the value of the investment as of the end of the period by the
amount of the initial investment and expressing the result as a percentage.
Non-standardized total return will be calculated separately for each class of
shares. Non-standardized total return calculations do not reflect the imposition
of a contingent deferred sales charge, and if any such contingent deferred sales
charge with respect to the CDSC imposed at the time of redemption were
reflected, it would reduce the performance quoted.

From time to time marketing materials may provide a portfolio manager update,
an adviser update or discuss general economic conditions and outlooks. The
Fund's marketing materials may show the Fund's asset class diversification, top
five sectors, ten largest holdings and other Fund asset structures, such as
duration, maturity, coupon, NAV, rating breakdown, AMT exposure and number of
issues in the portfolio. Materials may also mention how Van Kampen American
Capital believes the Fund compares relative to other Van Kampen American Capital
funds. Materials also may 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 if shareholders purchased their funds
in direct or sales force distribution channels. The study showed that investors
working with a professional representative

B-27
<PAGE> 57

have tended over time to earn higher returns than those who invested directly.
The Fund will also be marketed on the Internet.

CLASS A SHARES

The average total return, including the payment of the maximum sales charge,
with respect to the Class A Shares for (i) the one year period ended December
31, 1995 was 12.02%; (ii) the 5 year period ended December 31, 1995 was 7.15%;
(iii) the 10 year period ended December 31, 1995 was 8.17% and (iv) the
approximately 10 year, 7 month period from May 27, 1985 (the commencement of
investment operations of the Fund) through December 31, 1995 was 10.02%.

The Fund's yield with respect to the Class A Shares for the 30 day period
ending December 30, 1995 (calculated in the manner described in the Prospectus
under the heading "Fund Performance") was 6.32%. The Fund's current distribution
rate with respect to the Class A Shares for the month ending December 31, 1995
(calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 6.88%.

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
the end of the current period, was 202.42%.

The Fund's cumulative non-standardized total return, excluding payment of the
maximum sales charge, with respect to Class A Shares from its inception to the
end of the current period was 217.44%.

CLASS B SHARES

The average total return, including payment of the CDSC, with respect to the
Class B Shares for (i) the one year period ended December 31, 1995 was 12.78%
and (ii) the approximately 3 year, 4 month period of August 24, 1992
(commencement of distribution) through December 31, 1995 was 4.74%.

The Fund's yield with respect to the Class B Shares for the 30 day period
ending December 30, 1995 (calculated in the manner described in the Prospectus
under the heading "Fund Performance") was 5.79%. The Fund's current distribution
rate with respect to the Class B Shares for the month ending December 31, 1995
(calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 6.50%.

The Fund's cumulative non-standardized total return, including payment of the
CDSC, with respect to the Class B Shares from its inception to the end of the
current period was 17.13%.

The Fund's cumulative non-standardized total return, excluding payment of the
CDSC, with respect to the Class B Shares from its inception to the end of the
current period was 19.49%.

CLASS C SHARES

The average total return, including payment of the CDSC, with respect to the
Class C Shares for (i) the one year period ended December 31, 1995 was 15.78%
and (ii) the approximately two year, 4 and 1/2 month period from August 13, 1993
(commencement of distribution) through December 31, 1995 was 4.20%.

The Fund's yield with respect to the Class C Shares for the 30 day period
ending December 30, 1995 (calculated in the manner described in the Prospectus
under the heading "Fund Performance") was 5.79%. The Fund's current distribution
rate with respect to the Class C Shares for the month ending December 31, 1995
(calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 6.50%.

The Fund's cumulative non-standardized total return, including payment of the
CDSC, with respect to the Class C Shares from its inception to the end of the
current period was 10.45%.

The Fund's cumulative non-standardized total return, excluding payment of the
CDSC, with respect to the Class C Shares from its inception to the end of the
current period was 10.45%.

B-28
<PAGE> 58

ALTERNATIVE SALES ARRANGEMENTS

The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor, taking into account
the amount of the purchase, the length of time the investor expects to hold the
shares, whether the investor wishes to receive dividends in cash or to reinvest
them in additional shares of the Fund, and other circumstances. Investors should
consider such factors together with the amount of sales charges and accumulated
distribution fees with respect to each class of shares that may be incurred over
the anticipated duration of their investment in the Fund.

The minimum initial investment with respect to each class of shares is $500.
The minimum subsequent investment with respect to each class of shares is $25.
It is presently the policy of the Distributor not to accept any order in an
amount of $500,000 or more for Class B Shares or any order for Class C Shares in
an amount of $1 million or more because it ordinarily will be more advantageous
for an investor making such an investment to purchase Class A Shares.

An investor should carefully consider the sales charges applicable to each
class of shares and the estimated period of their investment to determine which
class of shares is more beneficial for the investor to purchase. For example,
investors who would qualify for a significant purchase price discount from the
maximum sales charge on Class A Shares may determine that payment of such a
reduced front-end sales charge is superior to electing to purchase Class B
Shares or Class C Shares, each with no front-end sales charge but subject to a
CDSC and a higher aggregate distribution and service fee. However, because
initial sales charges are deducted at the time of purchase of Class A Share
accounts under $1 million, a purchaser of such Class A Shares would not have all
of his or her funds invested initially and, therefore, would initially own fewer
shares than if Class B Shares or Class C Shares had been purchased. On the other
hand, an investor whose purchase would not qualify for price discounts
applicable to Class A Shares and intends to remain invested until after the
expiration of the applicable CDSC may wish to defer the sales charge and have
all his or her funds initially invested in Class B Shares or Class C Shares. If
such an investor anticipates that he or she will redeem such shares prior to the
expiration of the CDSC period applicable to Class B Shares, the investor may
wish to acquire Class C Shares. Investors must weigh the benefits of deferring
the sales charge and having all of their funds invested against the higher
aggregate distribution and service fee applicable to Class B Shares and Class C
Shares (discussed below).

Each class of shares represents an interest in the same portfolio of
investments of the Fund and has the same rights, except each class of shares (i)
bears those distribution fees, service fees and administrative expenses
applicable to the respective class of shares as a result of its sales
arrangements, (ii) has exclusive voting rights with respect to those provisions
of the Fund's Rule 12b-1 distribution plan which relate only to such class and
(iii) has a different exchange privilege. Only the Class B Shares are subject to
a conversion feature (discussed below). Generally, a class of shares subject to
a higher ongoing distribution fee, service fee or, where applicable, the
conversion feature will have a higher expense ratio and pay lower dividends than
a class of shares subject to a lower ongoing distribution fee, service fee or
not subject to the conversion feature. The per share net asset values of the
different classes of shares are expected to be substantially the same; from time
to time, however, the per share net asset values of the classes may differ. The
net asset value per share of each class of shares of the Fund will be determined
as described in the Prospectus under "How to Buy Shares."

The administrative expenses that may be allocated to a specific class of
shares may consist of (i) transfer agency expenses attributable to a specific
class of shares, which expenses typically will be higher with respect to classes
of shares subject to the conversion feature; (ii) printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxy statements to current

B-29
<PAGE> 59

shareholders of a specific class; (iii) SEC registration fees incurred by a
class of shares; (iv) the expense of administrative personnel and services as
required to support the shareholders of a specific class; (v) Trustees' fees or
expense incurred as a result of issues relating to one class of shares; (vi)
accounting expenses relating solely to one class of shares; and (vii) any other
incremental expenses subsequently identified that should be properly allocated
to one or more classes of shares that shall be approved by the SEC pursuant to
an amended exemptive order. All such expenses incurred by a class will be borne
on a pro rata basis by the outstanding shares of such class. All allocations of
administrative expenses to a particular class of shares will be limited to the
extent necessary to preserve the Fund's qualification as a regulated investment
company under the Code.

PURCHASE OF SHARES

The Fund currently offers three classes of shares to the public on a
continuous basis through the Distributor, as principal underwriter, which is
located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares are also
offered through members of the National Association of Securities Dealers, Inc.
("NASD") acting as securities dealers ("dealers") and through NASD members
acting as brokers for investors ("brokers") or eligible non-NASD members acting
as agents for investors ("financial intermediaries"). The Fund reserves the
right to suspend or terminate the continuous public offering at any time and
without prior notice.

The Fund's shares are offered at the net asset value per share next computed
after an investor places an order to purchase directly with the investor's
broker, dealer or financial intermediary or with the Distributor, plus any
applicable sales charge. Sales personnel of brokers, dealers and financial
intermediaries distributing the Fund's shares may receive differing compensation
for selling different classes of shares. It is the responsibility of the
investor's broker, dealer or financial intermediary to transmit the order to the
Distributor. Because the Fund generally will determine net asset value once each
business day as of the close of business, purchase orders placed through an
investor's broker, dealer or financial intermediary must be transmitted to the
Distributor by such broker, dealer or financial intermediary prior to such time
in order for the investor's order to be fulfilled on the basis of the net asset
value to be determined that day. Any change in the purchase price due to the
failure of the Distributor to receive a purchase order prior to such time must
be settled between the investor and the broker, dealer or financial intermediary
submitting the order.

The Distributor may from time to time implement programs under which a broker,
dealer or financial intermediary's sales force may be eligible to win nominal
awards for certain sales efforts or under which the Distributor will reallow to
any broker, dealer or financial intermediary 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
broker, dealer or financial intermediary at the public offering price during
such programs. Other programs provide, among other things and subject to certain
conditions, 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 it, pay fees and sponsor business seminars to
qualifying brokers, dealers or financial intermediary for certain services or
activities which are primarily intended to result in sales of shares of the
Fund. Fees may include payment for travel expenses, including lodging, incurred
in connection with trips taken by invited registered representatives and members
of their families to locations within or outside of the United States for
meetings or seminars of a business nature. 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. 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. Such payments to brokers, dealers or financial
intermediaries for sales contests, other sales programs and seminars are made by
the Distributor out of its own assets and not out of the assets of the Fund.
These programs will not change the price an investor will pay for shares or the
amount that the Fund will receive from such sale.

CLASS A SHARES

The public offering price of Class A Shares is equal to the net asset value
per share plus an initial sales charge which is a variable percentage of the
offering price depending upon the amount of the sale. The table below shows
total sales charges and dealer concessions reallowed to dealers and agency
commissions paid to

B-30
<PAGE> 60

brokers with respect to sales of Class A Shares. The sales charge is allocated
between the investor's broker, dealer or financial intermediary and the
Distributor. As indicated previously, at the discretion of the Distributor, the
entire sales charge may be reallowed to such broker, dealer or financial
intermediary. The staff of the SEC has taken the position that dealers who
receive more than 90% or more of the sales charge may be deemed to be
"underwriters" as that term is defined in the Securities Act of the 1933.

SALES CHARGE TABLE

<TABLE>
<CAPTION>
DEALER
CONCESSION
OR AGENCY
COMMISSION
TOTAL SALES CHARGE ----------
-------------------------- PERCENTAGE
PERCENTAGE PERCENTAGE OF
SIZE OF TRANSACTION OF OFFERING OF NET OFFERING
AT OFFERING PRICE PRICE ASSET VALUE 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 for such investments the Fund imposes a contingent
deferred sales charge of 1.00% on redemptions made within one year of the
purchase. A commission will be paid to dealers who initiate and are
responsible for purchases of $1 million or more as follows: 1.00% on sales to
$2 million, plus 0.80% on the next million, plus 0.20% on the next $2 million
and 0.08% on the excess over $5 million. See "Purchase of Shares--Deferred
Sales Charge Alternatives" for additional information with respect to
contingent deferred sales charges.

QUANTITY DISCOUNTS

Investors purchasing Class A Shares may, under certain circumstances, be
entitled to pay reduced sales charges. The circumstances under which such
investors may pay reduced sales charges are described below.

Investors, or their brokers, dealers or financial intermediaries, must notify
the Fund whenever a quantity discount is applicable to purchases. Upon such
notification, an investor will receive 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 broker,
dealer or financial intermediary or the Distributor.

As used herein, "any person" eligible for a reduced sales charge includes an
individual, their spouse and minor children (and any trust or custodial accounts
for their benefit) 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 fiduciary account; or a
"company" as defined is section 2(a)(8) of the 1940 Act.

As used herein, "Participating Funds" refers to all open-end investment
companies distributed by the Distributor other than Van Kampen American Capital
Tax Free Money Fund ("Tax Free Money Fund"), Van Kampen American Capital Reserve
Fund ("Reserve Fund") and The Govett Funds, Inc.

VOLUME DISCOUNTS. The size of investment shown in the preceding table applies
to the total dollar amount being invested by any person at any one time in Class
A Shares of the Fund alone, or in combination with other 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 preceding
table may also be determined by combining the amount being invested in Class A
Shares of the Fund with other shares of the Fund and shares of Participating
Funds plus the current offering price of all shares of the Fund and other
Participating Funds which have been previously purchased and are still owned.

B-31
<PAGE> 61

LETTER OF INTENT. A Letter of Intent provides an opportunity for an investor
to obtain a reduced sales charge by aggregating the amount being invested over a
13-month period to determine the sales charge as outlined in the preceding
table. The size of investment shown in the preceding table includes the amount
of intended purchases of Class A Shares of the Fund with other shares of the
Fund and shares of the Participating Funds plus the value of all shares of the
Fund and other Participating Funds previously purchased during such 13-month
period 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. If trades not initially made under a
Letter of Intent subsequently qualify for a lower sales charge through the
90-day back-dating provision, an adjustment will be made at the expiration of
the Letter of Intent to give effect to the lower charge. If the goal is not
achieved within the 13-month period, the investor must pay the difference
between the charges applicable to the purchases made and the charges previously
paid. When an investor signs a Letter of Intent, shares equal to at least 5% of
the total purchase amount of the level selected will be restricted from sale or
redemption by the investor until the Letter of Intent is satisfied or any
additional sales charges have been paid; if the Letter of Intent is not
satisfied by the investor and any additional sales charges are not paid,
sufficient restricted shares will be redeemed by the Fund to pay such charges.
Additional information is contained in the application accompanying this
Prospectus.

OTHER PURCHASE PROGRAMS

Purchasers of Class A Shares may be entitled to reduced initial sales charges
in connection with unit trust reinvestment programs 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 PROGRAMS. 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 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 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 broker, dealer or
financial intermediary, 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 applicable terms and conditions thereof, should
contact their broker, dealer or financial intermediary 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 the Fund's transfer agent with
appropriate backup data for each participating investor in a computerized format
fully compatible with the transfer agent's processing system.

As further requirements for obtaining these special benefits, the Fund also
requires that all dividends and other distributions by the Fund be reinvested in
additional shares without 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 monthly basis only, even
if their investments are made more frequently.

NAV 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/Directors of funds advised by the Adviser, Van
Kampen American Capital Asset Management, Inc. or John Govett & Co.
Limited and such persons' families and their beneficial accounts.

B-32
<PAGE> 62

(2) Current or retired directors, officers and employees of VK/AC Holding,
Inc. and any of its subsidiaries, Clayton, Dubilier & Rice, Inc.,
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 registered representatives of financial
institutions that have a selling group agreement with the Distributor and
their spouses and minor children 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.

(4) Registered investment advisers, trust companies and bank trust departments
investing on their own behalf or on behalf of their clients provided that
the aggregate amount invested in Class A Shares of the Fund alone, or in
any combination of shares of the Fund and shares of other Participating
Funds as described herein under "Purchase of Shares -- Class A Shares --
Quantity Discounts," during the 13-month period commencing with the first
investment pursuant hereto equals at least $1 million. The Distributor may
pay brokers, dealers or financial intermediaries through which purchases
are made an amount up to 0.50% of the amount invested, over a twelve-month
period following such transaction.

(5) Trustees and other fiduciaries purchasing shares for retirement plans of
organizations with retirement plan assets of $10 million or more. The
Distributor may pay commissions of up to 1.00% for such purchases.

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

(7) Investors purchasing shares of the Fund with redemption proceeds from
other mutual fund complexes on which the investor has paid a front-end
sales charge or was subject to a deferred sales charge, whether or not
paid, if such redemption has occurred no more than 30 days prior to such
purchase.

(8) Full service participant directed profit sharing and money purchase plans,
full service 401(k) plans, or similar full service recordkeeping programs
made available through Van Kampen American Capital Trust Company with at
least 50 eligible employees or investing at least $250,000 in the
Participating Funds, Tax Free Money Fund or Reserve Fund. For such
investments the Fund imposes a contingent deferred sales charge of 1.00%
in the event of redemptions within one year of the purchase other than
redemptions required to make payments to participants under the terms of
the plan. The contingent deferred sales charge incurred upon certain
redemptions is paid to the Distributor in reimbursement for
distribution-related expenses. A commission will be paid to dealers who
initiate and are responsible for such purchases as follows: 1.00% on sales
to $5 million, plus 0.50% on the next $5 million, plus 0.25% on the excess
over $10 million.

(9) Participants in any 403(b)(7) program of a college or university system
which permits only net asset value mutual fund investments and for which
Van Kampen American Capital Trust Company serves as custodian. In
connection with such purchases, the Distributor may pay, out of its own
assets, a commission to brokers, dealers, or financial intermediaries as
follows: one percent on sales up to $5 million, plus 0.50% on the next $5
million, plus 0.25% on the excess over $10 million.

The term "families" includes a person's spouse, minor children and
grandchildren, parents, and a person's spouse's parents.

Purchase orders made pursuant to clause (4) may be placed either through
authorized brokers, dealers or financial intermediaries as described above or
directly with the Fund's transfer agent, the investment adviser, trust company
or bank trust department, provided that the Fund's transfer agent receives
federal funds for the purchase by the close of business on the next business day
following acceptance of the order. An authorized broker, dealer or financial
intermediary 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. The Fund may terminate, or amend the terms of, offering shares
of the Fund at net asset value to such groups at any time.

B-33
<PAGE> 63

DEFERRED SALES CHARGE ALTERNATIVES

Investors choosing the deferred sales charge alternative may purchase Class A
Shares in an amount of $1 million or more, Class B Shares and Class C Shares.
The public offering price of a CDSC Share is equal to the net asset value per
share without the imposition of a sales charge at the time of purchase. CDSC
Shares are sold without an initial sales charge so that the Fund may invest the
full amount of the investor's purchase payment. The Distributor will compensate
brokers, dealers and financial intermediaries participating in the continuous
public offering of the CDSC Shares out of its own assets, and not out of the
assets of the Fund, at a percentage rate of the dollar value of the CDSC Shares
purchased from the Fund by such brokers, dealers and financial intermediaries,
which percentage rate will be equal to (i) with respect to Class A Shares, 1.00%
on sales to $2 million, plus 0.80% on the next million, plus 0.20% on the next
$2 million and 0.08% on the excess over $5 million; (ii) 4.00% with respect to
Class B Shares, and (iii) 1.00% with respect to Class C Shares. Such
compensation will not change the price an investor will pay for CDSC Shares or
the amount that the Fund will receive from such sale.

CDSC Shares redeemed within a specified period of time generally will be
subject to a contingent deferred sales charge at the rates set forth below. The
amount of the contingent deferred sales charge will vary depending on (i) the
class of CDSC Shares to which such shares belong and (ii) the number of years
from the time of payment for the purchase of the CDSC Shares until the time of
their redemption. The charge will be assessed on an amount equal to the lesser
of the then current market value or the original purchase price of the CDSC
Shares being redeemed. Accordingly, no sales charge will be imposed on increases
in net asset value above the initial purchase price. In addition, no contingent
deferred sales charge will be assessed on CDSC Shares derived from reinvestment
of dividends or capital gains distributions. Solely for purposes of determining
the number of years from the time of any payment for the purchase of CDSC
Shares, all payments during a month will be aggregated and deemed to have been
made on the last day of the month.

Proceeds from the contingent deferred sales charge applicable to a class of
CDSC Shares are paid to the Distributor and are used by the Distributor to
defray its expenses related to providing distribution related services to the
Fund in connection with the sale of shares of such class of CDSC Shares, such as
the payment of compensation to selected dealers and agents for selling such
shares. The combination of the contingent deferred sales charge and the
distribution and services fees facilitates the ability of the Fund to sell such
CDSC Shares without a sales charge being deducted at the time of purchase.

In determining whether a contingent deferred sales charge is applicable to a
redemption of CDSC Shares, it will be assumed that the redemption is made first
of any CDSC Shares acquired pursuant to reinvestment of dividends or
distributions, second of CDSC Shares that have been held for a sufficient period
of time such that the contingent deferred sales charge no longer is applicable
to such shares, third of Class A Shares in the shareholder's Fund account that
have converted from Class B Shares, if any, and fourth of CDSC Shares held
longest during the period of time that a contingent deferred sales charge is
applicable to such CDSC Shares. The charge will not be applied to dollar amounts
representing an increase in the net asset value per share since the time of
purchase.

To provide an example, assume an investor purchased 100 Class B Shares (as set
forth below) at $10 per share (at a cost of $1,000) and in the second year after
purchase, the net asset value per share is $12 and, during such time, the
investor has acquired 10 additional Class B Shares upon dividend reinvestment.
If at such time the investor makes his first redemption of 50 shares (proceeds
of $600), 10 shares will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 shares, the charge is applied
only to the original cost of $10 per share and not to the increase in net asset
value of $2 per share. Therefore, $400 of the $600 redemption proceeds will be
charged at a rate of 3.75% (the applicable rate in the second year after
purchase).

CLASS A SHARE PURCHASES OF $1 MILLION OR MORE. No sales charge is payable at
the time of purchase on investments in Class A Shares of $1 million or more,
although for such investments the Fund imposes a contingent deferred sales
charge of 1.00% on redemptions made within one year of the purchase. A
commission will be paid to dealers who initiate and are responsible for
purchases of $1 million or more as follows: 1.00% on sales to $2 million, plus
0.80% on the next million, plus 0.20% on the next $2 million and 0.08% on the
excess over $5 million.

B-34
<PAGE> 64

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------- -------------------
<S> <C>
First.................................................. 4.00%
Second................................................. 3.75%
Third.................................................. 3.50%
Fourth................................................. 2.50%
Fifth.................................................. 1.50%
Sixth.................................................. 1.00%
Seventh and after...................................... 0.00%
</TABLE>

The contingent deferred sales charge is waived on redemptions of Class B
Shares made pursuant to the Systematic Withdrawal Plan. See "Shareholder
Services--Systematic Withdrawal Plan."

Conversion Feature. Six years or ten years after the end of the month in which
a shareholder's order to purchase a Class B Share or Class C Share of the Fund,
respectively was accepted, such Class B Share or Class C Share automatically
will convert to a Class A Share and will no longer be subject to the higher
aggregate distribution and service fees. The purpose of the conversion feature
is to relieve the holders of Class B Shares and Class C Shares that have been
outstanding for a period of time sufficient for the Distributor to have been
compensated for distribution expenses related to the Class B Shares and Class C
Shares from most of the burden of such distribution-related expenses.

For purposes of conversion to Class A Shares, Class B Shares and Class C
Shares purchased through the reinvestment of dividends and distributions paid in
respect of Class B Shares and Class C Shares in a shareholder's account will be
considered to be held in a separate sub-account. Each time any Class B Shares or
Class C Shares in the shareholder's account (other than those in the
sub-account) convert to Class A Shares, an equal pro rata portion of the Class B
Shares or Class C Shares in the sub-account also will convert to Class A Shares.
The holding period applicable to a Class B Share or Class C Share acquired
through the use of the exchange privilege (discussed below) shall be the holding
period applicable to a Class B Share or Class C Share of such Fund acquired
other than through use of the exchange privilege. For purposes of calculating
the holding period applicable to a Class B Share or Class C Share of the Fund
prior to conversion, a Class B Share or Class C Share of the Fund issued in
connection with an exercise of the exchange privilege, or a series of exchanges,
shall be deemed to have been issued on the date on which the investor's order to
purchase the exchanged Class B Share or Class C Share was accepted or, in the
case of a series of exchanges, when the investor's order to purchase the
original Class B Share or Class C Share was accepted.

The conversion of Class B Shares and Class C 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 services fee and transfer
agency costs with respect to such shares does not result in the Fund's dividends
or distributions constituting "preferential dividends" under the Code, and (ii)
that the conversion of such shares does not constitute a taxable event under
federal income tax law. The conversion of Class B Shares or Class C Shares to
Class A Shares may be suspended if such an opinion is no longer available. In
that event, no further conversions of Class B Shares or Class C Shares would
occur, and such shares might continue to be subject to the higher aggregate
distribution and service fees for an indefinite period.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The contingent deferred sales
charge is waived on redemptions of Class B Shares and Class C Shares (i)
following the death or disability (as defined in the Code) of a

B-35
<PAGE> 65

shareholder, (ii) in connection with certain distributions from an IRA or other
retirement plan, (iii) pursuant to the Fund's systematic withdrawal plan but
limited to 12% annually of the initial value of the account, and (iv) effected
pursuant to the right of the Fund to liquidate a shareholder's account as
described herein under "Redemptions." The contingent deferred sales charge is
also waived on redemptions of Class C Shares as it relates to the reinvestment
of redemption proceeds in shares of the same class of the Fund within 120 days
after redemption. See "Shareholder Services" and "Redemptions" for further
discussion of the waiver provisions.

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. Unless otherwise described below, each of these
services may be modified or terminated by the Fund at any time.

INVESTMENT ACCOUNT. ACCESS Investor Services, Inc. ("ACCESS"), transfer agent
for the Fund and a wholly-owned subsidiary of Van Kampen American Capital,
performs bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. Each shareholder has an investment account
under which shares are held by ACCESS. Except as described herein, after each
share transaction in an account, the shareholder receives a statement showing
the activity in the account. Each shareholder will receive statements at least
quarterly from ACCESS showing any reinvestments of dividends and capital gains
distributions 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
gains distributions and systematic purchases or redemptions. Additions to an
investment account may be made at any time by purchasing shares through
authorized brokers, dealers or financial intermediaries or by mailing a check
directly to ACCESS.

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
redemption thereof. In addition, if such certificates are lost the shareholder
must write to Van Kampen American Capital Funds, c/o ACCESS, P.O. Box 418256,
Kansas City, MO 64141-9256, requesting an "affidavit of loss" and to obtain a
Surety Bond in a form acceptable to ACCESS. On the date the letter is received
ACCESS will calculate a 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.

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gains distributions in shares of
the Fund. Such shares are acquired at net asset value (without sales charge) on
the record date of such dividend or distribution. Unless the shareholder
instructs otherwise, the reinvestment plan is automatic. This instruction may be
made by telephone by calling (800) 421-5666 (or (800) 772-8889 for the hearing
impaired) or in writing to ACCESS. The investor may, on the initial application
or prior to any declaration, instruct that dividends be paid in cash and capital
gains distributions be reinvested at net asset value, or that both dividends and
capital gains distributions be paid in cash. For further information, see
"Distributions from the Fund."

AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under
which a shareholder can authorize ACCESS to charge a bank account on a regular
basis to invest pre-determined amounts in the Fund. Additional information is
available from the Distributor or authorized brokers, dealers or financial
intermediaries.

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

B-36
<PAGE> 66

DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanied by this
Prospectus or by calling (800) 421-5666 (or (800) 772-8889 for the hearing
impaired), elect to have all dividends and other distributions paid on a class
of shares of the Fund invested into shares of the same class of any other
Participating Fund, Tax Free Money Fund or Reserve Fund so long as a
pre-existing account for such class of shares exists for such shareholder.

If the 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 as of the payable date of the
distribution only if shares of such selected fund have been registered for sale
in the investor's state.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged with shares of another
Participating Fund, the Tax Free Money Fund or the Reserve Fund, subject to
certain limitations herein or in such other fund's prospectus. Before effecting
an exchange, shareholders in the Fund should obtain and read a current
prospectus of the fund into which the exchange is to be made. SHAREHOLDERS MAY
ONLY EXCHANGE INTO SUCH OTHER FUNDS AS ARE LEGALLY AVAILABLE FOR SALE IN THEIR
STATE.

In general, 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; however, under normal circumstances, it is the
policy of the Adviser not to approve such requests.

Class A Shares of Van Kampen American Capital funds that generally impose an
initial sales charge are not subject to any sales charge upon exchange into the
Fund. Class A Shares of Van Kampen American Capital funds that generally do not
impose an initial sales charge are subject to the appropriate sales charge
applicable to Class A Shares of the Fund.

No sales charge is imposed upon the exchange of Class B Shares and Class C
Shares between Van Kampen American Capital funds. Upon redemption from the Van
Kampen American Capital family of funds, however, such shares are subject to the
contingent deferred sales charge schedule of the initial Van Kampen American
Capital fund from which such shares were purchased. The holding period of a
Class B Share or Class C Share for purposes of determining the contingent
deferred sales charge and the conversion privilege with respect thereto is
determined by reference to the date the respective share originally was
purchased from a Van Kampen American Capital fund.

Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes. If the shares exchanged have been held for less than 91
days, the sales charge paid on such shares is not included in the tax basis of
the exchanged shares, but 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 ACCESS or by contacting the telephone transaction line at (800)
421-5684 (or (800) 772-8889 for the hearing impaired). A shareholder
automatically has telephone exchange privileges unless otherwise designated in
the application form accompanied by this Prospectus. The exchange will take
place at the relative net asset values of the shares next determined after
receipt of such request with adjustment for any additional sales charge. Any
shares exchanged begin earning dividends on the next business day after the
exchange is affected. Van Kampen American Capital and its subsidiaries,
including ACCESS (collectively, "VKAC"), 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, a
shareholder agrees that neither VKAC nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. VKAC and the
Fund may be liable for any losses due to unauthorized or fraudulent instructions
if reasonable procedures are not followed. 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 gains
options (except dividend diversification options) and broker, dealer or
financial intermediary 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 dividend diversification
options for the new account, an exchanging shareholder must file a specific
written request. The Fund reserves

B-37
<PAGE> 67

the right to reject any order to acquire its shares through exchange. In
addition, the Fund may restrict or terminate the exchange privilege at any time
on 60 days' notice to its shareholders of any termination or material amendment.

SYSTEMATIC WITHDRAWAL PLAN. Any investor whose shares in a single account
total $10,000 or more at the offering price next computed after receipt of
instructions may establish a monthly, quarterly, semi-annual 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 withdrawal
constitutes a redemption of shares on which taxable gain or loss will be
recognized. The plan holder may arrange for monthly, quarterly, semi-annual, 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. See "Shareholder Services --
Retirement Plans."

Holders of Class B Shares and Class C Shares who establish a 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 in the Fund at the time the
election to participate in the plan is made. See "Purchase of Shares -- Deferred
Sales Charge Alternatives -- Waiver of Contingent Deferred Sales Charge."

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under the plan are reinvested in additional shares
at the next determined net asset value. If periodic withdrawals continuously
exceed reinvested dividends and capital gains distributions, the shareholder's
original investment will be correspondingly reduced and ultimately exhausted.
Withdrawals made concurrently with purchases of additional shares ordinarily
will be disadvantageous to the shareholder because of the duplication of sales
charges. The Fund reserves the right to amend or terminate the systematic
withdrawal program on thirty days' notice to its shareholders.

CHECK WRITING PRIVILEGE. Holders of Class A Shares of the Fund for which
certificates have not been issued and which are in a non-escrow status may
appoint ACCESS 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 ACCESS. Once the form is properly completed, signed and
returned to the agent, a supply of checks drawn on State Street Bank and Trust
Company ("State Street Bank") will be sent to such shareholder. These checks may
be made payable by the holder of Class A Shares to the order of any person in
any amount of $100 or more.

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

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 Share account, the check
will be returned and the shareholder may be subject to additional charges.
Holders of Class A Shares 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 State Street Bank. Retirement plans and accounts that are subject to
backup withholding are not eligible for the privilege. A "stop payment" system
is not available on these checks.

AUTOMATED CLEARING HOUSE ("ACH") DEPOSITS. Holders of Class A Shares can use
ACH to have redemption proceeds deposited electronically into their bank
accounts. Redemptions 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 Automated Clearing House. 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
redemptions are to be deposited together with the completed application. Once
ACCESS has received the application and the voided check or deposit slip, such
shareholder's designated bank account, following any

B-38
<PAGE> 68

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 ACCESS.

REDEMPTIONS

Shareholders may redeem for cash some or all of their shares without charge by
the Fund (other than, with respect to CDSC Shares, the applicable contingent
deferred sales charge) at any time by sending a written request in proper form
directly to ACCESS, P. O. Box 418256, Kansas City, Missouri 64141-9256, by
placing the redemption request through an authorized dealer or by calling the
Fund.

WRITTEN REDEMPTION REQUESTS. In the case of redemption requests sent directly
to ACCESS, the redemption request should indicate the number of shares to be
redeemed, the class designation of such shares, the account number and be signed
exactly as the shares are registered. Signatures must conform exactly to the
account registration. If the proceeds of the redemption would 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. If certificates are held for the shares being redeemed, such
certificates must be endorsed for transfer or accompanied by an endorsed stock
power and sent with 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 60 days must accompany the redemption request. The
redemption price is the net asset value per share next determined after the
request is received by ACCESS in proper form. Payment for shares redeemed (less
any sales charge, if applicable) will ordinarily be made by check mailed within
three business days after acceptance by ACCESS of the request and any other
necessary documents in proper order. Such payments may be postponed or the right
of redemption suspended as provided by the rules of the SEC. If the shares to be
redeemed have been recently purchased by check, ACCESS may delay mailing a
redemption check until it confirms that the purchase check has cleared, usually
a period of up to 15 days. Any gain or loss realized on the redemption of shares
is a taxable event.

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. To establish
such privilege, a shareholder must complete the appropriate section of the
application form accompanying this Prospectus or call the Fund at (800) 421-5666
(or (800) 772-8889 for the hearing impaired) to request that a copy of the
Telephone Redemption Authorization form be sent to them for completion. To
redeem shares, contact the telephone transaction line at (800) 421-5684. VKAC
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, a shareholder agrees that neither VKAC nor the Fund
will be liable for following instructions which it reasonably believes to be
genuine. VKAC and the Fund may be liable for any losses due to unauthorized or
fraudulent instructions if

B-39
<PAGE> 69

reasonable procedures are not followed. Telephone redemptions may not be
available if the shareholder cannot reach ACCESS 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 procedures previously
described. Requests received by ACCESS prior to 4:00 p.m., New York time, on a
regular business day will be processed at the net asset value per share
determined that day. These privileges are available for all accounts other than
retirement accounts. The telephone redemption privilege is not available for
shares represented by certificates. If the shares to be redeemed have been
recently purchased by check, ACCESS may delay mailing a redemption check or
wiring redemption proceeds until it confirms that the purchase check has
cleared, usually a period of up to 15 days. If an account has multiple owners,
ACCESS may rely on the instructions of any one owner.

REDEMPTION UPON DISABILITY. The Fund will waive the contingent deferred sales
charge on redemptions following the disability of holders of Class B Shares and
Class C Shares. An individual will be considered disabled for this purpose if he
or she meets the definition thereof in Section 72(m)(7) of 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 disability before it determines to waive the
contingent deferred sales charge on Class B Shares and Class C Shares.

In cases of disability, the contingent deferred sales charges on Class B
Shares and Class C Shares will be waived where the 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 initial determination of
disability. This waiver of the contingent deferred sales charge on Class B
Shares and Class C Shares applies to a total or partial redemption, but only to
redemptions of shares held at the time of the initial determination of
disability.

REINSTATEMENT PRIVILEGE. Holders of Class A Shares or Class B Shares who have
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. Holders of Class C Shares who
have 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 next determined after the order is
received, which must be within 120 days after the date of the redemption. See
"Purchase of Shares -- Waiver of Contingent Deferred Sales Charge."
Reinstatement at net asset value is also offered to participants in those
eligible retirement plans held or administered by Van Kampen American Capital
Trust Company for repayment of principal (and interest) on their borrowings on
such plans.

B-40
<PAGE> 70

DISTRIBUTIONS FROM THE FUND

The Fund will declare distributions on a daily basis and will pay such
distributions from net investment income and net realized short-term capital
gains on a monthly basis. The monthly distribution is composed of all or a
portion of investment income earned by the Fund plus all or a portion of net
short-term capital gains, if any, realized by the Fund on transactions in
securities and in futures and options, in each case less the Fund's expenses.
The Fund will also distribute annually any remaining short-term capital gains
together with long-term capital gains, if any. Long-term capital gains
distributions consist of the Fund's realized long-term gains on transactions in
securities and in futures and options, net of any realized capital losses, less
any carryover capital losses from previous years.

Distributions with respect to each class of shares will be calculated in the
same manner on the same day and will be in the same amount, except that the
different distribution and service fees and any incremental administrative
expenses relating to each class of shares will be borne exclusively by the
respective class and may cause the distributions relating to the different
classes of shares to differ. Generally, distributions with respect to a class of
shares subject to a higher distribution fee, service fee, or, where applicable,
the conversion feature will be lower than distributions with respect to a class
of shares subject to a lower distribution fee, service fee, or not subject to
the conversion feature.

Investors will be entitled to begin receiving dividends on their shares on the
business day after the Fund's transfer agent receives payments for such shares.
However, shares become entitled to dividends on the day the Fund's transfer
agent receives payment for the shares either through a fed wire or NSCC
settlement. Shares remain entitled to dividends through the day such shares are
processed for payment on redemption.

Distribution checks may be sent to parties other than the shareholder in whose
name the account is registered. Shareholders wishing to utilize this service
should complete the appropriate section of the account application accompanying
this Prospectus or available from Van Kampen American Capital Funds, c/o ACCESS,
P.O. Box 418256, Kansas City, MO 64141-9256. After ACCESS receives this
completed form, distribution checks will be sent to the bank or other person so
designated by such shareholder.

PURCHASE OF ADDITIONAL SHARES WITH DISTRIBUTIONS. The Fund will automatically
credit monthly distributions and any annual net long-term capital gain
distributions to a shareholder's account in additional shares of the Fund valued
at net asset value, without a sales charge. Unless a shareholder instructs
otherwise, the reinvestment plan is automatic. This instruction may be made by
telephone by calling (800) 421-5666 (or (800) 772-8889 for the hearing impaired)
or in writing to ACCESS.

B-41
<PAGE> 71
Independent Auditors' Report

The Board of Trustees and Shareholders of
Van Kampen American Capital U.S. Government Fund:

We have audited the accompanying statement of assets and liabilities of
Van Kampen American Capital U.S. Government Fund (the "Fund"), including the
portfolio of investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31,1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Van Kampen American Capital U.S. Government Fund as of December
31, 1995, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Chicago, Illinois
January 30, 1996

B-42
<PAGE> 72
Portfolio of Investments
December 31, 1995

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Par
Amount Market
(000) Description Coupon Maturity Value
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Backed Securities 118.4%
$ 1,162 FHLMC ............................ 10.250% 11/01/09 $ 1,268,438
309 FHLMC ............................ 11.250 09/01/15 341,437
1 FHLMC ............................ 8.000 01/01/19 595
23,000 FHLMC <F3> ....................... 8.000 01/15/21 23,847,320
52,201 FHLMC ............................ 8.500 Various 54,140,939
36,305 FHLMC ............................ 10.000 Various 39,704,088
36,030 FHLMC ............................ 11.000 Various 39,587,711
5,724 FHLMC (Seasoned) ................. 8.500 01/01/16 5,965,388
17,373 FHLMC REMIC #14B PAC <F3> ........ 9.000 12/15/19 18,578,772
44,820 FHLMC REMIC #79C PAC <F3> ........ 8.600 10/15/05 45,706,091
14,248 FHLMC REMIC #89D <F3> ............ 9.000 02/15/21 15,241,722
23,277 FHLMC REMIC #92G PAC <F3> ........ 7.000 11/15/20 23,329,159
13,124 FHLMC REMIC #97G PAC <F3> ........ 9.250 11/15/05 13,694,763
15,061 FHLMC REMIC #106G PAC <F3> ....... 8.250 12/15/20 16,370,102
13,099 FHLMC REMIC #127D PAC <F3> ....... 6.000 05/15/20 13,055,347
10,894 FHLMC REMIC #1350G PAC <F3> ...... 7.500 08/15/19 11,321,154
13,550 FHLMC REMIC #163E PAC <F3> ....... 6.000 01/15/21 13,408,402
30,326 FHLMC REMIC #165K PAC <F3> ....... 6.500 09/15/21 30,554,052
32,376 FHLMC REMIC #181E PAC <F3> ....... 7.000 08/15/21 33,048,450
56 FNMA ............................. 12.500 03/01/15 63,465
2,811 FNMA ............................. 13.000 06/01/15 3,216,514
7,273 FNMA ............................. 8.500 07/01/19 7,626,997
3,521 FNMA ............................. 9.500 05/01/20 3,752,956
740,297 FNMA <F2> ........................ 6.500 Various 732,191,150
516,410 FNMA <F2> ........................ 7.000 Various 520,918,336
42,410 FNMA ............................. 7.500 Various 43,482,788
62,423 FNMA ............................. 8.000 Various 64,820,964
11,890 FNMA ............................. 8.500 Various 12,409,711
7,195 FNMA ............................. 9.000 Various 7,581,236
10,936 FNMA ............................. 10.500 Various 12,080,978
11,426 FNMA ............................. 11.000 Various 12,757,353
2,050 FNMA ............................. 11.500 Various 2,303,995
2,723 FNMA #7- Interest Only <F3> ...... 8.500 04/01/17 637,938
3,760 FNMA #28- Interest Only <F3> ..... 8.500 01/01/18 859,215
11,859 FNMA (Seasoned) .................. 9.000 Various 12,570,039
5,921 FNMA REMIC #89-49C PAC <F3> ...... 8.900 11/25/17 5,941,128
6,346 FNMA REMIC #89-63E <F3> .......... 9.400 06/25/12 6,373,157
8,369 FNMA REMIC #89-85D PAC <F3> ...... 7.600 05/25/18 8,408,265
11,900 FNMA REMIC #89-94G PAC <F3> ...... 7.500 12/25/19 12,298,650
8,993 FNMA REMIC #89-97C <F3> .......... 9.000 01/25/15 9,092,228
18,085 FNMA REMIC #90-12G PAC <F3> ...... 4.500 02/25/20 16,249,553
20,517 FNMA REMIC #90-71H PAC <F3> ...... 8.500 06/25/20 21,923,440
9,650 FNMA REMIC #90-97E PAC <F3> ...... 7.000 08/25/19 9,703,109
15,000 FNMA REMIC #93-4HB PAC <F3> ...... 11.000 01/25/19 17,135,850
4,542 GNMA ............................. 11.500 Various 5,134,163
138,407 GNMA ............................. 7.000 Various 140,135,552
345,938 GNMA ............................. 7.500 Various 356,094,781
317,069 GNMA ............................. 8.000 Various 330,341,281
271 GNMA ............................. 8.000 Various 283,460
67,125 GNMA ............................. 8.500 Various 70,480,727
149 GNMA ............................. 8.500 Various 156,505
</TABLE>

See Notes to Financial Statements

B-43
<PAGE> 73
Portfolio of Investments (Continued)
December 31, 1995

- -------------------------------------------------------------------------------------
Par
Amount Market
(000) Description Coupon Maturity Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Backed Securities (Continued)
$ 52,260 GNMA ................................. 9.000% Various $ 55,378,532
777,817 GNMA <F3> ............................ 9.000 Various 827,145,631
73,940 GNMA ................................. 9.500 Various 79,323,054
17,930 GNMA ................................. 10.000 Various 19,734,479
26,261 GNMA ................................. 10.500 Various 29,149,659
2,629 GNMA ................................. 11.000 Various 2,952,084
2,920 GNMA ................................. 12.000 Various 3,332,154
3,033 GNMA ................................. 12.500 Various 3,491,670
1,978 GNMA ................................. 13.000 Various 2,292,059
169,688 GNMA (Seasoned) ...................... 9.000 Various 181,617,463
1,037 GNMA GPM ............................. 12.250 Various 1,187,569
250 GNMA II .............................. 8.500 Various 261,462
9,618 GNMA II .............................. 10.500 Various 10,453,341
5,818 GNMA II .............................. 11.000 Various 6,398,140
2,559 GNMA II .............................. 11.500 Various 2,828,421
2,532 GNMA II .............................. 12.000 Various 2,829,987
1,560 GNMA II .............................. 12.500 Various 1,758,891
---------------
4,076,324,010
---------------
U.S. Treasury Securities 10.0%
15,000 U.S. T-Bonds ........................ 13.125 05/15/01 20,335,950
5,000 U.S. T-Bonds ........................ 13.750 08/15/04 7,755,100
55,000 U.S. T-Bonds <F3> ................... 14.000 11/15/11 91,260,400
40,000 U.S. T-Bonds ........................ 12.000 08/15/13 61,710,000
30,000 U.S. T-Bonds ........................ 7.250 08/15/22 34,750,500
55,000 U.S. T-Bonds ........................ 7.500 11/15/24 66,182,600
50,000 U.S. T-Bonds <F3> ................... 7.625 02/15/25 61,115,000
---------------
343,109,550
---------------
Total Long-Term Investments 128.4%
(Cost $4,282,930,048) <F1>........................................ 4,419,433,560
Liabilities in Excess of Other Assets (28.4%)..................... (976,626,407)
---------------
Net Assets 100%.................................................... $ 3,442,807,153
===============

<FN>
<F1> At December 31, 1995, cost for federal income tax purposes is
$4,282,930,048; the aggregate gross unrealized appreciation is $145,587,976
and the aggregate gross unrealized depreciation is $8,104,437, resulting in
net unrealized appreciation including open option transactions of
$137,483,539.

<F2> Securities purchased pursuant to a dollar roll transaction.
<F3> Assets segregated as collateral for dollar roll, reverse repurchase and
open option transactions.
</TABLE>

See Notes to Financial Statements

B-44
<PAGE> 74
Statement of Assets and Liabilities
December 31, 1995

- -------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $4,282,930,048) (Note 1).......................... $ 4,419,433,560
Cash................................................................................. 686
Receivables:
Investments Sold................................................................... 99,240,746
Interest........................................................................... 32,228,063
Fund Shares Sold................................................................... 1,297,917
Options at Market Value (Net premiums paid of $1,926,233) (Note 5)................... 2,906,260
Other................................................................................ 283,088
-----------------
Total Assets..................................................................... 4,555,390,320
-----------------
Liabilities:
Payables:
Investments Purchased (Note 4)..................................................... 976,512,501
Reverse Repurchase Agreements (Note 4)............................................. 115,954,000
Income Distributions .............................................................. 10,410,975
Fund Shares Repurchased............................................................ 3,335,370
Investment Advisory Fee (Note 2)................................................... 1,475,582
Accrued Expenses..................................................................... 4,894,739
-----------------
Total Liabilities................................................................ 1,112,583,167
-----------------
Net Assets........................................................................... $ 3,442,807,153
=================
Net Assets Consist of:
Paid in Surplus (Note 3)............................................................. $ 3,754,082,146
Net Unrealized Appreciation on Investments........................................... 137,483,539
Accumulated Undistributed Net Investment Income...................................... 4,934,355
Accumulated Net Realized Loss on Investments......................................... (453,692,887)
-----------------
Net Assets........................................................................... $ 3,442,807,153
=================
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$2,962,872,443 and 198,186,689 shares of beneficial interest issued and
outstanding) (Note 3)............................................................ $ 14.95
Maximum sales charge (4.75%* of offering price).................................. .75
-----------------
Maximum offering price to public................................................. $ 15.70
=================
Class B Shares:
Net asset value and offering price per share (Based on net assets of $466,659,324
and 31,218,386 shares of beneficial interest issued and outstanding) (Note 3).... $ 14.95
=================
Class C Shares:
Net asset value and offering price per share (Based on net assets of $13,275,386
and 888,082 shares of beneficial interest issued and outstanding) (Note 3)....... $ 14.95
=================
</TABLE>
* On sales of $100,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

B-45
<PAGE> 75
Statement of Operations
For the Year Ended December 31, 1995

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------

<S> <C>
Investment Income:
Interest................................................................................ $ 292,245,019
Fee Income (Note 4)..................................................................... 13,105,469
------------------
Total Income........................................................................ 305,350,488
------------------
Expenses:
Investment Advisory Fee (Note 2)........................................................ 17,475,740
Distribution (12b-1) and Service Fees (Allocated to Classes A, B, C and D of
$5,543,018,$4,537,659, $116,637 and $1, respectively) (Note 7) ....................... 10,197,315
Shareholder Services (Note 2) .......................................................... 4,647,943
Custody................................................................................. 2,029,910
Legal (Note 2).......................................................................... 326,992
Trustees Fees and Expenses (Note 2)..................................................... 61,879
Other................................................................................... 1,019,456
------------------
Total Operating Expenses............................................................ 35,759,235
Interest Expense (Note 4)........................................................... 9,371,512
------------------
Total Expenses...................................................................... 45,130,747
Less Expenses Reimbursed............................................................ 13,125
------------------
Net Expenses........................................................................ 45,117,622
------------------
Net Investment Income................................................................... $ 260,232,866
==================
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales................................................................... $ 8,803,856,172
Cost of Securities Sold............................................................... (8,807,627,946)
------------------
Net Realized Loss on Investments (Including realized loss on closed and expired option
transactions of $44,265,301).......................................................... (3,771,774)
------------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period............................................................... (162,461,005)
End of the Period (Including unrealized appreciation on open option transactions of
$980,027)........................................................................... 137,483,539
------------------
Net Unrealized Appreciation on Investments During the Period............................ 299,944,544
------------------
Net Realized and Unrealized Gain on Investments......................................... $ 296,172,770
==================
Net Increase in Net Assets from Operations.............................................. $ 556,405,636
==================
</TABLE>

See Notes to Financial Statements

B-46
<PAGE> 76
Statement of Changes in Net Assets
For the Years Ended December 31, 1995 and 1994

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.............................................. $ 260,232,866 $ 300,654,036
Net Realized Loss on Investments................................... (3,771,774) (181,281,942)
Net Unrealized Appreciation/Depreciation on Investments
During the Period................................................ 299,944,544 (331,730,536)
----------------- -----------------
Change in Net Assets from Operations .............................. 556,405,636 (212,358,442)
Distributions from Net Investment Income*.......................... (256,065,504) (299,974,780)
----------------- -----------------
Net Change in Net Assets from Investment Activities................ 300,340,132 (512,333,222)
----------------- -----------------
From Capital Transactions (Note 3):
Proceeds from Shares Sold.......................................... 114,233,308 225,736,668
Net Asset Value of Shares Issued Through Dividend Reinvestment..... 125,466,322 146,031,506
Cost of Shares Repurchased......................................... (469,431,118) (625,132,457)
----------------- -----------------
Net Change in Net Assets from Capital Transactions................. (229,731,488) (253,364,283)
----------------- -----------------
Total Increase/Decrease in Net Assets.............................. 70,608,644 (765,697,505)
Net Assets:
Beginning of the Period............................................ 3,372,198,509 4,137,896,014
----------------- -----------------
End of the Period (Including undistributed net investment income
of $4,934,355 and $766,993, respectively)........................ $ 3,442,807,153 $ 3,372,198,509
================= =================
</TABLE>

<TABLE>
<CAPTION>
Year Ended Year Ended
*Distributions by Class December 31, 1995 December 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Distributions from Net Investment Income:
Class A Shares......................... $ (224,639,172) $ (265,263,650)
Class B Shares......................... (30,640,126) (33,862,695)
Class C Shares......................... (786,177) (848,319)
Class D Shares......................... (29) (116)
----------------- -----------------
$ (256,065,504) $ (299,974,780)
================= =================
</TABLE>

See Notes to Financial Statements

B-47
<PAGE> 77
Financial Highlights

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

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
----------------------------------------------------
Class A Shares 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period...................................... $ 13.698 $ 15.662 $ 15.720 $ 16.130 $ 15.253
--------- ---------- ---------- ---------- ---------
Net Investment Income....................................................... 1.111 1.177 1.286 1.365 1.390
Net Realized and Unrealized Gain/Loss on Investments........................ 1.233 (1.965) (.060) (.407) .897
--------- ---------- ---------- ---------- ---------
Total from Investment Operations.............................................. 2.344 (.788) 1.226 .958 2.287
Less Distributions from and in Excess of Net Investment Income................ 1.092 1.176 1.284 1.368 1.410
--------- ---------- ---------- ---------- ---------
Net Asset Value, End of the Period............................................ $ 14.950 $ 13.698 $ 15.662 $ 15.720 $ 16.130
========= ========== ========== ========== =========
Total Return.................................................................. 17.61% (5.10%) 7.95% 6.27% 15.80%
Net Assets at End of the Period (In millions)................................. $ 2,962.9 $ 2,924.4 $ 3,653.6 $ 3,571.7 $ 3,505.9
Ratio of Operating Expenses to Average Net Assets (Annualized)................ .93%* .92% .87% .77% .68%
Ratio of Interest Expense to Average
Net Assets (Annualized) (Note 4)............................................ .27% .08% N/A N/A N/A
Ratio of Net Investment Income to
Average Net Assets (Annualized)............................................. 7.68%* 8.13% 8.08% 8.64% 8.97%
Portfolio Turnover (Excluding Dollar Rolls and Forward Transactions).......... 63.18% 43.69% 67.04% 10.94% 26.87%

</TABLE>

* The Ratios of Expenses to Average Net Assets and Net Investment Income to
Average Net Assets were not affected by the assumption of certain expenses
by VKAC.

N/A = Prior to 1994, interest expense was immaterial and subsequently netted
against interest income.

See Notes to Financial Statements

B-48
<PAGE> 78
Financial Highlights (Continued)

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

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
August 24, 1992
Year Ended December 31 (Commencement of
------------------------------------------ Distribution) to
Class B Shares 1995 1994 1993 December 31, 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period................ $ 13.694 $ 15.643 $ 15.709 $ 15.983
--------- ----------- ---------- -----------
Net Investment Income................................. .991 1.055 1.149 .425
Net Realized and Unrealized Gain/Loss on Investments.. 1.241 (1.964) (.063) (.263)
--------- ----------- ---------- -----------
Total from Investment Operations........................ 2.232 (.909) 1.086 .162
Less Distributions from and in Excess
of Net Investment Income.............................. .978 1.040 1.152 .436
--------- ----------- ---------- -----------
Net Asset Value, End of the Period...................... $ 14.948 $ 13.694 $ 15.643 $ 15.709
========= =========== ========== ===========
Total Return............................................ 16.78% (5.93%) 7.01% 1.64%*
Net Assets at End of the Period (In millions)........... $ 466.7 $ 436.3 $ 474.7 $ 103.1
Ratio of Operating Expenses to Average
Net Assets (Annualized)............................... 1.75%** 1.74% 1.73% 1.61%
Ratio of Interest Expense to Average Net Assets
(Annualized) (Note 4)................................. .27% .09% N/A N/A
Ratio of Net Investment Income to Average Net
Assets (Annualized)................................... 6.85%** 7.29% 7.00% 6.16%
Portfolio Turnover (Excluding Dollar Rolls and
Forward Transactions)................................. 63.18% 43.69% 67.04% 110.94%

</TABLE>

*Non-Annualized

**The Ratios of Expenses to Average Net Assets and Net Investment Income
to Average Net Assets were not affected by the assumption of certain
expenses by VKAC.

N/A = Prior to 1994, interest expense was immaterial and subsequently
netted against interest income.

See Notes to Financial Statements

B-49
<PAGE> 79
Financial Highlights (Continued)

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

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
August 13, 1993
(Commencement of
Year Ended Year Ended Distribution) to
Class C Shares December 31, 1995 December 31, 1994 December 31, 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period.................. $ 13.693 $ 15.626 $ 16.000
----------- --------- -----------
Net Investment Income................................... .996 1.063 .433
Net Realized and Unrealized Gain/Loss on Investments ... 1.237 (1.956) (.364)
----------- --------- -----------
Total from Investment Operations.......................... 2.233 (.893) .069
Less Distributions from and in Excess
of Net Investment Income................................ .978 1.040 .443
----------- --------- -----------
Net Asset Value, End of the Period........................ $ 14.948 $ 13.693 $ 15.626
=========== ========= ===========
Total Return.............................................. 16.78% (5.86%) .46%*
Net Assets at End of the Period (In millions)............. $ 13.3 $ 11.4 $ 9.6
Ratio of Operating Expenses to Average Net
Assets (Annualized)..................................... 1.75%** 1.74% 1.71%
Ratio of Interest Expense to Average Net
Assets (Annualized) (Note 4)............................ .27% .10% N/A
Ratio of Net Investment Income to
Average Net Assets (Annualized)......................... 6.86%** 7.29% 6.42%
Portfolio Turnover (Excluding Dollar Rolls and
Forward Transactions)................................... 63.18% 43.69% 67.04%

*Non-Annualized

**The Ratios of Expenses to Average Net Assets and Net Investment Income to
Average Net Assets were not affected by the assumption of certain expenses
by VKAC.

N/A = Prior to 1994, interest expense was immaterial and subsequently netted
against interest income.
</TABLE>

See Notes to Financial Statements

B-50

<PAGE> 80
Notes to Financial Statements
December 31, 1995
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

Van Kampen American Capital U.S. Government Fund (the "Fund") is organized as a
series of Van Kampen American Capital U.S. Government Trust (the "Trust"), a
Delaware business trust and is registered as a diversified open-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to provide a high level of current
income, with liquidity and safety of principal. The Fund commenced investment
operations on May 31, 1984. The distribution of the Fund's Class B and Class C
shares commenced on August 24, 1992 and August 13, 1993, respectively. On May
2, 1995, all Class D shareholders redeemed their shares and the class was
eliminated. The Fund will no longer offer Class D shares.

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.

A. Security Valuation--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in
accordance with procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of less than 60 days are
valued at amortized cost.

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
December 31, 1995, there were no when issued or delayed delivery purchase
commitments.

C. Investment Income and Expenses--Interest income and expenses are recorded on
an accrual basis. Original issue discounts on securities purchased are
amortized over the expected life of each applicable security.

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.

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

The Fund intends to utilize provisions of the federal income tax laws
which allow it to carry a realized capital loss forward for eight years
following the year of loss and offset such losses against any future realized
capital gains. At December 31, 1995, the Fund had an accumulated capital loss
carryforward for tax purposes of $453,692,887. Of this amount, $157,069,720,
$50,594,575, $6,272,412, $8,800,432, $45,902,032, $181,281,942 and $3,771,774
will expire on December 31, 1996, 1997, 1998, 2000, 2001, 2002 and 2003,
respectively. On December 31, 1995, $74,101,929 of the Fund's capital loss
carryforward expired, resulting in a permanent book and tax basis difference.
Accordingly, this difference was reclassified from accumulated net realized
loss on investments to Class A share paid in surplus.

B-51
<PAGE> 81
Notes to Financial Statements (Continued)
December 31, 1995
- --------------------------------------------------------------------------------

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 as ordinary income for
tax purposes.

2. Investment Advisory Agreement and Other Transactions with Affiliates

Under the terms of the Fund's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (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 $500 million..... .550 of 1%
Next $500 million...... .525 of 1%
Next $2 billion........ .500 of 1%
Next $2 billion........ .475 of 1%
Next $2 billion........ .450 of 1%
Next $2 billion........ .425 of 1%
Thereafter............. .400 of 1%
</TABLE>

Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

For the year ended December 31, 1995, the Fund recognized expenses of
approximately $860,500 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting,
cash management, legal and certain shareholder services (prior to July 1995) to
the Fund.

In July 1995, the Fund began using ACCESS Investor Services, Inc., an
affiliate of the Adviser, as the transfer agent of the Fund. For the year ended
December 31, 1995, the Fund recognized expenses of approximately $1,720,000,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.

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

The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC. The Fund's liability under the
deferred compensation and retirement plans at December 31, 1995, was
approximately $47,100.

At December 31, 1995, VKAC owned 100 shares of Class C.

B-52
<PAGE> 82
Notes to Financial Statements (Continued)
December 31, 1995
- --------------------------------------------------------------------------------

3. Capital Transactions

The Fund has outstanding three classes of common shares, Classes A, B and C.
There are an unlimited number of shares of each class without par value
authorized. At December 31, 1995, paid in surplus aggregated $3,241,403,229,
$498,757,767 and $13,921,150 for Class A, B and C, respectively. For the year
ended December 31, 1995, transactions were as follows:

<TABLE>
<CAPTION>
Shares Value
- ---------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A....................... 4,450,487 $ 64,561,951
Class B....................... 3,196,962 46,404,360
Class C....................... 223,253 3,266,997
Class D....................... -0- -0-
------------ ----------------
Total Sales..................... 7,870,702 $ 114,233,308
============ ================
Dividend Reinvestment:
Class A....................... 7,595,317 $ 110,358,313
Class B....................... 1,006,560 14,629,660
Class C....................... 32,914 478,345
Class D....................... -0- 4
------------ ----------------
Total Dividend Reinvestment..... 8,634,791 $ 125,466,322
============ ================
Repurchases:
Class A....................... (27,345,845) $ (396,421,409)
Class B....................... (4,846,397) (70,074,798)
Class C....................... (202,889) (2,933,194)
Class D....................... (114) (1,717)
------------ ================
Total Repurchases............... (32,395,245) $ (469,431,118)
============ ================
</TABLE>

B-53
<PAGE> 83
Notes to Financial Statements (Continued)
December 31, 1995
- --------------------------------------------------------------------------------

At December 31, 1994, paid in surplus aggregated $3,537,006,303,
$507,798,545, $13,109,002 and $1,713 for Classes A, B, C and D, respectively.
For the year ended December 31, 1994, transactions were as follows:

<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A...................... 7,599,641 $ 112,208,814
Class B...................... 7,168,455 106,241,984
Class C...................... 498,458 7,284,166
Class D...................... 113 1,704
------------ ----------------
Total Sales.................... 15,266,667 $ 225,736,668
============ ================
Dividend Reinvestment:
Class A...................... 8,956,898 $ 129,070,604
Class B...................... 1,141,680 16,421,225
Class C...................... 37,661 539,668
Class D...................... 1 9
------------ ----------------
Total Dividend Reinvestment.... 10,136,240 $ 146,031,506
============ ================
Repurchases:
Class A...................... (36,347,230) $ (523,299,211)
Class B...................... (6,793,189) (97,347,991)
Class C...................... (317,931) (4,485,255)
Class D...................... -0- -0-
------------- ----------------
Total Repurchases.............. (43,458,350) $ (625,132,457)
============= ================
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within six years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales
arrangements, including higher distribution and service fees and incremental
transfer agency costs.

Contingent Deferred
Sales Charge
Year of Redemption Class B Class C
- ---------------------------------------------
First...................... 4.00% 1.00%
Second..................... 3.75% None
Third...................... 3.50% None
Fourth..................... 2.50% None
Fifth...................... 1.50% None
Sixth...................... 1.00% None
Seventh and Thereafter..... None None

For the year ended December 31, 1995, VKAC, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$193,700 and CDSC on the redeemed shares of Classes B and C of approximately
$1,661,200. Sales charges do not represent expenses of the Fund.

B-54
<PAGE> 84
Notes to Financial Statements (Continued)
December 31, 1995
- --------------------------------------------------------------------------------

4. Investment Transactions

Aggregate purchases and cost of sales of investment securities, including
principal paydowns and dollar rolls, excluding short-term notes, for the year
ended December 31, 1995, were $8,523,171,213 and $8,807,627,946, respectively.

The Fund utilizes investment techniques called "dollar rolls," "forward
transactions" and reverse repurchase agreements for leverage purposes. In a
dollar roll, the Fund sells securities for delivery in the current month and
simultaneously contracts to repurchase, typically in 30 to 60 days,
substantially similar (same type, coupon and maturity) securities on a
specified future date from the same party at an agreed upon price which is
less than the sales price. The Fund is compensated by the difference between
the current sales price and the forward price for the future purchase.

In a forward transaction, the Fund purchases securities for delivery in the
current month and subsequently agrees to postpone delivery until the next
available delivery date, usually the next month. The Fund receives a fee as
compensation for postponing delivery. Fee income on these transactions is
recognized at the offsetting transaction's trade date for dollar rolls and the
date when settlement is postponed for forward transactions. At December 31,
1995, the Fund had open dollar roll and/or forward transactions with a market
value of $896.0 million and related assets segregated for these open purchases
of $900.7 million.

In a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. During the reverse
repurchase agreement period, the Fund continues to receive principal and inter-
est payments on these securities but pays interest to the counter-party based
upon a short-term interest rate. The average daily balance of reverse
repurchase agreements during the period was approximately $158.3 million
with an average interest rate of 5.919%. At December 31, 1995, the interest
rate in effect for reverse repurchase agreements was 5.674%.

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 utilizes option contracts to manage the portfolio's effective
maturity or duration. Options are marked to market each day with the change in
value reflected in the unrealized appreciation/depreciation on investments.
Upon disposition, a realized gain or loss is recognized accordingly, except
for exercised option contracts where the recognition of gain or loss is
postponed until the disposal of the security underlying the option contract.
An option contract gives the buyer the right, but not the obligation to buy
(call) or sell (put) an underlying item at a fixed exercise price during a
specified period.

Transactions in options for the year ended December 31, 1995, were as
follows:

<TABLE>
<CAPTION>
Contracts Premium
- ------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 31, 1994..... -0- $ -0-
Options Written and Purchased
(Net).............................. 109,117 (131,629,351)
Options Terminated in Closing
Transactions (Net)................. (75,800) 112,638,675
Options Expired (Net)................ (31,317) 17,064,443
--------- ----------------
Outstanding at December 31, 1995..... 2,000 $ (1,926,233)
========= ================
</TABLE>

B-55
<PAGE> 85
Notes to Financial Statements (Continued)
December 31, 1995
- --------------------------------------------------------------------------------

The related futures contracts of the outstanding option transactions as of
December 31, 1995, and the description and market value is as follows:

<TABLE>
<CAPTION>
Exp. Month/ Market Value
Contracts Exercise Price of Options
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Mar 1996 US Treasury Bond
Futures-Purchased Calls...... 2,000 Feb/122 $ 2,906,260
========= ============
</TABLE>

6. Mortgage Backed Securities

A Mortgage Backed Security (MBS) is a pass-through security created by pooling
mortgages and selling participations in the principal and interest payments
received from borrowers. Most of these securities are guaranteed by federally
sponsored agencies---Government National Mortgage Association (GNMA), Federal
National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC).

A Collateralized Mortgage Obligation (CMO) is a bond which is collateralized
by a pool of MBS's. The Fund also invests in REMIC's (Real Estate Mortgage
Investment Conduit) which are simply another form of CMO. These MBS pools are
divided into classes or tranches with each class having its own
characteristics. For instance, a PAC (Planned Amortization Class) is a
specific class of mortgages which over its life will generally have the most
stable cash flows and the lowest prepayment risk. A GPM (Graduated Payment
Mortgage) is a negative amortization mortgage where the payment amount
gradually increases over the life of the mortgage. The early payment amounts
are not sufficient to cover the interest due and, therefore, the unpaid
interest is added to the principal, thus increasing the borrower's mortgage
balance.

An Interest Only security is another class of MBS representing ownership in
the cash flows of the interest payments made from a specified pool of MBS. The
cash flow on this instrument decreases as the mortgage principal balance is
repaid by the borrower.

7. Distribution and Service Plans

The Fund and its shareholders have adopted a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 and a service plan (the "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 shares and 1.00% each of
Class B and Class C shares are accrued daily. Included in these fees for the
year ended December 31, 1995, are payments to VKAC of approximately $3,973,200.

B-56

<PAGE> 86

PART C: OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS:

Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information:
Independent Auditors' Report
Financial Statements
Notes to Financial Statements

(B) EXHIBITS:

<TABLE>
<S> <C>
(1)(a) Agreement and Declaration of Trust(+)
(b) Certificate of Designation(+)
(2) By-Laws(+)
(4) Specimen of Share Certificate
(i) Class A Shares(+)
(ii) Class B Shares(+)
(iii) Class C Shares(+)
(5) Investment Advisory Agreement(+)
(6)(a) Distribution and Service Agreement(+)
(b) Form of Dealer Agreement(27)
(c) Form of Broker Agreement(27)
(d) Form of Bank Agreement(27)
(8)(a) Custodian Agreement(8)
(b) Transfer Agency and Service Agreement(+)
(9)(a) Amended and Restated Fund Accounting Agreement(+)
(b) Amended and Restated Legal Services Agreement(+)
(10) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom(+)
(11) Consent of KPMG Peat Marwick LLP(+)
(13) Letter of understand relating to initial capital*
(14)(a) Copy of Proposed Model Simplified Employee Pension Plan.(1)
(b) Copy of Proposed Model Individual Retirement Account Plan.(2)
(i) Copy of Proposed Profit-Sharing Adoption Agreement for Prototype
Paired Defined Contribution Plan.(3)
(ii) Copy of Proposed Money Purchase Pension Adoption Agreement for
Prototype Paired Defined Contribution Plan.(3)
(15)(a) Plan of Distribution Pursuant to Rule 12b-1(+)
(b) Form of Shareholder Assistance Agreement(27)
(c) Form of Administrative Services Agreement(27)
(d) Service Plan(+)
(16) Computation of Performance Quotations(+)
(17)(a) Investment Companies for which Van Kampen American Capital Distributors, Inc.
acts as principal underwriter or depositor(+)
(b) List of Officers and Directors of Van Kampen American Capital Distributors,
Inc.(+)
(24) Power of Attorney(27)
(27) Financial Data Schedules(+)
</TABLE>

- ---------------
* Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement, File No. 2-89190, filed on April 6,
1984.

(1) Incorporated herein by reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File No. 2-89190, filed on June 19,
1984.

(2) Incorporated herein by reference to Post-Effective Amendment No. 2 to
Registrant's Registration Statement, File No. 2-89190, filed on August 20,
1984.

C-1
<PAGE> 87

(3) Incorporated herein by reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File No. 2-89190, filed on January 25,
1985.

(8) Incorporated herein by reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File No. 2-89190, filed February 5,
1988.

(25) Incorporated herein by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement, File No. 2-89190, filed April 28,
1995.

(27) Incorporated herein by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement, File No. 2-89190, filed August 2,
1995.

+ Filed herewith.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

To the best knowledge of Registrant, no person is controlled by or under
common control with the Registrant.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES:

AS OF APRIL 10, 1996

<TABLE>
<CAPTION>
(1) (2)
NUMBER OF RECORD HOLDERS
-----------------------------
TITLE OF CLASS CLASS A CLASS B CLASS C
-------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Shares of Beneficial Interest,*
$0.01 par value..................... 119,140 18,982 339
* Prior to May 1, 1995, the Fund offered Class D Shares.
</TABLE>

ITEM 27. INDEMNIFICATION:

Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust.

Article 8, Section 8.4 of the Agreement and Declaration of Trust provides
that each officer and trustee of the Registrant shall be indemnified by the
Registrant against all liabilities incurred in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which the officer or trustee may be or may have been involved by reason of
being or having been an officer or trustee, except that such indemnity shall not
protect any such person against a liability to the Registrant or any shareholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved 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 willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved 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 officers 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 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.

C-2
<PAGE> 88

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by the trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:

See "How the Fund is Managed" in the Prospectus and "Trustees and Officers"
and "Investment Advisory and Other Services" in the Statement of Additional
Information for information regarding the business of the Adviser. For
information as to the business, profession, vocation or employment of a
substantial nature of each of the officers and Directors of Van Kampen American
Capital Investment Advisory Corp., reference is made to the Adviser's current
Form ADV filed under the Investment Advisers Act of 1940, incorporated herein by
reference.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) The sole principal underwriter is Van Kampen American Capital
Distributors, Inc., which acts as a principal underwriter for certain investment
companies and unit investment trusts set forth in Exhibit (17)(a) hereto.

(b) Van Kampen American Capital Distributors, Inc., which is an affiliated
person of an affiliated person of the Fund. The name, principal business address
and positions and offices with Van Kampen American Capital Distributors, Inc. of
each of the officers thereof are set forth in Exhibit 17(b). Except as disclosed
under the heading "Officers and Trustees" in Part B of this Registration
Statement, none of such persons has any position or office with Registrant.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS:

All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, ACCESS 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; (ii) by the Adviser, will
be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181; and (iii) by the Distributor, the principal underwriter, will be
maintained at its offices located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.

ITEM 31. MANAGEMENT SERVICES:

Not applicable.

ITEM 32. UNDERTAKINGS:

(a) Not applicable.

(b) Not applicable.

(c) The Registrant provides the information required by Item 5A in the
respective annual reports to shareholders of Registrant's series and hereby
undertakes to furnish without charge to each person to whom a prospectus is
delivered for a particular series with a copy of the latest annual report to
shareholders of such series.

C-3
<PAGE> 89

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, VAN KAMPEN AMERICAN CAPITAL U.S.
GOVERNMENT FUND, certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 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 the State of Illinois, on the
19th day of April, 1996.

VAN KAMPEN AMERICAN CAPITAL

U.S. GOVERNMENT FUND

By: /s/ RONALD A. NYBERG

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

Ronald A. Nyberg, Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this Registration Statement has been signed on April 19, 1996 by the
following persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------------- ----------------------------
<C> <S> <C>
Principal Executive Officer:
/s/ DON G. POWELL* President and Trustee
- -------------------------------------------------
Don G. Powell

Principal Financial Officer:
/s/ EDWARD C. WOOD III Vice President and Chief
- ------------------------------------------------- Financial Officer
Edward C. Wood III
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- -------------------------------------------------
J. Miles Branagan
Trustee
- -------------------------------------------------
Linda Hutton Heagy

/s/ ROGER HILSMAN* Trustee
- -------------------------------------------------
Roger Hilsman

/s/ R. CRAIG KENNEDY* Trustee
- -------------------------------------------------
R. Craig Kennedy

/s/ DENNIS J. MCDONNELL* Trustee
- -------------------------------------------------
Dennis J. McDonnell

/s/ DONALD C. MILLER* Trustee
- -------------------------------------------------
Donald C. Miller

/s/ JACK E. NELSON* Trustee
- -------------------------------------------------
Jack E. Nelson

/s/ JEROME L. ROBINSON* Trustee
- -------------------------------------------------
Jerome L. Robinson

/s/ FERNANDO SISTO* Trustee
- -------------------------------------------------
Fernando Sisto

/s/ WAYNE W. WHALEN* Trustee
- -------------------------------------------------
Wayne W. Whalen

/s/ WILLIAM S. WOODSIDE* Trustee
- -------------------------------------------------
William S. Woodside
- ------------
* Signed by Ronald A. Nyberg pursuant to a power of attorney.
RONALD A. NYBERG April 19, 1996
- -------------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>

C-4
<PAGE> 90

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

SCHEDULE OF EXHIBITS TO POST-EFFECTIVE

AMENDMENT 28 TO FORM N-1A SUBMITTED TO THE

SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 1996

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------- ------------------------------------------------------------------------- ------
<S> <C> <C>
(1)(a) Agreement and Declaration of Trust
(b) Certificate of Designation
(2) By-Laws
(4) Specimen of Share Certificate
(i) Class A Shares
(ii) Class B Shares
(iii) Class C Shares
(5) Investment Advisory Agreement
(6)(a) Distribution and Service Agreement
(8)(b) Transfer Agency and Service Agreement
(9)(a) Amended and Restated Fund Accounting Agreement
(b) Amended and Restated Legal Services Agreement
(10) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(11) Consent of KPMG Peat Marwick LLP
(15)(a) Plan of Distribution Pursuant to Rule 12b-1
(d) Service Plan
(16) Computation of Performance Quotations
(17)(a) Investment Companies for which Van Kampen American Capital Distributors,
Inc. acts as principal underwriter or depositor
(b) List of Officers and Directors of Van Kampen American
Capital Distributors, Inc.
(27) Financial Data Schedules
</TABLE>

<PAGE> 1
EXHIBIT (1)(a)

AGREEMENT AND DECLARATION OF TRUST

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

May 10, 1995

<PAGE> 2

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
AGREEMENT AND DECLARATION OF TRUST

Index

<TABLE>
<S> <C>
RECITALS ................................................................ 1

ARTICLE I THE TRUST ..................................................... 2

SECTION 1.1 Name ........................................................ 2

SECTION 1.2. Location ................................................... 2

SECTION 1.3. Nature of Trust ............................................ 2

SECTION 1.4. Definitions ................................................ 2

SECTION 1.5. Real Property to be Converted into Personal Property ....... 4

ARTICLE 2 PURPOSE OF THE TRUST .......................................... 4

ARTICLE 3 POWERS OF THE TRUSTEES ........................................ 5

SECTION 3.1. Powers in General .......................................... 5
(a) Investments ........................................................ 5
(b) Disposition of Assets .............................................. 5
(c) Ownership Powers ................................................... 6
(d) Form of Holding .................................................... 6
(e) Reorganization, etc. ............................................... 6
(f) Voting Trusts, etc. ................................................ 6
(g) Contracts, etc. .................................................... 6
(h) Guarantees, etc. ................................................... 6
(i) Partnerships, etc. ................................................. 6
(j) Insurance .......................................................... 6
(k) Pensions, etc ...................................................... 6
(l) Power of Collection and Litigation ................................. 6
(m) Issuance and Repurchase of Shares .................................. 7
(n) Offices ............................................................ 7
(o) Expenses ........................................................... 7
(p) Agents, etc. ....................................................... 7
(q) Accounts . ......................................................... 7
(r) Valuation .......................................................... 7
(s) Indemnification .................................................... 7
(t) General ............................................................ 7

SECTION 3.2. Borrowings; Financings; Issuance of Securities .............. 7
</TABLE>

<PAGE> 3

<TABLE>
<S> <C> <C>
SECTION 3.3. Deposits .................................................. 8

SECTION 3.4. Allocations ............................................... 8

SECTION 3.5. Further Powers; Limitations ............................... 8

ARTICLE 4 TRUSTEES AND OFFICERS ..................................... 8

SECTION 4.1. Number, Designation, Election, Term, etc .................. 8
(a) Initial Trustee ............................................................ 8
(b) Number ..................................................................... 8
(c) Election and Term .......................................................... 8
(d) Resignation and Retirement ................................................. 9
(e) Removal .................................................................... 9
(f) Vacancies .................................................................. 9
(g) Acceptance of Trusts ....................................................... 9
(h) Effect of Death, Resignation, etc. ......................................... 9
(i) Conveyance ................................................................. 9
(j) No Accounting .............................................................. 9

SECTION 4.2. Trustees' Meetings; Participation by Telephone, etc. ...... 9

SECTION 4.3. Committees; Delegation .................................... 10

SECTION 4.4. Officers .................................................. 10

SECTION 4.5. Compensation of Trustees and Officers ..................... 10

SECTION 4.6. Ownership of Shares and Securities of the Trust ........... 10

SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage
in Business; Authority of Trustees to Permit Others to Do
Likewise .................................................. 10

SECTION 4.8. Reliance on Experts ....................................... 11

SECTION 4.9. Surety Bonds .............................................. 11

SECTION 4.10. Apparent Authority of Trustees and Officers ............... 11

SECTION 4.11. Other Relationships Not Prohibited ........................ 11

SECTION 4.12. Payment of Trust Expenses ................................. 11

SECTION 4.13. Ownership of the Trust Property ........................... 12
</TABLE>

<PAGE> 4
<TABLE>
<S> <C>
SECTION 4.14. By-Laws ...................................... 12

ARTICLE 5 DELEGATION OF MANAGERIAL RESPONSIBILITIES ........ 12

SECTION 5.1. Appointment; Action by Less than All Trustees . 12

SECTION 5.2. Certain Contracts ............................. 12
(a) Advisory ............................................... 12
(b) Administration ......................................... 13
(c) Underwriting ........................................... 13
(d) Custodian .............................................. 13
(e) Transfer and Dividend Disbursing Agent ................. 13
(f) Shareholder Servicing .................................. 13
(g) Accounting ............................................. 13

Section 5.3. Distribution Arrangements ..................... 13

Section 5.4. Service Arrangements .......................... 13

ARTICLE 6 SERIES AND SHARES ................................ 13

SECTION 6.1. Description of Series and Shares .............. 13
(a) General ................................................ 14
(b) Establishment, etc. of Series; Authorization of Shares.. 14
(c) Character of Separate Series and Shares Thereof ........ 14
(d) Consideration for Shares ............................... 14
(e) Assets Belonging to Series ............................. 14
(f) Liabilities of Series .................................. 15
(g) Dividends .............................................. 15
(h) Liquidation ............................................ 15
(i) Voting ................................................. 15
(j) Redemption by Shareholder .............................. 15
(k) Redemption at the Option of the Trust .................. 16
(l) Net Asset Value ........................................ 16
(m) Transfer ............................................... 16
(n) Equality ............................................... 16
(o) Rights of Fractional Shares ............................ 17
(p) Conversion Rights ...................................... 17

SECTION 6.2. Ownership of Shares .......................... 17

SECTION 6.3. Investments in the Trust ..................... 17

SECTION 6.4. No Pre-emptive Rights ........................ 17
</TABLE>

iii

<PAGE> 5
<TABLE>
<S> <C>
SECTION 6.5. Status of Shares ................................................... 17

ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS ....................... 18

SECTION 7.1. Voting Powers .................................................. 18

SECTION 7.2. Number of Votes and Manner of Voting; Proxies .................. 18

SECTION 7.3. Meetings ....................................................... 18

SECTION 7.4. Record Dates ................................................... 19

SECTION 7.5. Quorum and Required Vote ....................................... 19

SECTION 7.6. Action by Written Consent ...................................... 19

SECTION 7.7. Inspection of Records .......................................... 19

SECTION 7.8. Additional Provisions .......................................... 19

ARTICLE 8 LIMITATION OF LIABILITY; INDEMNIFICATION ....................... 19

SECTION 8.1. Trustees, Shareholders, etc. Not Personally Liable; Notice ..... 19

SECTION 8.2. Trustees' Good Faith Action; Expert Advice; No Bond or Surety .. 20

SECTION 8.3. Indemnification of Shareholders ................................ 20

SECTION 8.4. Indemnification of Trustees, Officers, etc. .................... 20

SECTION 8.5. Compromise Payment ............................................. 21

SECTION 8.6. Indemnification Not Exclusive, etc. ............................ 21

SECTION 8.7. Liability of Third Persons Dealing with Trustees ............... 21

ARTICLE 9 DURATION; REORGANIZATION; INCORPORATION;
AMENDMENTS ..................................................... 21

SECTION 9.1. Duration of Trust .............................................. 21

SECTION 9.2. Termination of Trust ........................................... 21

SECTION 9.3. Reorganization ................................................. 22

SECTION 9.4. Incorporation .................................................. 22
</TABLE>

<PAGE> 6
<TABLE>
<S> <C>
SECTION 9.5. Amendments; etc. ................................ 22

SECTION 9.6. Filing of Copies of Declaration and Amendments .. 22

ARTICLE 10 MISCELLANEOUS ..................................... 23

SECTION 10.1. Notices ........................................ 23

SECTION 10.2. Governing Law .................................. 23

SECTION 10.3. Counterparts ................................... 23

SECTION 10.4. Reliance by Third Parties ...................... 23

SECTION 10.5. References; Headings ........................... 23

SECTION 10.6. Provisions in Conflict With Law or Regulation .. 23

SECTION 10.7. Use of the Name "Van Kampen American Capital" .. 23

Signature .................................................... 25

Acknowledgments .............................................. 26
</TABLE>

<PAGE> 7

AGREEMENT AND DECLARATION OF TRUST

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

This AGREEMENT AND DECLARATION OF TRUST, made at this 10th day of May,
1995, by and between Ronald A. Nyberg, an individual residing in Naperville,
Illinois (the "Settlor"), and the Trustee whose signature is set forth below
(the "Initial Trustee").

W I T N E S S E T H T H A T:

WHEREAS, the Settlor proposes to deliver to the Initial Trustee the sum of
one hundred dollars ($100.00) lawful money of the United States of America in
trust hereunder and to authorize the Initial Trustee and all other individuals
acting as Trustees hereunder to employ such funds, and any other funds coming
into their hands or the hands of their successor or successors as such
Trustees, to carry on the business of an investment company and as such of
buying, selling, investing or otherwise dealing in and with stocks, bonds,
debentures, warrants and other securities and interests therein, financial
futures contracts, or options with respect to securities or financial futures
contracts, and such other and further investment media and other property as
the Trustees may deem advisable, which are not prohibited by law or the terms
of this Declaration; and

WHEREAS, the Initial Trustee is willing to accept such sum, together with
any and all additions thereto and the income or increments thereof, upon the
terms, conditions and trusts hereinafter set forth; and

WHEREAS, the beneficial interest in the assets held by the Trustees shall
be divided into transferable Shares, all in accordance with the provisions
hereinafter set forth; and

WHEREAS, it is desired that the trust established hereby be managed and
operated as a trust with transferable shares under the laws of Delaware with
respect to Delaware business trusts in accordance with the provisions
hereinafter set forth;

NOW, THEREFORE, the Initial Trustee, for himself and his successors as
Trustees, hereby declares and agrees with the Settlor, for himself and for all
Persons who shall hereafter become holders of Shares that the Trustees will
hold the sum delivered to them upon the execution hereof, and all other and
further cash, securities and other property of every type and description which
they may in any way acquire in their capacity as such Trustees, together with
the income therefrom and the proceeds thereof, IN TRUST NEVERTHELESS, to manage
and dispose of the same for the benefit of the holders from time to time of the
Shares being issued and to be issued hereunder and in the manner and subject to
the provisions hereof, to wit:

<PAGE> 8
ARTICLE I

THE TRUST

SECTION 1.1 Name. The name of the Trust shall be

"VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST"

and so far as may be practicable, the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which
name (and the word "Trust" wherever used in this Agreement and Declaration of
Trust, except where the context otherwise requires) shall refer to the Trustees
in their capacity as Trustees, and not individually or personally, and shall
not refer to the officers, agents or employees of the Trust or of such
Trustees, or to the holders of the Shares of Beneficial Interest of the Trust
or any Series. If the Trustees determine that the use of such name is not
practicable, legal or convenient at any time or in any jurisdiction, or if the
Trust is required to discontinue the use of such name pursuant to Section 10.7
hereof, then subject to that Section, the Trustees may use such other
designation, or they may adopt such other name for the Trust as they deem
proper, and the Trust may hold property and conduct its activities under such
designation or name.

SECTION 1.2. Location. The Trust shall maintain a registered office in the
State of Delaware and may have such other offices or places of business as the
Trustees may from time to time determine to be necessary or expedient.

SECTION 1.3. Nature of Trust. The Trust shall be a trust with transferable
shares under the laws of The State of Delaware, of the type defined in Title
12, Chapter 38, Section 3801 of the Delaware Code as a business trust. The
Trust is not intended to be, shall not be deemed to be, and shall not be
treated as, a general partnership, limited partnership, joint venture,
corporation or joint stock company. The Shareholders shall be beneficiaries and
their relationship to the Trustees shall be solely in that capacity in
accordance with the rights conferred upon them hereunder.

SECTION 1.4. Definitions. As used in this Agreement and Declaration of
Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:

"Accounting Agent" shall have the meaning designated in Section 5.2(g)
hereof.

"Administrator" shall have the meaning designated in Section 5.2(b)
hereof.

"Affiliated Person" shall have the meaning assigned to it in the 1940 Act.

"By-Laws" shall mean the By-Laws of the Trust, as amended from time to
time.

"Certificate of Designation" shall have the meaning designated in Section
6.1 hereof.

"Certificate of Termination" shall have the meaning designated in Section
6.1 hereof.

"Class" or "Classes" shall mean, with respect to any Series, any unissued
Shares of such Series in respect of which the Trustees shall from time to time
fix and determine any special provisions relating to sales charges, any rights
of redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the Shareholders of such Class shall have separate voting rights or no
voting rights.

"Commission" shall have the same meaning as in the 1940 Act.

"Contracting Party" shall have the meaning designated in the preamble to
Section 5.2 hereof.

"Conversion Date" shall mean with respect to Shares of any Class that are
convertible automatically into Shares of any other Class of a Series the date
fixed by the Trustees for such conversion.

"Covered Person" shall have the meaning designated in Section 8.4 hereof.

"Custodian" shall have the meaning designated in Section 5.2(d) hereof.

"Declaration" and "Declaration of Trust" shall mean this Agreement and
Declaration of Trust and all amendments or modifications thereof as from time
to time in effect. This Agreement and Declaration of Trust is the "governing
instrument" of the Trust within the meaning of the laws of

<PAGE> 9
the State of Delaware with respect to Delaware business trusts. References in
this Agreement and Declaration of Trust to "hereof", "herein" and "hereunder"
shall be deemed to refer to the Declaration of Trust generally, and shall not
be limited to the particular text, Article or Section in which such words
appear.

"Disabling Conduct" shall have the meaning designated in Section 8.4
hereof.

"Distributor" shall have the meaning designated in Section 5.2(c) hereof.

"Dividend Disbursing Agent" shall have the meaning designated in Section
5.2(e) hereof.

"General Items" shall have the meaning defined in Section 6.2(a) hereof.

"Initial Trustee" shall have the meaning defined in the preamble hereto.

"Investment Advisor" shall have the meaning defined in Section 5.2(a)
hereof.

"Majority of the Trustees" shall mean a majority of the Trustees in office
at the time in question. At any time at which there shall be only one (1)
Trustee in office, such term shall mean such Trustee.

"Majority Shareholder Vote," as used with respect to (a) the election of
any Trustee at a meeting of Shareholders, shall mean the vote for the election
of such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and entitled to vote
thereon, provided that a quorum (as determined in accordance with the By-Laws)
is present, (b) any other action required or permitted to be taken by
Shareholders, shall mean the vote for such action of the holders of that
majority of all outstanding Shares (or, where a separate vote of Shares of any
particular Series is to be taken, the affirmative vote of that majority of the
outstanding Shares of that Series) of the Trust which consists of: (i) a
majority of all Shares (or of Shares of the particular Series) represented in
person or by proxy and entitled to vote on such action at the meeting of
Shareholders at which such action is to be taken, provided that a quorum (as
determined in accordance with the By-Laws) is present; or (ii) if such action
is to be taken by written consent of Shareholders, a majority of all Shares (or
of Shares of the particular Series) issued and outstanding and entitled to vote
on such action; provided that (iii) as used with respect to any action
requiring the affirmative vote of "a majority of the outstanding voting
securities," as the quoted phrase is defined in the 1940 Act, of the Trust or
of any Series, "Majority Shareholder Vote" means the vote for such action at a
meeting of Shareholders of the smallest majority of all outstanding Shares of
the Trust (or of Shares of the particular Series) entitled to vote on such
action which satisfies such 1940 Act voting requirement.

"1940 Act" shall mean the provisions of the Investment Company Act of 1940
and the rules and regulations thereunder, both as amended from time to time,
and any order or orders thereunder which may from time to time be applicable to
the Trust.

"Person" shall mean and include individuals, as well as corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, banks, trust companies, land trusts, business trusts or
other organizations established under the laws of any jurisdiction, whether or
not considered to be legal entities, and governments and agencies and political
subdivisions thereof.

"Principal Underwriter" shall have the meaning designated in Section
5.2(c) hereof.

"Prospectus," as used with respect to the Trust (or the Shares of a
particular Series), shall mean the prospectus relating to the Trust (or such
Series) which constitutes part of the currently effective Registration
Statement of the Trust under the Securities Act of 1933, as such prospectus may
be amended or supplemented from time to time.

"Securities" shall have the same meaning ascribed to that term in the
Securities Act of 1993.

"Series" shall mean one or more of the series of Shares authorized by the
Trustees to represent the beneficial interest in one or more separate
components of the assets of the Trust which are now or hereafter established
and designated under or in accordance with the provisions of Article 6 hereof.

"Settlor" shall have the meaning defined in the preamble hereto.

<PAGE> 10
"Shareholder" shall mean as of any particular time any Person shown of
record at such time on the books of the Trust as a holder of outstanding Shares
of any Series, and shall include a pledgee into whose name any such Shares are
transferred in pledge.

"Shareholder Servicing Agent" shall have the meaning designated in Section
5.2(f) hereof.

"Shares" shall mean the transferable units into which the beneficial
interest in the Trust and each Series of the Trust (as the context may require)
shall be divided from time to time, and includes fractions of Shares as well as
whole Shares. All references herein to "Shares" which are not accompanied by a
reference to any particular Series or Class shall be deemed to apply to
outstanding Shares without regard to Series or Class.

"Single Class Voting," as used with respect to any matter to be acted upon
at a meeting or by written consent of Shareholders, shall mean a style of
voting in which each holder of one or more Shares shall be entitled to one vote
on the matter in question for each Share standing in his name on the records of
the Trust, irrespective of Series or Class of a Series, and all outstanding
Shares of all Series vote as a single class.

"Statement of Additional Information," as used with respect to the Trust
(or any Series), shall mean the statement of additional information relating to
the Trust (or such Series) which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act of 1933, as such
statement of additional information may be amended or supplemented from time to
time.

"Transfer Agent" shall have the meaning defined in Section 5.2(e) hereof.

"Trust" shall mean the trust named in Section 1.1 hereof.

"Trust Property" shall mean, as of any particular time, any and all
property which shall have been transferred, conveyed or paid to the Trust or
the Trustees, and all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and which at
such time is owned or held by, or for the account of, the Trust or the
Trustees, without regard to the Series to which such property is allocated.

"Trustees" shall mean, collectively, the Initial Trustee, so long as he
shall continue in office, and all other individuals who at the time in question
have been duly elected or appointed as Trustees of the Trust in accordance with
the provisions hereof and who have qualified and are then in office. At any
time at which there shall be only one (I) Trustee in office, such term shall
mean such single Trustee.

SECTION 1.5. Real Property to be Converted into Personal Property.
Notwithstanding any other provision hereof, any real property at any time
forming part of the Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and in such manner and
upon such terms as the Trustees shall approve, but the Trustees shall have
power until the termination of this Trust to postpone such conversion as long
as they in their uncontrolled discretion shall think fit, and for the purpose
of determining the nature of the interest of the Shareholders therein, all such
real property shall at all times be considered as personal property.

ARTICLE 2

PURPOSE OF THE TRUST

The purpose of the Trust shall be to (a) manage, conduct, operate and
carry on the business of an investment company; (b) subscribe for, invest in,
reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, exchange, distribute or otherwise deal in or dispose of any and all
sorts of property, tangible or intangible, including but not limited to
Securities of any type whatsoever, whether equity or nonequity, of any issuer,
evidences of indebtedness of any person and any other rights, interest,
instruments or property of any sort to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investment
of every kind and description, including without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more Persons to

<PAGE> 11
exercise any of said rights, powers and privileges in respect of any of said
investments. The Trustees shall not be limited by any law limiting the
investments which may be made by fiduciaries.

ARTICLE 3

POWERS OF THE TRUSTEES

SECTION 3.1. Powers in General. The Trustees shall have, without other or
further authorization, full, entire, exclusive and absolute power, control and
authority over, and management of, the business of the Trust and over the Trust
Property, to the same extent as if the Trustees were the sole owners of the
business and property of the Trust in their own right, and with such powers of
delegation as may be permitted by this Declaration, subject only to such
limitations as may be expressly imposed by this Declaration of Trust or by
applicable law. The enumeration of any specific power or authority herein shall
not be construed as limiting the aforesaid power or authority or any specific
power or authority. Without limiting the foregoing; they may select, and from
time to time change, the fiscal year of the Trust; they may adopt and use a
seal for the Trust, provided that unless otherwise required by the Trustees, it
shall not be necessary to place the seal upon, and its absence shall not impair
the validity of, any document, instrument or other paper executed and delivered
by or on behalf of the Trust; they may from time to time in accordance with the
provisions of Section 6.1 hereof establish one or more Series to which they may
allocate such of the Trust Property, subject to such liabilities, as they shall
deem appropriate, each such Series to be operated by the Trustees as a separate
and distinct investment medium and with separately defined investment
objectives and policies and distinct investment purposes, all as established by
the Trustees, or from time to time changed by them; they may as they consider
appropriate elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the foregoing
of whom may be a Trustee; they may appoint from their own number, and
terminate, any one or more committees consisting of one or more Trustees,
including without implied limitation an Executive Committee, which may, when
the Trustees are not in session and subject to the 1940 Act, exercise some or
all of the power and authority of the Trustees as the Trustees may determine;
in accordance with Section 5.2 they may employ one or more Investment Advisers,
Administrators and Custodians and may authorize any such service provider to
employ one or more other service providers and to deposit all or any part of
such assets in a system or systems for the central handling of Securities,
retain Transfer, Dividend Disbursing, Accounting or Shareholder Servicing
Agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more Distributors, Principal Underwriters or otherwise,
set record dates or times for the determination of Shareholders entitled to
participate in, benefit from or act with respect to various matters; and in
general they may delegate to any officer of the Trust, to any Committee of the
Trustees and to any employee, Investment Adviser, Administrator, Distributor,
Custodian, Transfer Agent, Dividend Disbursing Agent, or any other agent or
consultant of the Trust, such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs
of the Trust, including without implied limitation the power and authority to
act in the name of the Trust and of the Trustees, to sign documents and to act
as attorney-in-fact for the Trustees. Without limiting the foregoing and to the
extent not inconsistent with the 1940 Act or other applicable law, the Trustees
shall have power and authority:

(a) Investments. To subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute
or otherwise deal in or dispose of any and all sorts of property, tangible or
intangible, including but not limited to Securities of any type whatsoever,
whether equity or nonequity, of any issuer, evidences of indebtedness of any
person and any other rights, interest, instruments or property of any sort, to
exercise any and all rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including without limitation the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers and privileges in respect of any of said investments, in
every case without being limited by any law limiting the investments which may
be made by fiduciaries;

(b) Disposition of Assets. Upon such terms and conditions as they deem
best, to lend, sell, exchange, mortgage, pledge, hypothecate, grant security
interests in, encumber, negotiate, convey, transfer or otherwise dispose of,
and to trade in, any and all of the Trust Property, free and clear of all
trusts, for cash or on terms, with or without advertisement, and on such terms
as to payment, security or otherwise, all as they shall deem necessary or
expedient;

<PAGE> 12
(c) Ownership Powers. To vote or give assent, or exercise any and all
other rights, powers and privileges of ownership with respect to, and to
perform any and all duties and obligations as owners of, any Securities or
other property forming part of the Trust Property, the same as any individual
might do; to exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of Securities, and to receive powers of
attorney from, and to execute and deliver proxies or powers of attorney to,
such Person or Persons as the Trustees shall deem proper, receiving from or
granting to such Person or Persons such power and discretion with relation to
Securities or other property of the Trust, all as the Trustees shall deem
proper;

(d) Form of Holding. To hold any Security or other property in a form not
indicating any trust, whether in bearer, unregistered or other negotiable form,
or in the name of the Trustees or of the Trust, or of the Series to which such
Securities or property belong, or in the name of a Custodian, subcustodian or
other nominee or nominees, or otherwise, upon such terms, in such manner or
with such powers, as the Trustees may determine, and with or without indicating
any trust or the interest of the Trustees therein;

(e) Reorganizations etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
Security of which is or was held in the Trust or any Series; to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any Security forming
part of the Trust Property;

(f) Voting Trusts, etc. To join with other holders of any Securities in
acting through a committee, depository, voting trustee or otherwise, and in
that connection to deposit any Security with, or transfer any Security to, any
such committee, depository or trustee, and to delegate to them such power and
authority with relation to any Security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depository or trustee as the Trustees shall deem proper;

(g) Contracts. etc. To enter into, make and perform all such obligations,
contracts, agreements and undertakings of every kind and description, with any
Person or Persons, as the Trustees shall in their discretion deem expedient in
the conduct of the business of the Trust, for such terms as they shall see fit,
whether or not extending beyond the term of office of the Trustees, or beyond
the possible expiration of the Trust; to amend, extend, release or cancel any
such obligations, contracts, agreements or understandings; and to execute,
acknowledge, deliver and record all written instruments which they may deem
necessary or expedient in the exercise of their powers;

(h) Guarantees. etc. To endorse or guarantee the payment of any notes or
other obligations of any Person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust Property or any part thereof to secure any of or all such
obligations;

(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or association;

(j) Insurance. To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, Investment Advisers, managers,
Administrators, Distributors, Principal Underwriters, or other independent
contractors, or any thereof (or any Person connected therewith), of the Trust,
individually, against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such Person
in any such capacity, whether or not the Trust would have the power to
indemnify such Person against such liability;

(k) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit sharing, share bonus, share purchase, savings, thrift, deferred
compensation and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity contracts as
a means of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust;

(I) Power of Collection and Litigation. To collect, sue for and receive
all sums of money coming due to the Trust, to employ counsel, and to commence,
engage in, prosecute, intervene in,

<PAGE> 13

join, defend, compound, compromise, adjust or abandon, in the name of the
Trust, any and all actions, suits, proceedings, disputes, claims,
controversies, demands or other litigation or legal proceedings relating to the
Trust, the business of the Trust, the Trust Property, or the Trustees,
officers, employees, agents and other independent contractors of the Trust, in
their capacity as such, at law or in equity, or before any other bodies or
tribunals, and to compromise, arbitrate or otherwise adjust any dispute to
which the Trust may be a party, whether or not any suit is commenced or any
claim shall have been made or asserted. Except to the extent required for a
Delaware business trust, the Shareholders shall have no power to vote as to
whether or not a court action, legal proceeding or claim should or should not
be brought or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders.

(m) Issuance and Repurchase of Shares. To authorize, issue, sell,
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in Shares of any Series, and, subject to Article 6
hereof, to apply to any such repurchase, redemption, retirement, cancellation
or acquisition of Shares of any Series, any of the assets belonging to the
Series to which such Shares relate, whether constituting capital or surplus or
otherwise, to the full extent now or hereafter permitted by applicable law;
provided that any Shares belonging to the Trust shall not be voted, directly or
indirectly;

(n) Offices. To have one or more offices, and to carry on all or any of
the operations and business of the Trust, in any of the States, Districts or
Territories of the United States, and in any and all foreign countries, subject
to the laws of such State, District, Territory or country;

(o) Expenses. To incur and pay any and all such expenses and charges as
they may deem advisable (including without limitation appropriate fees to
themselves as Trustees), and to pay all such sums of money for which they may
be held liable by way of damages, penalty, fine or otherwise;

(p) Agents, etc. To retain and employ any and all such servants, agents,
employees, attorneys, brokers, Investment Advisers, accountants, architects,
engineers, builders, escrow agents, depositories, consultants, ancillary
trustees, custodians, agents for collection, insurers, banks and officers, as
they think best for the business of the Trust or any Series, to supervise and
direct the acts of any of the same, and to fix and pay their compensation and
define their duties;

(q) Accounts. To determine, and from time to time change, the method or
form in which the accounts of the Trust or any Series shall be kept;

(r) Valuation. Subject to the requirements of the 1940 Act, to determine
from time to time the value of all or any part of the Trust Property and of any
services, Securities, property or other consideration to be furnished to or
acquired by the Trust, and from time to time to revalue all or any part of the
Trust Property in accordance with such appraisals or other information as is,
in the Trustees' sole judgment, necessary and satisfactory;

(s) Indemnification. In addition to the mandatory indemnification provided
for in Article 8 hereof and to the extent permitted by law, to indemnify or
enter into agreements with respect to indemnification with any Person with whom
this Trust has dealings, including, without limitation, any independent
contractor, to such extent as the Trustees shall determine; and

(t) General. Subject to the fundamental policies in effect from time to
time with respect to the Trust, to do all such other acts and things and to
conduct, operate, carry on and engage in such other lawful businesses or
business activities as they shall in their sole and absolute discretion
consider to be incidental to the business of the Trust or any Series as an
investment company, and to exercise all powers which they shall in their
discretion consider necessary, useful or appropriate to carry on the business
of the Trust or any Series, to promote any of the purposes for which the Trust
is formed, whether or not such things are specifically mentioned herein, in
order to protect or promote the interests of the Trust or any Series, or
otherwise to carry out the provisions of this Declaration.

SECTION 3.2. Borrowings; Financings: Issuance of Securities. The Trustees
have power, subject to the fundamental policies in effect from time to time
with respect to the Trust, to borrow or in any other manner raise such sum or
sums of money, and to incur such other indebtedness for goods or services, or
for or in connection with the purchase or other acquisition of property, as
they shall deem advisable for the purposes of the Trust, in any manner and on
any terms, and to evidence the same by negotiable or nonnegotiable Securities
which may mature at any time or times, even beyond the possible date of
termination of the Trust; to issue Securities of any type for such cash,
property, services or other considerations, and at such time or times and upon
such terms, as they may deem advisable; and to reacquire any such

<PAGE> 14
Securities. Any such Securities of the Trust may, at the discretion of the
Trustees, be made convertible into Shares of any Series, or may evidence the
right to purchase, subscribe for or otherwise acquire Shares of any Series, at
such times and on such terms as the Trustees may prescribe.

SECTION 3.3. Deposits. Subject to the requirements of the 1940 Act, the
Trustees shall have power to deposit any moneys or Securities included in the
Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest. Such deposits
are to be subject to withdrawal in such manner as the Trustees may determine,
and the Trustees shall have no responsibility for any loss which may occur by
reason of the failure of the bank, trust company or other banking institution
with which any such moneys or Securities have been deposited, except as
provided in Section 8.2 hereof.

SECTION 3.4. Allocations. The Trustees shall have power to determine
whether moneys or other assets received by the Trust shall be charged or
credited to income or capital, or allocated between income and capital,
including the power to amortize or fail to amortize any part or all of any
premium or discount, to treat any part or all of the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a discount,
as income or capital, or to apportion the same between income and capital, to
apportion the sale price of any asset between income and capital, and to
determine in what manner any expenses or disbursements are to be borne as
between income and capital, whether or not in the absence of the power and
authority conferred by this Section 3.4 such assets would be regarded as income
or as capital or such expense or disbursement would be charged to income or to
capital; to treat any dividend or other distribution on any investment as
income or capital, or to apportion the same between income and capital; to
provide or fail to provide reserves, including reserves for depreciation,
amortization or obsolescence in respect of any Trust Property in such amounts
and by such methods as they shall determine; to allocate less than all of the
consideration paid for Shares of any Series to surplus with respect to the
Series to which such Shares relate and to allocate the balance thereof to
paid-in capital of that Series, and to reallocate such amounts from time to
time; all as the Trustees may reasonably deem proper.

SECTION 3.5. Further Powers: Limitations. The Trustees shall have power to
do all such other matters and things, and to execute all such instruments, as
they deem necessary, proper or desirable in order to carry out, promote or
advance the interests of the Trust, although such matters or things are not
herein specifically mentioned. Any determination as to what is in the interests
of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees. The Trustees shall not be
required to obtain any court order to deal with the Trust Property. The
Trustees may limit their right to exercise any of their powers through express
restrictive provisions in the instruments evidencing or providing the terms for
any Securities of the Trust or in other contractual instruments adopted on
behalf of the Trust.

ARTICLE 4

TRUSTEES AND OFFICERS

SECTION 4.1. Number. Designation, Election. Term, etc.

(a) Initial Trustee. Upon his execution of this Declaration of Trust or a
counterpart hereof or some other writing in which he accepts such Trusteeship
and agrees to the provisions hereof, the individual whose signature is affixed
hereto as Initial Trustee shall become the Initial Trustee hereof.

(b) Number. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase (to not more than twenty (20)) or decrease the
number of Trustees to a number other than the number theretofore determined by
a written instrument signed by a Majority of the Trustees (or by an officer of
the Trust pursuant to the vote of a Majority of the Trustees). No decrease in
the number of Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 4.1.

(c) Election and Term. The Trustees shall be elected by the Shareholders
of the Trust at the first meeting of Shareholders immediately prior to the
initial public offering of Shares of the Trust, and the term of office of any
Trustees in office before such election shall terminate at the time of such
election. Subject to Section 16(a) of the 1940 Act and to the preceding
sentence of this subsection (c), the Trustees shall have the power to set and
alter the terms of office of the Trustees, and at any time to lengthen or
shorten their own terms or make their terms of unlimited duration, to elect
their own successors and, pursuant to subsection (f) of this Section 4.1, to
appoint Trustees to fill vacancies; provided that Trustees shall be elected

<PAGE> 15
by a Majority Shareholder Vote at any such time or times as the Trustees shall
determine that such action is required under Section 16(a) of the 1940 Act or,
if not so required, that such action is advisable; and further provided that,
after the initial election of Trustees by the Shareholders, the term of office
of any incumbent Trustee shall continue until the termination of this Trust or
his earlier death, resignation, retirement, bankruptcy, adjudicated
incompetency or other incapacity or removal, or if not so terminated, until the
election of such Trustee's successor in office has become effective in
accordance with this subsection (c).

(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by a written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument.

(e) Removal. Any Trustee may be removed with or without cause at any time:
(i) by written instrument, signed by at least two thirds (2/3) of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two thirds (2/3) of the Shares of each Series then outstanding, cast in person
or by proxy at any meeting called for the purpose; or (iii) by a written
declaration signed by Shareholders holding not less than two thirds (2/3) of
the Shares of each Series then outstanding. Upon incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require in order to effect the
purpose of this Paragraph.

(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including an increase in the number of Trustees, may (but need not
unless required by the 1940 Act) be filled by a Majority of the Trustees,
subject to the provisions of Section 16(a) of the 1940 Act, through the
appointment in writing of such other individual as such remaining Trustees in
their discretion shall determine; provided that if there shall be no Trustees
in office, such vacancy or vacancies shall be filled by Majority Shareholders
Vote. Any such appointment or election shall be effective upon such
individual's written acceptance of his appointment as a Trustee and his
agreement to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in the number of Trustees to be effective
at a later date shall become effective only at or after the effective date of
said retirement, resignation or increase in the number of Trustees.

(g) Acceptance of Trusts. Whenever any conditions to the appointment or
election of any individual as a Trustee hereunder who was not, immediately
prior to such appointment or election, acting as a Trustee shall have been
satisfied, such individual shall become a Trustee and the Trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance. Such new Trustee shall accept such appointment or
election in writing and agree in such writing to be bound by the provisions
hereof, but the execution of such writing shall not be requisite to the
effectiveness of the appointment or election of a new Trustee.

(h) Effect of Death. Resignation, etc. No vacancy, whether resulting from
the death, resignation, retirement, bankruptcy, adjudicated incompetency,
incapacity, or removal of any Trustee, an increase in the number of Trustees or
otherwise, shall operate to annul or terminate the Trust hereunder or to revoke
or terminate any existing agency or contract created or entered into pursuant
to the terms of this Declaration of Trust. Until such vacancy is filled as
provided in this Section 4.1, the Trustees in office (if any), regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration.

(i) Convevance. In the event of the resignation or removal of a Trustee
or his otherwise ceasing to be a Trustee, such former Trustee or his legal
representative shall, upon request of the continuing Trustees, execute and
deliver such documents as may be required for the purpose of consummating or
evidencing the conveyance to the Trust or the remaining Trustees of any Trust
Property held in such former Trustee's name, but the execution and delivery of
such documents shall not be requisite to the vesting of title to the Trust
Property in the remaining Trustees, as provided in subsection (g) of this
Section 4.1 and in Section 4.13 hereof.

(j) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no Person ceasing to
be a Trustee (nor the estate of any such Person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.

SECTION 4.2. Trustees' Meetings: Participation by Telephone. etc. Annual
and special meetings may be held from time to time, in each case, upon the call
of such officers as may be thereunto authorized by the By-Laws or vote of the
Trustees, or by any three (3) Trustees, or

<PAGE> 16
pursuant to a vote of the Trustees adopted at a duly constituted meeting of the
Trustees, and upon such notice as shall be provided in the By-Laws. Any such
meeting may be held within or without the state of Delaware. The Trustees may
act with or without a meeting, and a written consent to any matter, signed by a
Majority of the Trustees, shall be equivalent to action duly taken at a meeting
of the Trustees, duly called and held. Except as otherwise provided by the 1940
Act or other applicable law, or by this Declaration of Trust or the By-Laws,
any action to be taken by the Trustees may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least a
Majority of the Trustees, being present), within or without Delaware. If
authorized by the By-Laws, all or any one or more Trustees may participate in a
meeting of the Trustees or any Committee thereof by means of conference
telephone or similar means of communication by means of which all Persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to such means of communication shall constitute presence in
person at such meeting. The minutes of any meeting thus held shall be prepared
in the same manner as a meeting at which all participants were present in
person.

SECTION 4.3. Committees; Delegation. The Trustees shall have power,
consistent with their ultimate responsibility to supervise the affairs of the
Trust, to delegate from time to time to one or more other Committees, or to any
single Trustee, the doing of such things and the execution of such deeds or
other instruments, either in the name of the Trust or the names of the Trustees
or as their attorney or attorneys in fact, or otherwise as the Trustees may
from time to time deem expedient, and any agreement, deed, mortgage, lease or
other instrument or writing executed by the Trustee or Trustees or other Person
to whom such delegation was made shall be valid and binding upon the Trustees
and upon the Trust.

SECTION 4.4. Officers. The Trustees shall annually elect such officers or
agents, who shall have such powers, duties and responsibilities as the Trustees
may deem to be advisable, and as they shall specify by resolution or in the
By-Laws. Except as may be provided in the By-Laws, any officer elected by the
Trustees may be removed at any time with or without cause. Any two (2) or more
offices may be held by the same individual.

SECTION 4.5. Compensation of Trustees and Officers. The Trustees shall fix
the compensation of all officers and Trustees. Without limiting the generality
of any of the provisions hereof, the Trustees shall be entitled to receive
reasonable compensation for their general services as such, and to fix the
amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including legal, accounting,
or other professional services, as they in good faith may deem reasonable. No
Trustee or officer resigning (except where a right to receive compensation for
a definite future period shall be expressly provided in a written agreement
with the Trust, duly approved by the Trustees) and no Trustee or officer
removed shall have any right to any compensation as such Trustee or officer for
any period following his resignation or removal, or any right to damages on
account of his removal, whether his compensation be by the month, or the year
or otherwise.

SECTION 4.6. Ownership of Shares and Securities of the Trust. Any Trustee,
and any officer, employee or agent of the Trust, and any organization in which
any such Person is interested, may acquire, own, hold and dispose of Shares of
any Series and other Securities of the Trust for his or its individual account,
and may exercise all rights of a holder of such Shares or Securities to the
same extent and in the same manner as if such Person were not such a Trustee,
officer, employee or agent of the Trust; subject, in the case of Trustees and
officers, to the same limitations as directors or officers (as the case may be)
of a Delaware business corporation; and the Trust may issue and sell or cause
to be issued and sold and may purchase any such Shares or other Securities from
any such Person or any such organization, subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Series or other Securities of the Trust generally.

SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage
in Business; Authority of Trustees to Permit Others to Do Likewise. The
Trustees, in their capacity as Trustees, and (unless otherwise specifically
directed by vote of the Trustees) the officers of the Trust in their capacity
as such, shall not be required to devote their entire time to the business and
affairs of the Trust. Except as otherwise specifically provided by vote of the
Trustees, or by agreement in any particular case, any Trustee or officer of the
Trust may acquire, own, hold and dispose of, for his own individual account,
any property, and acquire, own, hold, carry on and dispose of, for his own
individual account, any business entity or business activity, whether similar
or dissimilar to any property or business entity or business activity invested
in or carried on by the Trust, and without first offering the same as an
investment opportunity to the Trust, and may exercise all rights in respect
thereof as if he were not a Trustee or officer of the Trust. The Trustees shall
also have power, generally or in specific cases, to permit employees or agents
of the Trust to have the same rights (or lesser rights) to acquire, hold, own
and dispose of property and businesses, to carry on businesses, and

<PAGE> 17
to accept investment opportunities without offering them to the Trust, as the
Trustees have by virtue of this Section 4.7.

SECTION 4.8. Reliance on Experts. The Trustees and officers may consult
with counsel, engineers, brokers, appraisers, auctioneers, accountants,
investment bankers, securities analysts or other Persons (any of which may be a
firm in which one or more of the Trustees or officers is or are members or
otherwise interested) whose profession gives authority to a statement made by
them on the subject in question, and who are reasonably deemed by the Trustees
or officers in question to be competent, and the advice or opinion of such
Persons shall be full and complete personal protection to all of the Trustees
and officers in respect of any action taken or suffered by them in good faith
and in reliance on or in accordance with such advice or opinion. In discharging
their duties, Trustees and officers, when acting in good faith, may rely upon
financial statements of the Trust represented to them to be correct by any
officer of the Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant fairly to present
the financial position of the Trust. The Trustees and officers may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.

SECTION 4.9. Surety Bonds. No Trustee, officer, employee or agent of the
Trust shall, as such, be obligated to give any bond or surety or other security
for the performance of any of his duties, unless required by applicable law or
regulation, or unless the Trustees shall otherwise determine in any particular
case.

SECTION 4.10. Apparent Authority of Trustees and Officers. No purchaser,
lender, transfer agent or other Person dealing with the Trustees or any officer
of the Trust shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by such officer, or to
make inquiry concerning or be liable for the application of money or property
paid, loaned or delivered to or on the order of the Trustees or of such
officer.

SECTION 4.11. Other Relationships Not Prohibited. The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any Contracting Party
(as defined in Section 5.2 hereof), or of or for any parent or affiliate of
any Contracting Party, or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust or any
Series, or that

(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or other organizations, or
have other business or interests, shall not affect the validity of any
contract for the performance and assumption of services, duties and
responsibilities to, for or of the Trust and/or the Trustees or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the Trust or
to the holders of Shares of any Series; provided that, in the case of any
relationship or interest referred to in the preceding clause (i) on the part
of any Trustee or officer of the Trust, either (x) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract
involved is approved in good faith by a majority of such Trustees not having
any such relationship or interest (even though such unrelated or
disinterested Trustees are less than a quorum of all of the Trustees), (y)
the material facts as to such relationship or interest and as to the contract
have been disclosed to or are known by the Shareholders entitled to vote
thereon and the contract involved is specifically approved in good faith by
vote of the Shareholders, or (z) the specific contract involved is fair to
the Trust as of the time it is authorized, approved or ratified by the
Trustees or by the Shareholders.

SECTION 4.12. Payment of Trust Expenses. The Trustees are authorized to
pay or to cause to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, and according to any
allocation to a particular Series and Class made by them pursuant to Section
6.1(f) hereof, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the business and affairs of the Trust or in
connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, Investment Adviser, Administrator, Distributor,
Principal Underwriter, auditor, counsel, Custodian, Transfer Agent, Dividend
Disbursing Agent, Accounting Agent, Shareholder Servicing Agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.

<PAGE> 18
SECTION 4.13. Ownership of the Trust Property. Legal title to all the
Trust Property shall be vested in the Trustees as joint tenants, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or of any particular Series, or in the name of any other Person as
nominee, on such terms as the Trustees may determine; provided that the
interest of the Trust and of the respective Series therein is appropriately
protected. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Person who may hereafter become a Trustee.
Upon the termination of the term of office of a Trustee as provided in Section
4.1(c), (d) or (e) hereof, such Trustee shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to Section 4.1(i) hereof.

SECTION 4.14. By-Laws. The Trustees may adopt and from time to time amend
or repeal By-Laws for the conduct of the business of the Trust.

ARTICLE 5

DELEGATION OF MANAGERIAL RESPONSIBILITIES

SECTION 5.1. Appointment; Action by Less than All Trustees. The Trustees
shall be responsible for the general operating policy of the Trust and for the
general supervision of the business of the Trust conducted by officers, agents,
employees or advisers of the Trust or by independent contractors, but the
Trustees shall not be required personally to conduct all the business of the
Trust and, consistent with their ultimate responsibility as stated herein, the
Trustees may appoint, employ or contract with one or more officers, employees
and agents to conduct, manage and/or supervise the operations of the Trust, and
may grant or delegate such authority to such officers, employees and/or agents
as the Trustees may, in their sole discretion, deem to be necessary or
desirable, without regard to whether such authority is normally granted or
delegated by trustees. With respect to those matters of the operation and
business of the Trust which they shall elect to conduct themselves, except as
otherwise provided by this Declaration or the By-Laws, if any, the Trustees may
authorize any single Trustee or defined group of Trustees, or any committee
consisting of a number of Trustees less than the whole number of Trustees then
in office without specification of the particular Trustees required to be
included therein, to act for and to bind the Trust, to the same extent as the
whole number of Trustees could do, either with respect to one or more
particular matters or classes of matters, or generally.

SECTION 5.2. Certain Contracts. Subject to compliance with the provisions
of the 1940 Act, but notwithstanding any limitations of present and future law
or custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time in their discretion and without limiting
the generality of their powers and authority otherwise set forth herein, enter
into one or more contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships or other types of
organizations, or individuals ("Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any Series, and/or
the Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below, as
the Trustees may deem appropriate:

(a) Advisory. An investment advisory or management agreement whereby the
agent shall undertake to furnish each Series of the Trust such management,
investment advisory or supervisory, statistical and research facilities and
services, and such other facilities and services, if any, as the Trustees
shall from time to time consider desirable, all upon such terms and conditions
as the Trustees may in their discretion determine to be not inconsistent with
this Declaration, the applicable provisions of the 1940 Act or any applicable
provisions of the By-Laws (any such agent being herein referred to as an
"Investment Adviser"). To the extent required by the 1940 Act, any such
advisory or management agreement and any amendment thereto shall be subject to
approval by a Majority Shareholder Vote at a meeting of the Shareholders of
the applicable Series of the Trust. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales, loans or exchanges of securities of the
Trust on behalf of the Trustees or may authorize any officer or employee of
the Trust or any Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any such purchases, sales, loans and exchanges shall
be deemed to have been authorized by all of the Trustees. The Trustees may, in
their sole discretion, call a meeting of Shareholders in order to submit to a
vote of Shareholders of the applicable Series of Trust

<PAGE> 19
at such meeting the approval of continuance of any such investment advisory or
management agreement.

(b) Administration. An agreement whereby the agent, subject to the
general supervision of the Trustees and in conformity with any policies of the
Trustees with respect to the operations of the Trust and each Series, will
supervise all or any part of the operations of the Trust and each Series, and
will provide all or any part of the administrative and clerical personnel,
office space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Series (any such agent
being herein referred to as an "Administrator").

(c) Underwriting. An agreement providing for the sale of Shares of any
one or more Series to net the Trust not less than the net asset value per
Share (as described in Section 6.2(l) hereof) and pursuant to which the Trust
may appoint the other party to such agreement as its principal underwriter or
sales agent for the distribution of such Shares. The agreement shall contain
such terms and conditions as the Trustees may in their discretion determine to
be not inconsistent with this Declaration, the applicable provisions of the
1940 Act and any applicable provisions of the By-Laws (any such agent being
herein referred to as a "Distributor" or a "Principal Underwriter," as the
case may be).

(d) Custodian. The appointment of an agent meeting the requirements for a
custodian for the assets of Investment Companies contained in the 1940 Act as
custodian of the Securities and cash of the Trust and of each Series and of
the accounting records in connection therewith (any such agent being herein
referred to as a "Custodian").

(e) Transfer and Dividend Disbursing Agent. An agreement with an agent to
maintain records of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof (any such agent being herein referred to
as a "Transfer Agent"), and to disburse any dividends declared by the Trustees
and in accordance with the policies of the Trustees and/or the instructions of
any particular Shareholder to reinvest any such dividends (any such agent
being herein referred to as a "Dividend Disbursing Agent").

(f) Shareholder Servicing. An agreement with an agent to provide service
with respect to the relationship of the Trust and its Shareholders, records
with respect to Shareholders and their Shares, and similar matters (any such
agent being herein referred to as a "Shareholder Servicing Agent").

(g) Accounting. An agreement with an agent to handle all or any part of
the accounting responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise (any such agent being herein referred to
as an "Accounting Agent").

In addition, the Trustees may from time to time cause the Trust or any Series
thereof to enter into agreements with respect to such other services and upon
such other terms and conditions as they may deem necessary, appropriate or
desirable. The same Person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into subcontractual arrangements relative to
any of the matters referred to in subsections (a) through (g) of this Section
5.2.

Section 5.3. Distribution Arrangements. Subject to compliance with the
1940 Act, the Trustees may adopt and amend or repeal from time to time and
implement one or more plans of distribution pursuant to Rule 12b-1 of the 1940
Act which plan(s) will provide for the payment of specified marketing,
distribution and shareholder relations expenses of the Trust and any or all
Series and their agents and the agents of such agents.

Section 5.4. Service Arrangements. Subject to compliance with the 1940
Act, the Trustees may adopt and amend or repeal from time to time and implement
one or more service plans which plans will provide for the payment of ongoing
services to holders of the shares of such Trust or any Series thereof and in
connection with the maintenance of such shareholders' accounts.

ARTICLE 6

SERIES AND SHARES

SECTION 6.1. Description of Series and Shares.

<PAGE> 20
(a) General. The beneficial interest in the Trust shall be divided into
Shares (either full or fractional) having $ 0.01 par value per Share, of which
an unlimited number may be issued. The Trustees shall have the authority from
time to time to establish and designate one or more separate, distinct and
independent Series of Shares (each of which Series, including without
limitation each Series authorized in Section 6.1(b) hereof, shall represent
interests only in the asset attributed by the Trustees to such Series), and to
authorize separate Classes of Shares of any such Series, as they deem
necessary or desirable. All Shares shall be of one class, provided that the
Trustees shall have the power to classify or reclassify any unissued Shares of
any Series into any number of additional Classes of such Series as set forth
in Section 6.1(b).

(b) Establishment. etc. of Series; Authorization of Shares. The
establishment and designation of any Series or Class and the authorization of
the Shares thereof shall be effective upon the execution by a Majority of the
Trustees (or by an officer of the Trust pursuant to the vote of a Majority of
the Trustees) of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Shares of such
Series or Class and the manner in which the same may be amended (a
"Certificate of Designation"), and may provide that the number of Shares of
such Series or Class which may be issued is unlimited, or may limit the number
issuable. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated, the Trustees may by an
instrument executed by a Majority of the Trustees (or by an officer of the
Trust pursuant to the vote of a Majority of the Trustees) terminate such
Series or Class and the establishment and designation thereof and the
authorization of its Shares (a "Certificate of Termination"). Each Certificate
of Designation, Certificate of Termination and any instrument amending a
Certificate of Designation shall have the status of an amendment to this
Declaration of Trust.

(c) Character of Separate Series and Shares Thereof. Each Series
established hereunder shall represent beneficial interests in a separate
component of the assets of the Trust. Holders of Shares of a Series shall be
considered Shareholders of such Series, but such Shareholders shall also be
considered Shareholders of the Trust for purposes of receiving reports and
notices and, except as otherwise provided herein or in the Certificate of
Designation of a particular Series, or as required by the 1940 Act or other
applicable law, the right to vote, all without distinction by Series. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Series, and to
fix and determine the relative rights and preferences as between the shares of
the respective Series, and as between the Classes of any Series, as to rights
of redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the Shareholders of the several Series or the several Classes of any
Series of Shares shall have separate voting rights or no voting rights. Except
as otherwise provided as to a particular Series herein, or in the Certificate
of Designation therefor, the Trustees shall have all the rights and powers,
and be subject to all the duties and obligations, with respect to each such
Series and the assets and affairs thereof as they have under this Declaration
with respect to the Trust and the Trust Property in general. Separate and
distinct records shall be maintained for each Series of Shares and the assets
and liabilities attributable thereto.

(d) Consideration for Shares. The Trustees may issue Shares of any Series
for such consideration (which may include property subject to, or acquired in
connection with the assumption of, liabilities) and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
nonassessable (but may be subject to mandatory contribution back to the Trust
as provided in Section 6.1(l) hereof. The Trustees may classify or reclassify
any unissued Shares, or any Shares of any Series previously issued and
reacquired by the Trust, into Shares of one or more other Series that may be
established and designated from time to time.

(e) Assets Belonging to Series. Any portion of the Trust Property
allocated to a particular Series, and all consideration received by the Trust
for the issue or sale of Shares of such Series, together with all assets in
which such consideration is invested or reinvested, all interest, dividends,
income, earnings, profits and gains therefrom, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series and shall irrevocably belong
to that Series for all purposes, and shall be so recorded upon the books of
account of the Trust, and the Shareholders of such Series shall not have, and
shall be conclusively deemed to have waived, any claims to the assets of any
Series of which

<PAGE> 21
they are not Shareholders. Such consideration, assets, interest, dividends,
income, earnings, profits, gains and proceeds, together with any General Items
allocated to that Series as provided in the following sentence, are herein
referred to collectively as assets "belonging to" that Series. In the event
that there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular Series (collectively, "General Items"), the Trustees shall allocate
such General Items to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Series shall belong to and be part of the assets
belonging to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all purposes.

(f) Liabilities of Series. The assets belonging to each particular Series
shall be charged with the liabilities in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities, expenses, costs, charges or reserves of the Trust which
are not readily identifiable as pertaining to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of the
Series established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable. The
indebtedness, expenses, costs, charges and reserves allocated and so charged
to a particular Series are herein referred to as "liabilities of" that Series.
Each allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the Shareholders of all Series
for all purposes. Any creditor of any Series may look only to the assets
belonging to that Series to satisfy such creditor's debt.

(g) Dividends. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to the
Shareholders of that Series, from such of the income, accrued or realized, and
capital gains, realized or unrealized, and out of the assets belonging to that
Series, as the Trustees may determine, after providing for actual and accrued
liabilities of that Series. All dividends and distributions on Shares of a
particular Series shall be distributed pro rata to the Shareholders of that
Series in proportion to the number of such Shares held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that the dividends and distributions of investment
income and capital gains with respect to each Class of Shares of a particular
Series shall be in such amount as may be declared from time to time by the
Trustees, and such dividends and distributions may vary as between such
Classes to reflect differing allocations of the expenses of the Series between
the Shareholders of such several Classes and any resultant differences between
the net asset value of such several Classes to such extent and for such
purposes as the Trustees may deem appropriate and further except that, in
connection with any dividend or distribution program or procedure, the
Trustees may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees under such
program or procedure, or that dividends or distributions shall be payable on
Shares which have been tendered by the holder thereof for redemption or
repurchase, but the redemption or repurchase proceeds of which have not yet
been paid to such Shareholder. Such dividends and distributions may be made in
cash, property or Shares of any Class of that Series or a combination thereof
as determined by the Trustees, or pursuant to any program that the Trustees
may have in effect at the time for the election by each Shareholder of the
mode of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with subsection (l) of this Section
6.1.

(h) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Series of which Shares are outstanding shall
be entitled to receive, when and as declared by the Trustees, the excess of
the assets belonging to that Series over the liabilities of such Series. The
assets so distributable to the Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to the number of Shares of
that Series held by them and recorded on the books of the Trust. The
liquidation of any particular Series may be authorized by vote of a Majority
of the Trustees, subject to the affirmative vote of "a majority of the
outstanding voting securities" of that Series, as the quoted phrase is defined
in the 1940 Act, determined in accordance with clause (iii) of the definition
of "Majority Shareholder Vote" in Section 1.4 hereof.

(i) Voting. The Shareholders shall have the voting rights set forth in or
determined under Article 7 hereof.

(j) Redemption by Shareholder. Each holder of Shares of a particular
Series shall have the right at such times as may be permitted by the Trust,
but no less frequently than required

<PAGE> 22
by the 1940 Act, to require the Series to redeem all or any part of his Shares
of that Series at a redemption price equal to the net asset value per Share of
that Series next determined in accordance with subsection (l) of this Section
6.1 after the Shares are properly tendered for redemption; provided, that the
Trustees may from time to time, in their discretion, determine and impose a
fee for such redemption and that the proceeds of the redemption of Shares
(including a fractional Share) of any Class of a particular Series shall be
reduced by the amount of any applicable contingent deferred sales charge or
other sales charge, if any, payable on such redemption to the distributor of
Shares of such Class pursuant to the terms of the initial issuance of the
Shares of such Class (to the extent consistent with the 1940 Act or
regulations or exemptions thereunder) and the Trust shall promptly pay to such
distributor the amount of such deferred sales charge. Payment of the
redemption price shall be in cash; provided, however, that if the Trustees
determine, which determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable, the Trust may make
payment wholly or partly in Securities or other assets belonging to such
Series at the value of such Securities or assets used in such determination of
net asset value. Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the holders of Shares of
any Series to require the Trust to redeem Shares of that Series during any
period or at any time when and to the extent permissible under the 1940 Act.

(k) Redemption at the Option of the Trust. The Trustees shall have the
power to redeem Shares of any Series at a redemption price determined in
accordance with Section 6.1(j), if at any time (i) the total investment in
such account does not have a value of at least such minimum amount as may be
specified in the Prospectus for such Series from time to time (ii) the number
of Shares held in such account is equal to or in excess of a specified
percentage of Shares of the Trust or any Series as set forth from time to time
in the applicable Prospectus. In the event the Trustees determine to exercise
their power to redeem Shares provided in this Section 6.1(k), the Shareholder
shall be notified that the value of his account is less than the applicable
minimum amount and shall be allowed 30 days to make an appropriate investment
before redemption is processed.

(l) Net Asset Value. The net asset value per Share of any Series at any
time shall be the quotient obtained by dividing the value of the net assets of
such Series at such time (being the current value of the assets belonging to
such Series, less its then existing liabilities) by the total number of Shares
of that Series then outstanding, all determined in accordance with the methods
and procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time in accordance with the
requirements of the 1940 Act. The net asset value of the several Classes of a
particular Series shall be separately computed, and may vary from one another.
The Trustees shall establish procedures for the allocation of investment
income or capital gains and expenses and liabilities of a particular Series
between the several Classes of such Series . The Trustees may determine to
maintain the net asset value per Share of any Series at a designated constant
dollar amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declaration of income
attributable to that Series as dividends payable in additional Shares of that
Series at the designated constant dollar amount and for the handling of any
losses attributable to that Series. Such procedures may provide that in the
event of any loss each Shareholder shall be deemed to have contributed to the
shares of beneficial interest account of that Series his pro rata portion of
the total number of Shares required to be canceled in order to permit the net
asset value per Share of that Series to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each Shareholder of the Trust
shall be deemed to have expressly agreed, by his investment in any Series with
respect to which the Trustees shall have adopted any such procedure, to make
the contribution referred to in the preceding sentence in the event of any
such loss.

(m) Transfer. All Shares of each particular Series shall be transferable,
but transfers of Shares of a particular Series will be recorded on the Share
transfer records of the Trust applicable to that Series only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Series and at such other times as may be permitted by the Trustees.

(n) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series (subject
to the liabilities of that Series), and each Share of any particular Series
shall be equal to each other Share thereof; but the provisions of this
sentence shall not restrict any distinctions between the several Classes of a
Series permissible under this Section 6.1 or under Section 7. 1 hereof nor any
distinctions permissible under subsection (g) of this Section 6.1 that may
exist with respect to dividends and distributions on Shares of the same
Series. The Trustees may from time to time divide or combine the Shares of any
class of particular Series into a greater or lesser number of Shares of that
class of a Series without thereby changing the proportionate beneficial
interest in the

<PAGE> 23
assets belonging to that Series or in any way affecting the rights of the
holders of Shares of any other Series.

(o) Rights of Fractional Shares. Any fractional Share of any Series shall
carry proportionately all the rights and obligations of a whole Share of that
Series, including rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust or of the Series to which they pertain.

(p) Conversion Rights. (i) Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that holders
of Shares of any Series shall have the right to convert said Shares into
Shares of one or more other Series, that holders of any Class of a Series of
Shares shall have the right to convert said Shares of such Class into Shares
of one or more other Classes of such Series, and that Shares of any Class of a
Series shall be automatically converted into Shares of another Class of such
Series, in each case in accordance with such requirements and procedures as
the Trustees may establish.

(ii) The number of Shares of into which a convertible Share shall
convert shall equal the number (including for this purpose fractions of a Share)
obtained by dividing the net asset value per Share for purposes of sales and
redemptions of the converting Share on the Conversion Date by the net asset
value per Share for purposes of sales and redemptions of the Class of Shares
into which it is converting on the Conversion Date.

(iii) On the Conversion Date, the Share converting into another share
will cease to accrue dividends and will no longer be deemed outstanding and the
rights of the holders thereof (except the right to receive the number of target
Shares into which the converting Shares have been converted and declared but
unpaid dividends to the Conversion Date) will cease. Certificates representing
Shares resulting from the conversion need not be issued until certificates
representing Shares converted, if issued, have been received by the Trust or its
agent duly endorsed for transfer.

(vi) The Trust will appropriately reflect the conversion of Shares of
one Class of a Series into Shares of another Class of such Series on the first
periodic statements of account sent to Shareholders of record affected which
provide account information with respect to a reporting period which includes
the date such conversion occurred.

SECTION 6.2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a Transfer Agent or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series that has been authorized. Certificates evidencing the ownership of
Shares need not be issued except as the Trustees may otherwise determine from
time to time, and the Trustees shall have power to call outstanding Share
certificates and to replace them with book entries. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates, the
use of facsimile signatures, the transfer of Shares and similar matters. The
record books of the Trust as kept by the Trust or any Transfer Agent or similar
agent, as the case may be, shall be conclusive as to who are the Shareholders
and as to the number of Shares of each Series held from time to time by each
such Shareholder.

The holders of Shares of each Series shall upon demand disclose to the
Trustees in writing such information with respect to their direct and indirect
ownership of Shares of such Series as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code, or to comply with the
requirements of any other authority.

SECTION 6.3. Investments in the Trust. The Trustees may accept investments
in any Series of the Trust from such Persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any Distributor,
Principal Underwriter, Custodian, Transfer Agent or other Person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares, whether or not conforming to such
authorized terms.

SECTION 6.4. No Preemptive Rights. No Shareholder, by virtue of holding
Shares of any Series, shall have any preemptive or other right to subscribe to
any additional Shares of that Series, or to any shares of any other Series, or
any other Securities issued by the Trust.

SECTION 6.5. Status of Shares. Every Shareholder, by virtue of having
become a Shareholder, shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. Shares shall be deemed to
be personal property, giving only the rights provided herein. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust Property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. The death of

<PAGE> 24
a Shareholder during the continuance of the Trust shall not operate to
terminate the Trust or any Series, nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Declaration of Trust.

ARTICLE 7

SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.1. Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Sections 4.1(c) and
(e) hereof, (ii) with respect to the approval or termination in accordance with
the 1940 Act of any contract with a Contracting Party as provided in Section
5.2 hereof as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 9.2, 9.3 and 9.4 hereof, (iv) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 9.5 hereof, (v) to the same extent as the stockholders of a
Delaware business corporation as to whether or not a court action, proceeding
or claim should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or any Series, or the Shareholders of any
of them (provided. however, that a Shareholder of a particular Series shall not
in any event be entitled to maintain a derivative or class action on behalf of
any other Series or the Shareholders thereof), and (vi) with respect to such
additional matters relating to the Trust as may be required by the 1940 Act,
this Declaration of Trust, the By-Laws or any registration of the Trust with
the Commission (or any successor agency) or any State, or as the Trustees may
consider necessary or desirable. If and to the extent that the Trustees shall
determine that such action is required by law or by this Declaration, they
shall cause each matter required or permitted to be voted upon at a meeting or
by written consent of Shareholders to be submitted to a separate vote of the
outstanding Shares of each Series entitled to vote thereon; provided, that (i)
when expressly required by the 1940 Act or by other law, actions of
Shareholders shall be taken by Single Class Voting of all outstanding Shares
whose holders are entitled to vote thereon; and (ii) when the Trustees
determine that any matter to be submitted to a vote of Shareholders affects
only the rights or interests of Shareholders of one or more but not all Series
or of one or more but not all Classes of a single Series (including without
limitation any distribution plan pursuant to Rule 12b-1 of the 1940 Act
applicable to such Class), then only the Shareholders of the Series or Classes
so affected shall be entitled to vote thereon. Any matter required to be
submitted to shareholders and affecting one or more Series shall require
separate approval by the required vote of Shareholders of each affected Series;
provided, however, that to the extent required by the 1940 Act, there shall be
no separate Series votes on the election or removal of Trustees, the selection
of auditors for the Trust and its Series or approval of any agreement or
contract entered into by the Trust or any Series. Shareholders of a particular
Series shall not be entitled to vote on any matter that affects only one or
more other Series.

SECTION 7.2. Number of Votes and Manner of Voting: Proxies. On each matter
submitted to a vote of the Shareholders, each holder of Shares of any Series
shall be entitled to a number of votes equal to the number of Shares of such
Series standing in his name on the books of the Trust. There shall be no
cumulative voting in the election or removal of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of two
(2) or more Persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.

SECTION 7.3. Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided, or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven (7) days before such
meeting, postage prepaid, stating the time, place and purpose of the meeting,
to each Shareholder at the Shareholder's address as it appears on the records
of the Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than ten
percent (10%) of the Shares then outstanding. If the Trustees shall fail to
call or give notice of any meeting of Shareholders for a period of thirty (30)
days after written application by Shareholders holding at least ten percent
(10%) of the Shares then outstanding requesting that a meeting be called for
any other purpose requiring action by the Shareholders as provided herein

<PAGE> 25
or in the By-Laws, then Shareholders holding at least ten percent (10%) of the
Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees. Any meetings may be held within or without The State
of Delaware. Shareholders may only act with respect to matters set forth in
the notice to Shareholders.

SECTION 7.4. Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding thirty (30) days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than ninety (90) days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment thereof or to
be treated as Shareholders of record for purposes of such other action, and any
Shareholder who was a Shareholder at the date and time so fixed shall be
entitled to vote at such meeting or any adjournment thereof or to be treated as
a Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for
purposes of such other action.

SECTION 7.5. Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
Majority Shareholder Vote at a meeting of which a quorum is present shall
decide any question, except when a different vote is required or permitted by
any provision of the 1940 Act or other applicable law or by this Declaration of
Trust or the By-Laws, or when the Trustees shall in their discretion require a
larger vote or the vote of a majority or larger fraction of the Shares of one
or more particular Series.

SECTION 7.6. Action By Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof or of the Shares of any particular
Series as shall be required by the 1940 Act or by any express provision of this
Declaration of Trust or the By-Laws or as shall be permitted by the Trustees)
consent to the action in writing and if the writings in which such consent is
given are filed with the records of the meetings of Shareholders, to the same
extent and for the same period as proxies given in connection with a
Shareholders' meeting. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.

SECTION 7.7. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders
of a Delaware business corporation under the Delaware business corporation law.

SECTION 7.8. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

ARTICLE 8

LIMITATION OF LIABILITY: INDEMNIFICATION

SECTION 8.1. Trustees. Shareholders. etc. Not Personally Liable; Notice.
The Trustees, officers, employees and agents of the Trust, in incurring any
debts, liabilities or obligations, or in limiting or omitting any other actions
for or in connection with the Trust, are or shall be deemed to be acting as
Trustees, officers, employees or agents of the Trust and not in their own
capacities. No Shareholder shall be subject to any personal liability
whatsoever in tort, contract or otherwise to any other Person or Persons in
connection with the assets or the affairs of the Trust or of any Series, and
subject to Section 8.4 hereof, no Trustee, officer, employee or agent of the
Trust shall be subject to any personal liability whatsoever in tort, contract,
or otherwise, to any other Person or Persons in connection with the assets or
affairs of the Trust or of any Series, save only that arising from his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office or the discharge of his functions.
The Trust (or if the matter relates only to a particular Series, that Series)
shall be solely liable for any and all debts, claims, demands, judgments,
decrees, liabilities or obligations of any and every kind, against or with
respect to the Trust or such Series in tort, contract or otherwise in
connection with the assets or the affairs of the Trust or such Series, and all
Persons dealing with the Trust or any Series shall be deemed to have

<PAGE> 26
agreed that resort shall be had solely to the Trust Property of the Trust or
the Series Assets of such Series, as the case may be, for the payment or
performance thereof.

The Trustees shall use their best efforts to ensure that every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall give notice that a Certificate of Trust,
referring to the Declaration of Trust, is on file with the Secretary of the
state of Delaware and shall recite to the effect that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer, and not individually, and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, or the
particular Series in question, as the case may be, but the omission thereof
shall not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually, or to subject the Series Assets of
any Series to the obligations of any other Series.

SECTION 8.2. Trustees' Good Faith Action; Expert Advice: No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. Subject to Section 8.4 hereof, a
Trustee shall be liable for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (i) the Trustees
shall not be responsible or liable in any event for any neglect or wrongdoing
of any officer, agent, employee, consultant, Investment Adviser, Administrator,
Distributor or Principal Underwriter, Custodian or Transfer Agent, Dividend
Disbursing Agent, Shareholder Servicing Agent or Accounting Agent of the Trust,
nor shall any Trustee be responsible for the act or omission of any other
Trustee; (ii) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (iii) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any independent
public accountant, and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of a Contracting Party
appointed by the Trustees pursuant to Section 5.2 hereof. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties.

SECTION 8.3. Indemnification of Shareholders. If any Shareholder (or
former Shareholder) of the Trust shall be charged or held to be personally
liable for any obligation or liability of the Trust solely by reason of being
or having been a Shareholder and not because of such Shareholder's acts or
omissions or for some other reason, the Trust (upon proper and timely request
by the Shareholder) may assume the defense against such charge and satisfy any
judgment thereon or may reimburse the Shareholders for expenses, and the
Shareholder or former Shareholder (or the heirs, executors, administrators or
other legal representatives thereof, or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled (but solely
out of the assets of the Series of which such Shareholder or former Shareholder
is or was the holder of Shares) to be held harmless from and indemnified
against all loss and expense arising from such liability.

SECTION 8.4. Indemnification of Trustees. Officers, etc. Subject to the
limitations, if applicable, hereinafter set forth in this Section 8.4, the
Trust shall indemnify (from the assets of the Series or Series to which the
conduct in question relates) each of its Trustees, officers, employees and
agents (including Persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise (hereinafter, together with
such Person's heirs, executors, administrators or personal representative,
referred to as a "Covered Person")) against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants' and counsel
fees, incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or with which
such Covered Person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or officer,
director or trustee, except with respect to any matter as to which it has been
determined that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to
the best interests of the Trust; (ii) had acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (iii) for a criminal proceeding, had
reasonable cause to believe that his conduct was unlawful (the conduct
described in (i), (ii) and (iii) being referred to hereafter as "Disabling
Conduct"). A determination that the Covered Person is entitled to
indemnification may be made by (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the

<PAGE> 27
Covered Person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the indemnitee
was not liable by reason of Disabling Conduct by (a) a vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as defined
in Section 2(a)(19) of the 1940 Act nor parties to the proceeding (the
"Disinterested Trustees"), or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of judgments,
in compromise or as fines or penalties), may be paid from time to time by one
or more Series to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided that the Covered
Person shall have undertaken to repay the amounts so paid to such Series if it
is ultimately determined that indemnification of such expenses is not
authorized under this Article 8 and (i) the Covered Person shall have provided
security for such undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of a quorum of
the disinterested Trustees, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available facts
(as opposed to a full trial type inquiry), that there is reason to believe that
the Covered Person ultimately will be found entitled to indemnification.

SECTION 8.5. Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 8.4
hereof, pursuant to a consent decree or otherwise, no such indemnification
either for said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum of the
disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent
legal counsel pursuant to clause (ii) shall not prevent the recovery from any
Covered Person of any amount paid to such Covered Person in accordance with
either of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust or to have been liable to the
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
Covered Person's office.

SECTION 8.6. Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article 8 shall not be exclusive of or affect
any other rights to which any such Covered Person or shareholder may be
entitled. As used in this Article 8, a "disinterested" Person is one against
whom none of the actions, suits or other proceedings in question, and no other
action, suit or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this Article 8 shall affect
any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other Persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such Person.

SECTION 8.7. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.

ARTICLE 9

DURATION: REORGANIZATION: INCORPORATION; AMENDMENTS

SECTION 9.1. Duration of Trust. Unless terminated as provided herein, the
Trust shall have perpetual existence.

SECTION 9.2. Termination of Trust. The Trust may be terminated at any time
by a Majority of the Trustees, subject to the favorable vote of the holders of
not less than a majority of the Shares outstanding and entitled to vote of each
Series of the Trust, or by an instrument or instruments in writing without a
meeting, consented to by the holders of not less than a majority of such
Shares, or by such greater or different vote of Shareholders of any Series as
may be established by the Certificate of Designation by which such Series was
authorized. Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, Securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with
the provisions of Section 6.1(h) hereof. After termination of the Trust or any
Series and distribution to the Shareholders as herein provided, a majority of
the Trustees shall execute and lodge among the

<PAGE> 28
records of the Trust an instrument in writing setting forth the fact of such
termination. Upon termination of the Trust, the Trustees shall thereupon, be
discharged from all further liabilities and duties hereunder, and the rights
and interests of all Shareholders shall thereupon cease. Upon termination of
any Series, the Trustees shall thereupon be discharged from all further
liabilities and duties with respect to such Series, and the rights and
interests of all Shareholders of such Series shall thereupon cease.

SECTION 9.3. Reorganization. The Trustees may sell, convey and transfer
all or substantially all of the assets of the Trust, or the assets belonging to
any one or more Series, to another trust, partnership, association, corporation
or other entity organized under the laws of any state of the United States, or
may transfer such assets to another Series of the Trust, in exchange for cash,
Shares or other Securities (including, in the case of a transfer to another
Series of the Trust, Shares of such other Series), or to the extent permitted
by law then in effect may merge or consolidate the Trust or any Series with any
other Trust or any corporation, partnership, or association organized under the
laws of any state of the United States, all upon such terms and conditions and
for such consideration when and as authorized by vote or written consent of a
Majority of the Trustees and approved by the affirmative vote of the holders of
not less than a majority of the Shares outstanding and entitled to vote of each
Series whose assets are affected by such transaction, or by an instrument or
instruments in writing without a meeting, consented to by the holders of not
less than a majority of such Shares, and/or by such other vote of any Series as
may be established by the Certificate of Designation with respect to such
Series. Following such transfer, the Trustees shall distribute the cash, Shares
or other Securities or other consideration received in such transaction (giving
due effect to the assets belonging to and indebtedness of, and any other
differences among, the various Series of which the assets have so been
transferred) among the Shareholders of the Series of which the assets have been
so transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated. Nothing in this Section 9.3 shall be construed
as requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or
other organizations, and to sell, convey or transfer less than substantially
all of the Trust Property or the assets belonging to any Series to such
organizations or entities.

SECTION 9.4. Incorporation. Upon approval by Majority Shareholder Vote,
the Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust,
partnership, association or other organization to take over all of the Trust
Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property to any such corporation, trust, association or organization, in
exchange for the shares or securities thereof, or otherwise, and to lend money
to, subscribe for the shares of securities of, and enter into any contracts
with any such corporation, trust, partnership, association or organization in
which the Trust holds or is about to acquire shares or any other interests. The
Trustees may also cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust, partnership, association or
other organization if and to the extent permitted by law, as provided under the
law then in effect. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in organizing
one or more corporation, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to such organizations or entities.

SECTION 9.5. Amendments; etc. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right
to amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or
Trustee or the prohibition of assessment upon the Shareholders (otherwise than
as permitted under Section 6.1(l)) without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the provisions of
this Declaration of Trust (whether or not related to the rights of
Shareholders) may be amended at any time, so long as such amendment does not
adversely affect the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the 1940 Act, by an instrument in
writing signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a Majority of the Trustees). Any amendment to this
Declaration of Trust that adversely affects the rights of all Shareholders may
be adopted at any time by an instrument in writing signed by a Majority of the
Trustees (or by an officer of the Trust pursuant to a vote of a Majority of the
Trustees) when authorized to do so by the vote in accordance with Section 7.1
hereof of Shareholders holding a majority of all the Shares outstanding and
entitled to vote, without regard to Series, or if said amendment adversely
affects the rights of the Shareholders of less than all of the Series, by the
vote of the holders of a majority of all the Shares entitled to vote of each
Series so affected.

SECTION 9.6. Filing of Copies of Declaration and Amendments. The original
or a copy of this Declaration and of each amendment hereto (including each
Certificate of Designation and

<PAGE> 29
Certificate of Termination) shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A restated Declaration, integrating into
a single instrument all of the provisions of this Declaration which are then in
effect and operative, may be executed from time to time by a Majority of the
Trustees and shall, upon execution, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto. A Certificate of Trust shall
be filed in the office of the Secretary of State of the State of Delaware.

ARTICLE 10

MISCELLANEOUS

SECTION 10.1. Notices. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the applicable register of the
Trust.

SECTION 10.2. Governing Law. This Declaration of Trust is, with reference
to the laws thereof, and the rights of all parties and the construction and
effect of every provision hereof shall be, subject to and construed according
to the laws of said The State of Delaware.

SECTION 10.3. Counterparts. This Declaration of Trust and any amendment
thereto may be simultaneously executed in several counterparts, each of which
so executed shall be deemed to be an original, and such counterparts, together,
shall constitute but one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.

SECTION 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust is a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Shareholders, (b) the
due authorization of the execution of any instrument or writing, (c) the form
of any vote passed at a meeting of Trustees or Shareholders, (d) the fact that
the number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration of Trust, (e)
the form of any By-Law adopted, or the identity of any officers elected, by the
Trustees, (f) the existence or nonexistence of any fact or facts which in any
manner relate to the affairs of the Trust, or (g) the name of the Trust or the
establishment of a Series shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees, or any of them, and
the successors of such Person.

SECTION 10.5. References; Headings. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part of this Declaration or control
or affect the meaning, construction or effect hereof.

SECTION 10.6. Provisions in Conflict With Law or Regulation. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986 or with other applicable laws and regulations,
the conflicting provision shall be deemed never to have constituted a part of
this Declaration; provided, however, that such determination shall not affect
any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.

(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.

SECTION 10.7. Use of the Name "Van Kampen American Capital". Van Kampen
American Capital, Inc. ("Van Kampen American Capital") has consented to the use
by the Trust and by each Series and each Series thereof to the identifying
words "Van Kampen" or "Van Kampen Merritt" or any combination thereof in the
name of the Trust and of each Series and Series thereof. Such consent is
conditioned upon the Trust's employment of Van Kampen American Capital, its
successors or a subsidiary or affiliate thereof as investment adviser to the
Trust and to each Series and each Series thereof. As between Van Kampen
American Capital and the Trust, Van Kampen American Capital shall control the
use of such name insofar as such name contains the identifying words "Van
Kampen" or "Van Kampen Merritt". Van Kampen American Capital may from time to
time use the identifying words "American Capital," "Van Kampen" or "Van Kampen
Merritt" in other connections and for other purposes, including without
limitation in the names of other investment companies, corporations or
businesses that it may manage, advise, sponsor or own or in which it may have a

<PAGE> 30
financial interest. Van Kampen American Capital may require the Trust or
any Series or Series thereof to cease using the identifying words "Van Kampen"
or "Van Kampen Merritt" in the name of the Trust or any Series or any Series
thereof if the Trust or any Series or Series thereof ceases to employ Van
Kampen American Capital, its successors or a subsidiary or affiliate thereof as
investment adviser.

<PAGE> 31
IN WITNESS WHEREOF, the undersigned, being the initial Trustee, has set
his hand and seal, for himself and his assigns, unto this Declaration of Trust
of Van Kampen American Capital U.S. Government Trust, all as of the day and
year first above written.

/s/ Ronald A. Nyberg
- ----------------------------------
Initial Trustee

<PAGE> 32
A C K N O W L E D G M E N T

STATE OF ILLINOIS )
) ss
COUNTY OF DUPAGE )

May 10, 1995

Then personally appeared the above named Ronald A. Nyberg and acknowledged
the foregoing instrument to be his free act and deed.

Before me,

/s/ Virginia Rodriguez
---------------------------------
(Notary Public)

My commission expires: 1/13/99
-----------
26

<PAGE> 1
EXHIBIT (1)(b)

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

Certificate of Designation
of

Van Kampen American Capital U.S. Government Fund

The undersigned, being the Secretary of Van Kampen American Capital U.S.
Government Trust, a Delaware business trust (the "Trust"), pursuant to the
authority conferred upon the Trustees of the Trust by Section 6.1 of the
Trust's Agreement and Declaration of Trust ("Declaration"), and by the
affirmative vote of a Majority of the Trustees does hereby establish and
designate as a Series of the Trust the Van Kampen American Capital U.S.
Government Fund (the "Fund") with following the rights, preferences and
characteristics:

1. Shares. The beneficial interest in the Fund shall be divided into Shares
having a nominal or par value of $0.01 per Share, of which an unlimited number
may be issued, which Shares shall represent interests only in the Fund. The
Trustees shall have the authority from time to time to authorize separate
Series of Shares for the Trust as they deem necessary or desirable.

2. Classes of Shares. The Shares of the Fund shall be initially divided into
three classes--Class A, Class B and Class C. The Trustees shall have the
authority from time to time to authorize additional Classes of Shares of the
Fund

3. Sales Charges. Each Class A, Class B and Class C Share shall be subject to
such sales charges, if any, as may be established from time to time by the
Trustees in accordance with the Investment Company Act of 1940 (the "1940 Act")
and applicable rules and regulations of the National Association of Securities
Dealers, Inc., all as set forth in the Fund's prospectus.

4. Conversion. Each Class B Share of the Fund shall be converted
automatically, and without any action or choice on the part of the Shareholder
thereof, into Class A Shares of the Fund at such times and pursuant to such
terms, conditions and restrictions as may be established by the Trustees and as
set forth in the Fund's Prospectus.

5. Allocation of Expenses Among Classes. Expenses related solely to a
particular Class (including, without limitation, distribution expenses under an
administrative or service agreement, plan or other arrangement, however
designated) shall be borne by that Class and shall be appropriately reflected
(in a manner determined by the Trustees) in the net asset value, dividends,
distribution and liquidation rights of the Shares of that Class.

6. Special Meetings. A special meeting of Shareholders of a Class of the Fund
may be called with respect to the Rule 12b-1 distribution plan applicable to
such Class or with respect to any other proper purpose affecting only holders
of shares of such Class at any time by a Majority of the Trustees.

7. Other Rights Governed by Declaration. All other rights, preferences,
qualifications, limitations and restrictions with respect to Shares of any
Series of the Trust or with respect to any Class of Shares set forth in the
Declaration shall apply to Shares of the Fund unless otherwise specified in
this Certificate of Designation, in which case this Certificate of Designation
shall govern.

8. Amendments, etc. Subject to the provisions and limitations of Section 9.5
of the Declaration and applicable law, this Certificate of Designation may be
amended by an instrument signed in writing by a Majority of the Trustees (or by
and officer of the Trust pursuant to the vote of a Majority of the Trustees) or
when authorized to do so by the vote in accordance with the Declaration of the
holders of a majority of all the Shares of the Fund outstanding and entitled to
vote or, if such amendment affects the Shares of one or more but not all of the
Classes of the Fund, the holders of a majority of all the Shares of the
affected Classes outstanding and entitled to vote.

9. Incorporation of Defined Terms. All capitalized terms which are not
defined herein shall have the same meaning as ascribed to those terms in the
Declaration.

May 10, 1995

/s/ Ronald A. Nyberg
--------------------------
Ronald A. Nyberg, Secretary

<PAGE> 1
EXHIBIT 2

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

BYLAWS

<PAGE> 2

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

BYLAWS

INDEX

<TABLE>
<S> <C>
ARTICLE 1 SHAREHOLDERS AND SHAREHOLDERS' MEETINGS ......................................... 1

Section 1.1. Meetings .............................................................. 1

Section 1.2. Presiding Officer; Secretary .......................................... 1

Section 1.3. Authority of Chairman of Meeting to Interpret Declaration and Bylaws .. 1

Section 1.4. Voting; Quorum ........................................................ 1

Section 1.5. Inspectors ............................................................ 1

Section 1.6 Records at Shareholder Meetings .............................................. 1

Section 1.7. Shareholders Action in Writing ............................................... 2

ARTICLE 2 TRUSTEES AND TRUSTEES' MEETINGS ................................................. 2

Section 2.1. Number of Trustees .................................................... 2

Section 2.2. Regular Meetings of Trustees .......................................... 2

Section 2.3. Special Meetings of Trustees .......................................... 2

Section 2.4. Notice of Meetings .................................................... 2

Section 2.5. Quorum; Presiding Trustee ............................................. 2

Section 2.6. Participation by Telephone ............................................ 2

Section 2.7. Location of Meetings .................................................. 2

Section 2.8. Actions by Trustees ................................................... 2

Section 2.9. Rulings of Presiding Trustee .......................................... 3

Section 2.10. Trustees' Action in Writing ........................................... 3

Section 2.11. Resignations .......................................................... 3

Section 2.12. Tenure of Trustees .................................................... 3
</TABLE>

<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 3 OFFICERS ........................................................................ 3

Section 3.1. Officers of the Trust ................................................. 3

Section 3.2. Time and Terms of Election ............................................ 3

Section 3.3. Resignation and Removal ............................................... 3

Section 3.4. Fidelity Bond ......................................................... 3

Section 3.5. President ............................................................. 3

Section 3.6. Vice Presidents ....................................................... 3

Section 3.7. Treasurer and Assistant Treasurers .................................... 3

Section 3.8. Controller and Assistant Controllers .................................. 4

Section 3.9. Secretary and Assistant Secretaries ................................... 4

Section 3.10. Substitutions ......................................................... 4

Section 3.11. Execution of Deeds, etc. .............................................. 4

Section 3.12. Power to Vote Securities .............................................. 4

ARTICLE 4 COMMITTEES ...................................................................... 4

Section 4.1. Power of Trustees to Designate Committees ............................. 4

Section 4.2. Rules for Conduct of Committee Affairs ................................ 5

Section 4.3. Trustees May Alter, Abolish, etc., Committees ......................... 5

Section 4.4. Minutes; Review by Trustees ........................................... 5

ARTICLE 5 SEAL ............................................................................ 6

ARTICLE 6 SHARES .......................................................................... 6

Section 6.1. Issuance of Shares .................................................... 6

Section 6.2. Uncertificated Shares ................................................. 6

Section 6.3. Share Certificates .................................................... 6

Section 6.4. Lost, Stolen, etc., Certificates ...................................... 6
</TABLE>

<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 7 STOCK TRANSFERS ................................................................. 6

Section 7.1. Transfer Agents, Registrars, etc. ..................................... 6

Section 7.2. Transfer of Shares .................................................... 6

Section 7.3. Registered Shareholders ............................................... 7

ARTICLE 8 AMENDMENTS ...................................................................... 7

Section 8.1. Bylaws Subject to Amendment ........................................... 7

Section 8.2. Notice of Proposal to Amend Bylaws Required ........................... 7
</TABLE>

<PAGE> 5
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

BYLAWS

These are the Bylaws of Van Kampen American Capital U.S. Government Trust,
a trust with transferable shares established under the laws of The State of
Delaware (the "Trust"), pursuant to an Agreement and Declaration of Trust of
the Trust (the "Declaration") made the 10th day of May, 1995, and a Certificate
of Trust filed in the office of the Secretary of State pursuant to Section 3810
of The Delaware Business Trust Act, Title 12, Chapter 38 of the Delaware Code.
These Bylaws have been adopted by the Trustees pursuant to the authority
granted by Section 4.14 of the Declaration.

All words and terms capitalized in these Bylaws, unless otherwise
defined herein, shall have the same meanings as they have in the Declaration.

ARTICLE 1

SHAREHOLDERS AND SHAREHOLDERS' MEETINGS

SECTION 1.1. Meetings. A meeting of the Shareholders of the Trust shall
be held whenever called by the Chairman, the President or a majority of the
Trustees and whenever election of a Trustee or Trustees by Shareholders is
required by the provisions of the 1940 Act. Meetings of Shareholders shall
also be called by the Trustees when requested in writing by Shareholders
holding at least ten percent (10%) of the Shares then outstanding for the
purpose of voting upon removal of any Trustee, or if the Trustees shall fail to
call or give notice of any such meeting of Shareholders for a period of thirty
(30) days after such application, then Shareholders holding at least ten
percent (10%) of the Shares then outstanding may call and give notice of such
meeting. Notice of Shareholders' meetings shall be given as provided in the
Declaration.

SECTION 1.2. Presiding Officer; Secretary. The President shall preside
at each Shareholders' meeting as chairman of the meeting, or in the absence of
the President, the Trustees present at the meeting shall elect one of their
number as chairman of the meeting. Unless otherwise provided for by the
Trustees, the Secretary of the Trust shall be the secretary of all meetings of
Shareholders and shall record the minutes thereof.

SECTION 1.3. Authority of Chairman of Meeting to Interpret Declaration
and Bylaws. At any Shareholders' meeting the chairman of the meeting shall be
empowered to determine the construction or interpretation of the Declaration or
these Bylaws, or any part thereof or hereof, and his ruling shall be final.

SECTION 1.4. Voting; Quorum. At each meeting of Shareholders, except as
otherwise provided by the Declaration, every holder of record of Shares
entitled to vote shall be entitled to a number of votes equal to the number of
Shares standing in his name on the Share register of the Trust on the record
date of the meeting. Shareholders may vote by proxy and the form of any such
proxy may be prescribed from time to time by the Trustees. A quorum shall
exist if the holders of a majority of the outstanding Shares of the Trust
entitled to vote are present in person or by proxy, but any lesser number
shall be sufficient for adjournments. At all meetings of the Shareholders,
votes shall be taken by ballot for all matters which may be binding upon the
Trustees pursuant to Section 7.1 of the Declaration. On other matters, votes
of Shareholders need not be taken by ballot unless otherwise provided for by
the Declaration or by vote of the Trustees, or as required by the 1940 Act,
but the chairman of the meeting may in his discretion authorize any matter to
be voted upon by ballot.

SECTION 1.5. Inspectors. At any meeting of Shareholders, the chairman of
the meeting may appoint one or more Inspectors of Election or Balloting to
supervise the voting at such meeting or any adjournment thereof. If Inspectors
are not so appointed, the chairman of the meeting may, and on the request of
any Shareholder present or represented and entitled to vote shall, appoint one
or more Inspectors for such purpose. Each Inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of Inspector of Election or Balloting, as the case may be, at such
meeting with strict impartiality and according to the best of his
ability. If appointed, Inspectors shall take charge of the polls and, when the
vote is completed, shall make a certificate of the result of the vote taken and
of such other facts as may be required by law.

SECTION 1.6. Records at Shareholder Meetings. At each meeting of the
Shareholders there shall be open for inspection the minutes of the last
previous Meeting of Shareholders of the Trust and a list of the Shareholders of
the Trust, certified to be true and correct by the

<PAGE> 6
Secretary or other proper agent of the Trust, as of the record date of the
meeting or the date of closing of transfer books, as the case may be. Such
list of Shareholders shall contain the name of each Shareholder. Shareholders
shall have such other rights and procedures of inspection of the books and
records of the Trust as are granted to shareholders of a Delaware corporation.

SECTION 1.7. Shareholders' Action in Writing. Nothing in this Article 1
shall limit the power of the Shareholders to take any action by means of
written instruments without a meeting, as permitted by Section 7.6 of the
Declaration.

ARTICLE 2

TRUSTEES AND TRUSTEES' MEETINGS

SECTION 2.1. Number of Trustees. There shall initially be one (1)
Trustee, and the number of Trustees shall thereafter be such number, authorized
by the Declaration, as from time to time shall be fixed by a vote adopted by a
Majority of the Trustees.

SECTION 2.2. Regular Meetings of Trustees. Regular meetings of the
Trustees may be held without call or notice at such places and at such times as
the Trustees may from time to time determine; provided, that notice of such
determination, and of the time and place of the first regular meeting
thereafter, shall be given to each absent Trustee in accordance with Section
2.4 hereof.

SECTION 2.3. Special Meetings of Trustees. Special meetings of the
Trustees may be held at any time and at any place when called by the President
or the Treasurer or by three (3) or more Trustees, or if there shall be less
than three (3) Trustees, by any Trustee; provided, that notice of the time and
place thereof is given to each Trustee in accordance with Section 2.4 hereof by
the Secretary or an Assistant Secretary or by the officer or the Trustees
calling the meeting.

SECTION 2.4. Notice of Meetings. Notice of any regular or special
meeting of the Trustees shall be sufficient if given in writing to each
Trustee, and if sent by mail at least five (5) days, by a nationally recognized
overnight delivery service at least two (2) days or by facsimile at least
twenty-four (24) hours, before the meeting, addressed to his usual or last
known business or residence address, or if delivered to him in person at least
twenty-four (24) hours before the meeting. Notice of a special meeting need
not be given to any Trustee who was present at an earlier meeting, not more
than thirty-one (31) days prior to the subsequent meeting, at which the
subsequent meeting was called. Unless statute, these bylaws or a resolution of
the Trustees might otherwise dictate, notice need not state the business to be
transacted at or the purpose of any meeting of the Board of Trustees. Notice
of a meeting may be waived by any Trustee by written waiver of notice, executed
by him before or after the meeting, and such waiver shall be filed with the
records of the meeting. Attendance by a Trustee at a meeting shall constitute a
waiver of notice, except where a Trustee attends a meeting for the purpose of
protesting prior thereto or at its commencement the lack of notice. No notice
need be given of action proposed to be taken by unanimous written consent.

SECTION 2.5. Quorum: Presiding Trustee. At any meeting of the Trustees,
a Majority of the Trustees shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice. Unless the Trustees shall otherwise elect, generally
or in a particular case, the Chairman shall be the presiding Trustee at each
meeting of the Trustees or in the absence of the Chairman, the President shall
preside over the meeting. In the absence of both the Chairman and the
President, the Trustees present at the meeting shall elect one of their number
as presiding Trustee of the meeting.

SECTION 2.6. Participation by Telephone. One or more of the Trustees may
participate in a meeting thereof or of any Committee of the Trustees by means
of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.

SECTION 2.7. Location of Meetings. Trustees' meetings may be held at any
place, within or without the State of Delaware.

SECTION 2.8. Actions by Trustees. Unless statute, the charter or
bylaws requires a greater proportion, action of a majority of the Trustees
present at a meeting at which a quorum is present is action of the Board of
Trustees. Voting at Trustees' meetings may be conducted orally, by show of
hands, or, if requested by any Trustee, by written ballot. The results of
all voting shall be recorded by the Secretary in the minute book.

2
<PAGE> 7
SECTION 2.9. Rulings of Presiding Trustee. All other rules of conduct
adopted and used at any Trustees' meeting shall be determined by the presiding
Trustee of such meeting, whose ruling on all procedural matters shall be
final.

SECTION 2.10. Trustees' Action in Writing. Nothing in this Article 2
shall limit the power of the Trustees to take action by means of a written
instrument without a meeting, as provided in Section 4.2 of the Declaration.

SECTION 2.11. Resignations. Any Trustee may resign at any time by
written instrument signed by him and delivered to the Chairman, the President
or the Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.

SECTION 2.12. Chairman of the Board. The Trustees may from time to time
elect one of the Trustees to serve as Chairman of the Board of Trustees.

ARTICLE 3

OFFICERS

SECTION 3.1. Officers of the Trust. The officers of the Trust shall
consist of a President, a Treasurer and a Secretary, and may include one or
more Vice Presidents, Assistant Treasurers and Assistant Secretaries, and such
other officers as the Trustees may designate. Any person may hold more than
one office.

SECTION 3.2. Time and Terms of Election. The President, the Treasurer
and the Secretary shall be elected by the Trustees at their first meeting and
thereafter at the annual meeting of the Trustees, as provided in Section 4.2 of
the Declaration. Such officers shall hold office until the next annual
meeting of the Trustees and until their successors shall have been duly elected
and qualified, and may be removed at any meeting by the affirmative vote of a
Majority of the Trustees. All other officers of the Trust may be elected or
appointed at any meeting of the Trustees. Such officers shall hold office for
any term, or indefinitely, as determined by the Trustees, and shall be subject
to removal, with or without cause, at any time by the Trustees.

SECTION 3.3. Resignation and Removal. Any officer may resign at any time
by giving written notice to the Trustees. Such resignation shall take effect
at the time specified therein, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
If the office of any officer or agent becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or otherwise,
the Trustees may choose a successor, who shall hold office for the unexpired
term in respect of which such vacancy occurred. Except to the extent expressly
provided in a written agreement with the Trust, no officer resigning or removed
shall have any right to any compensation for any period following such
resignation or removal, or any right to damage on account of such removal.

SECTION 3.4. Fidelity Bond. The Trustees may, in their discretion,
direct any officer appointed by them to furnish at the expense of the Trust a
fidelity bond approved by the Trustees, in such amount as the Trustees may
prescribe.

SECTION 3.5. President. The President shall be the chief executive
officer of the Trust and, subject to the supervision of the Trustees, shall
have general charge and supervision of the business, property and affairs of
the Trust and such other powers and duties as the Trustees may prescribe.

SECTION 3.6. Vice Presidents. In the absence or disability of the
President, the Vice President or, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all of the powers and duties of the President. The
Vice Presidents shall have the power to execute bonds, notes, mortgages and
other contracts, agreements and instruments in the name of the Trust, and shall
do and perform such other duties as the Trustees or the President shall direct.

SECTION 3.7. Treasurer and Assistant Treasurers. The Treasurer shall be
the chief financial officer of the Trust, and shall have the custody of the
Trust's funds and Securities, and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit
all moneys, and other valuable effects in the name and to the credit of the
Trust, in such depositories as may be designated by the Trustees, taking
proper vouchers for such disbursements, shall have such other duties and
powers as may be prescribed from time to time by the Trustees, and shall
render to the Trustees, whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the Trust. If no
Controller is elected, the Treasurer shall also have the duties and powers
of the

3
<PAGE> 8
Controller, as provided in these Bylaws. Any Assistant Treasurer shall have
such duties and powers as shall be prescribed from time to time by the Trustees
or the Treasurer, and shall be responsible to and shall report to the
Treasurer. In the absence or disability of the Treasurer, the Assistant
Treasurer or, if there shall be more than one, the Assistant Treasurers in the
order of their seniority or as otherwise designated by the Trustees or the
Chairman, shall have the powers and duties of the Treasurer.

SECTION 3.8. Controller and Assistant Controllers. If a Controller is
elected, he shall be the chief accounting officer of the Trust and shall be in
charge of its books of account and accounting records and of its accounting
procedures, and shall have such duties and powers as are commonly incident to
the office of a controller, and such other duties and powers as may be
prescribed from time to time by the Trustees. The Controller shall be
responsible to and shall report to the Trustees, but in the ordinary
conduct of the Trust's business, shall be under the supervision of the
Treasurer. Any Assistant Controller shall have such duties and powers as shall
be prescribed from time to time by the Trustees or the Controller, and shall be
responsible to and shall report to the Controller. In the absence or
disability of the Controller, the Assistant Controller or, if there shall be
more than one, the Assistant Controllers in the order of their seniority or as
otherwise designated by the Trustees, shall have the powers and duties of the
Controller.

SECTION 3.9. Secretary and Assistant Secretaries. The Secretary
shall, if and to the extent requested by the Trustees, attend all meetings of
the Trustees, any Committee of the Trustees and/or the Shareholders and record
all votes and the minutes of proceedings in a book to be kept for that purpose,
shall give or cause to be given notice of all meetings of the Trustees, any
Committee of the Trustees, and of the Shareholders and shall perform such
other duties as may be prescribed by the Trustees. The Secretary, or in his
absence any Assistant Secretary, shall affix the Trust's seal to any instrument
requiring it, and when so affixed, it shall be attested by the signature of
the Secretary or an Assistant Secretary. The Secretary shall be the custodian
of the Share records and all other books, records and papers of the Trust
(other than financial) and shall see that all books, reports, statements,
certificates and other documents and records required by law are properly kept
and filed. In the absence or disability of the Secretary, the Assistant
Secretary or, if there shall be more than one, the Assistant Secretaries in the
order of their seniority or as otherwise designated by the Trustees, shall have
the powers and duties of the Secretary.

SECTION 3.10. Substitutions. In case of the absence or disability of
any officer of the Trust, or for any other reason that the Trustees may deem
sufficient, the Trustees may delegate, for the time being, the powers or
duties, or any of them, of such officer to any other officer, or to any
Trustee.

SECTION 3.11. Execution of Deeds, etc. Except as the Trustees may
generally or in particular cases otherwise authorize or direct, all deeds,
leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Trust shall be signed or endorsed
on behalf of the Trust by its properly authorized officers or agents as
provided in the Declaration.

SECTION 3.12. Power to Vote Securities. Unless otherwise ordered by
the Trustees, the Treasurer shall have full power and authority on behalf of
the Trust to give proxies for, and/or to attend and to act and to vote at, any
meeting of stockholders of any corporation in which the Trust may hold stock,
and at any such meeting the Treasurer or his proxy shall possess and may
exercise any and all rights and powers incident to the ownership of such stock
which, as the owner thereof, the Trust might have possessed and exercised if
present. The Trustees, by resolution from time to time, or, in the absence
thereof, the Treasurer, may confer like powers upon any other person or persons
as attorneys and proxies of the Trust.

ARTICLE 4

COMMITTEES

SECTION 4.1. Power of Trustees to Designate Committees. The Trustees, by
vote of a Majority of the Trustees, may elect from their number an Executive
Committee and any other Committees and may delegate thereto some or all of
their powers except those which by law, by the Declaration or by these
Bylaws may not be delegated; provided, that an Executive Committee shall not
be empowered to elect the President, the Treasurer or the Secretary, to amend
the Bylaws, to exercise the powers of the Trustees under this Section 4.1 or
under Section 4.3 hereof, or to perform any act for which the action of a
Majority of the Trustees is required by law, by the Declaration or by these
Bylaws. The members of any such Committee shall serve at the pleasure of the
Trustees.

4
<PAGE> 9
SECTION 4.2. Rules for Conduct of Committee Affairs. Except as otherwise
provided by the Trustees, each Committee elected or appointed pursuant to this
Article 4 may adopt such standing rules and regulations for the conduct of its
affairs as it may deem desirable, subject to review and approval of such
rules and regulations by the Trustees at the next succeeding meeting of the
Trustees, but in the absence of any such action or any contrary provisions by
the Trustees, the business of each Committee shall be conducted, so far as
practicable, in the same manner as provided herein and in the Declaration for
the Trustees.

SECTION 4.3. Trustees May Alter, Abolish, etc., Committees Trustees may
at any time alter or abolish any Committee, change membership of any Committee,
or revoke, rescind, waive or modify action of any Committee or the authority
of any Committee with respect to any matter or class of matters; provided, that
no such action shall impair the rights of any third parties.

SECTION 4.4. Minutes: Review by Trustees. Any Committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees.

<PAGE> 10
ARTICLE 5

SEAL

The seal of the Trust, if any, may be affixed to any instrument, and the
seal and its attestation may be lithographed, engraved or otherwise printed on
any document with the same force and effect as if had been imprinted and
affixed manually in the same manner and with the same force and effect as if
done by a Delaware corporation. Unless otherwise required by the Trustees,
the seal shall not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.

ARTICLE 6

SECTION 6.1. Issuance of Shares. The Trustees may issue an unlimited
number of Classes of Shares of any or all Series either in certificated or
uncertificated form, they may issue certificates to the holders of a Class of
Shares of a Series which was originally issued in uncertificated form, and if
they have issued Shares of any Series in certificated form, they may at any
time discontinue the issuance of Share certificates for such Series and may, by
written notice to such Shareholders of such Series require the surrender of
their Share certificates to the Trust for cancellation, which surrender and
cancellation shall not affect the ownership of Shares for such Series.

SECTION 6.2. Uncertificated Shares. For any Class of Shares for which
the Trustees issue Shares without certificates, the Trust or the Transfer Agent
may either issue receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such Shares, who shall in either case be
deemed, for all purposes hereunder, to be the holders of such Shares as if they
had received certificates therefor and shall be held to have expressly assented
and agreed to the terms hereof and of the Declaration.

SECTION 6.3. Share Certificates. For any Class of Shares for which the
Trustees shall issue Share certificates, each Shareholder of such Class shall
be entitled to a certificate stating the number of Shares owned by him in such
form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Trust. Such signatures may be facsimiles if the certificate
is countersigned by a Transfer Agent, or by a Registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the
Trust with the same effect as if he were such officer at the time of its issue.

SECTION 6.4. Lost, Stolen, etc., Certificates. If any certificate
for certificated Shares shall be lost, stolen, destroyed or mutilated,
the Trustees may authorize the issuance of a new certificate of the same tenor
and for the same number of Shares in lieu thereof. The Trustees shall require
the surrender of any mutilated certificate in respect of which a new
certificate is issued, and may, in their discretion, before the issuance of a
new certificate, require the owner of a lost, stolen or destroyed certificate,
or the owner's legal representative, to make an affidavit or affirmation
setting forth such facts as to the loss, theft or destruction as they deem
necessary, and to give the Trust a bond in such reasonable sum as the Trustees
direct, in order to indemnify the Trust.

ARTICLE 7

TRANSFER OF SHARES

SECTION 7.1. Transfer Agents, Registrars, etc. As approved in Section
5.2(e) of the Declaration, the Trustees shall have the authority to employ and
compensate such transfer agents and registrars with respect to the Shares of
the Trust as the Trustees shall deem necessary or desirable. In addition, the
Trustees shall have the power to employ and compensate such dividend dispersing
agents, warrant agents and agents for reinvestment of dividends as they shall
deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustees.

SECTION 7.2 Transfer of Shares. The Shares of the Trust shall be
transferable on the books of the Trust only upon delivery to the Trustees or a
transfer agent of the Trust of proper

6
<PAGE> 11
documentation as provided in Section 6.1(m) of the Declaration. The Trust, or
its transfer agents, shall be authorized to refuse any transfer unless and
until presentation of such evidence as may be reasonably required to show that
the requested transfer is proper.

SECTION 7.3 Registered Shareholders. The Trust may deem and treat the
holder of record of any Shares the absolute owner thereof for all purposes and
shall not be required to take any notice of any right or claim of right of any
other person.

ARTICLE 8

AMENDMENTS

SECTION 8.1. Bylaws Subject to Amendment. These Bylaws may be altered,
amended or repealed, in whole or in part, at any time by vote of the holders of
a majority of the Shares issued, outstanding and entitled to vote. The
Trustees, by vote of a Majority of the Trustees, may alter, amend or repeal
these Bylaws, in whole or in part, including Bylaws adopted by the
Shareholders, except with respect to any provision hereof which by law, the
Declaration or these Bylaws requires action by the Shareholders. Bylaws
adopted by the Trustees may be altered, amended or repealed by the
Shareholders.

SECTION 8.2. Notice of Proposal to Amend Bylaws Required. No proposal to
amend or repeal these Bylaws or to adopt new Bylaws shall be acted upon at a
meeting unless either (i) such proposal is stated in the notice or in the
waiver of notice, as the case may be, of the meeting of the Trustees or
Shareholders at which such action is taken, or (ii) all of the Trustees or
Shareholders, as the case may be, are present at such meeting and all agree to
consider such proposal without protesting the lack of notice.

<PAGE> 1
EXHIBIT 4(i)

NUMBER SHARES

__________ __________

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND, a series of
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

CLASS A

ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES that is the owner of

*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________

CUSIP 921129-102
_________________

fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital U.S. Government Fund,
transferable on the books of the Fund by the holder thereof in person or by
duly authorized attorney upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent.

WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.

Dated

[VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND
DELAWARE SEAL]

RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT

KC 002717

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

COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256

TRANSFER AGENT

By
----------------------------------------------------
AUTHORIZED OFFICER

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

PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

NUMBER CLASS A SHARES
KC

ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.

TRADE DATE CONFIRM DATE BATCH I.D. NO.

CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:

ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256

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

REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

THE 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.

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

For value received, hereby sell, assign and transfer unto

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares

of the Common Stock represented by the within Certificate, and do hereby

irrevocably constitute and appoint _____________________________________________

_______________________________________________________________________ Attorney

to transfer the said stock on the books of the within-named Corporation with

full power of substitution in the premises.

Dated, _________________________________________ 19 ______

__________________________________________________________________
Owner

__________________________________________________________________
Signature of Co-Owner, if any

IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.

SIGNATURE(S) guaranteed by:

________________________________________________________________________________

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

*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common

Additional abbreviations may also be used though not in the above list

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

________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY

<PAGE> 1
EXHIBIT 4(ii)

NUMBER SHARES

__________ __________

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND, a series of
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

CLASS B

ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES that is the owner of

*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________

CUSIP 921129-201
_________________

fully paid and nonassessable shares of beneficial interest of the par
value of $0.01 per share of Van Kampen American Capital U.S. Government
Fund, transferable on the books of the Fund by the holder thereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent.

WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.

Dated

[VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND
DELAWARE SEAL]

RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT

KC 002717

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

COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256

TRANSFER AGENT

By
----------------------------------------------------
AUTHORIZED OFFICER

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

PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

NUMBER CLASS B SHARES
KC

ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.

TRADE DATE CONFIRM DATE BATCH I.D. NO.

CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:

ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256

THE SIGNATURE(S) MUST BE GUARANTEED BY ONE OF THE FOLLOWING:

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

For value received, hereby sell, assign and transfer unto

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares

of the Common Stock represented by the within Certificate, and do hereby

irrevocably constitute and appoint _____________________________________________

_______________________________________________________________________ Attorney

to transfer the said stock on the books of the within-named Corporation with

full power of substitution in the premises.

Dated, _________________________________________ 19 ______

__________________________________________________________________
Owner

__________________________________________________________________
Signature of Co-Owner, if any

IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.

SIGNATURE(S) guaranteed by:

________________________________________________________________________________

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

*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list

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

________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY

<PAGE> 1
EXHIBIT 4(iii)

NUMBER SHARES

__________ __________

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND, a series of
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST

CLASS C

ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES that is the owner of

*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________

CUSIP 921129-300
_________________

WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.

Dated

[VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND
DELAWARE SEAL]

RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT

KC 002717

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

COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256

TRANSFER AGENT

By
----------------------------------------------------
AUTHORIZED OFFICER

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

PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

NUMBER CLASS C SHARES
KC

ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.

TRADE DATE CONFIRM DATE BATCH I.D. NO.

CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:

ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256

THE SIGNATURE(S) MUST BE GUARANTEED BY ONE OF THE FOLLOWING:

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

For value received, hereby sell, assign and transfer unto

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares

of the Common Stock represented by the within Certificate, and do hereby

irrevocably constitute and appoint _____________________________________________

_______________________________________________________________________ Attorney

to transfer the said stock on the books of the within-named Corporation with

full power of substitution in the premises.

Dated, _________________________________________ 19 ______

__________________________________________________________________
Owner

__________________________________________________________________
Signature of Co-Owner, if any

IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.

SIGNATURE(S) guaranteed by:

________________________________________________________________________________

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

*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list

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

________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY

<PAGE> 1
EXHIBIT (5)

INVESTMENT ADVISORY AGREEMENT

THIS INVESTMENT ADVISORY AGREEMENT dated as of April 7, 1995, by and
between VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND (the "Fund"), a series
of Van Kampen American Capital U.S. GOVERNMENT TRUST, Delaware business trust
(the "Trust"), and VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP. (the
"Adviser"), a Delaware corporation.

1. (a) Retention of Adviser by Fund. The Fund hereby employs the Adviser
to act as the investment adviser for and to manage the investment and
reinvestment of the assets of the Fund in accordance with the Fund's investment
objective and policies and limitations, and to administer its affairs to the
extent requested by, and subject to the review and supervision of, the Board of
Trustees of the Fund for the period and upon the terms herein set forth. The
investment of funds shall be subject to all applicable restrictions of
applicable law and of the Declaration of Trust and By-Laws of the Trust, and
resolutions of the Board of Trustees of the Fund as may from time to time be in
force and delivered or made available to the Adviser.

(b) Adviser's Acceptance of Employment. The Adviser accepts such
employment and agrees during such period to render such services, to supply
investment research and portfolio management (including without limitation the
selection of securities for the Fund to purchase, hold or sell and the
selection of brokers through whom the Fund's portfolio transactions are
executed, in accordance with the policies adopted by the Fund and its Board of
Trustees), to administer the business affairs of the Fund, to furnish offices
and necessary facilities and equipment to the Fund, to provide administrative
services for the Fund, to render periodic reports to the Board of Trustees of
the Fund, and to permit any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions.

(c) Independent Contractor. The Adviser shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed as agent of the Fund.

(d) Non-Exclusive Agreement. The services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.

2. (a) Fee. For the services and facilities described in Section 1, the
Fund will accrue daily and pay to the Adviser at the end of each calendar month
an investment management fee equal to a percentage of the average daily net
assets of the Fund as follows:

<TABLE>
<CAPTION>
FEE PERCENT OF
AVERAGE DAILY AVERAGE DAILY
NET ASSETS NET ASSETS
------------------ ---------------
<S> <C>
First $500 million .55% of 1%
Next $500 million .525% of 1%
Next $2 billion .50% of 1%
Next $2 billion .475% of 1%
Next $2 billion .45% of 1%
Next $2 billion .425% of 1%
Over $9 billion .40% of 1%
</TABLE>

(b) Expense Limitation. The Adviser's compensation for any fiscal year
of the Fund shall be reduced by the amount, if any, by which the Fund's expense
for such fiscal year exceeds the most restrictive applicable expense
jurisdiction in which the Fund's shares are qualified for offer and sale, as
such limitations set forth in the most recent notice thereof furnished by the
Adviser to the Fund. For purposes of this paragraph there shall be excluded
from computation of the Fund's expenses any amount borne directly or indirectly
by the Fund which is permitted to be excluded from the computation of such
limitation by such statute or regulatory authority. If for any month expenses
of the Fund properly included in such calculation exceed 1/12 of the amount
permitted annually by the most restrictive applicable expense limitation, the
payment to the Adviser for that month shall be reduced, and, if necessary, the
Adviser shall make a refund payment to the Fund, so that the total net expense
for the month will not exceed 1/12 of such amount. As of the end of the Fund's
fiscal year, however, the computations and payments shall be readjusted so that
the aggregate compensation payable to the Adviser for the year is equal to the
fee set forth in subsection (a) of this Section 2, diminished to the extent
necessary so that the expenses for the year do not exceed those permitted by
the applicable expense limitation.

(c) Determination of Net Asset Value. The net asset value of the Fund
shall be calculated as of the close of the New York Stock Exchange on each day
the Exchange is open for trading or such other time or times as the trustees
may determine in accordance with the

<PAGE> 2
provisions of applicable law and of the Declaration of Trust and By-Laws
of the Trust, and resolutions of the Board of Trustees of the Fund as from time
to time in force. For the purpose of the foregoing computations, on each such
day when net asset value is not calculated, the net asset value of a share of
beneficial interest of the Fund shall be deemed to be the net asset value of
such share as of the close of business of the last day on which such
calculation was made.

(d) Proration. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Adviser's fee on the basis of the number of days that the Agreement is in
effect during such month and year, respectively.

3. Expenses. In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for the safekeeping
of the Fund's securities or other property, for keeping its books of account,
for any other charges of the custodian and for calculating the net asset value
of the Fund as provided above. The Adviser shall not be required to pay, and
the Fund shall assume and pay, the charges and expenses of its operations,
including compensation of the trustees (other than those who are interested
persons of the Adviser and other than those who are interested persons of the
distributor of the Fund but not of the Adviser, if the distributor has agreed
to pay such compensation), charges and expenses of independent accountants, of
legal counsel and of any transfer or dividend disbursing agent, costs of
acquiring and disposing of portfolio securities, cost of listing shares of the
New York Stock Exchange or other exchange interest (if any) on obligations
incurred by the Fund, costs of share certificates, membership dues in the
Investment Company Institute or any similar organization, costs of reports and
notices to shareholders, costs of registering shares of the Fund under the
federal securities laws, miscellaneous expenses and all taxes and fees to
federal, state or other governmental agencies on account of the registration of
securities issued by the Fund, filing of corporate documents or otherwise. The
Fund shall not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Adviser
without first obtaining the written approval of the Adviser. The Adviser shall
arrange, if desired by the Fund, for officers or employees of the Adviser to
serve, without compensation from the Fund, as trustees, officers or agents of
the Fund if duly elected or appointed to such positions and subject to their
individual consent and to any limitations imposed by law.

4. Interested Persons. Subject to applicable statutes and regulations, it
is understood that trustees, officers, shareholders and agents of the Fund are
or may be interested in the Adviser as directors, officers, shareholders,
agents or otherwise and that the directors, officers, shareholders and agents
of the Adviser may be interest in the Fund as trustees, officers, shareholders,
agents or otherwise.

5. Liability. The Adviser shall not be liable for any error of judgment
or of law, or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.

6. (a) Term. This Agreement shall become effective on the date hereof
and shall remain in full force until the second anniversary of the date hereof
unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter, but only as long as such
continuance is specifically approved at least annually in the manner required
by the Investment Company Act of 1940, as amended.

(b) Termination. This Agreement shall automatically terminate in the
event of its assignment. This Agreement may be terminated at any time without
the payment of any penalty by the Fund or by the Adviser on sixty (60) days
written notice to the other party. The Fund may effect termination by action
of the Board of Trustees or by vote of a majority of the outstanding shares of
stock of the Fund, accompanied by appropriate notice. This Agreement may be
terminated at any time without the payment of any penalty and without advance
notice by the Board of Trustees or by vote of a majority of the outstanding
shares of the Fund in the event that it shall have been established by a court
of competent jurisdiction that the Adviser or any officer or director of the
Adviser has taken any action which results in a breach of the covenants of the
Adviser set forth herein.

(c) Payment upon Termination. Termination of this Agreement shall not
affect the right of the Adviser to receive payment on any unpaid balance of the
compensation described in Section 2 earned prior to such termination.

7. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall
not thereby affected.

8. Notices. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.

9. Disclaimer. The Adviser acknowledges and agrees that, as provided by
Section 8.1 of the Declaration of Trust of the Trust, (i) this Agreement has
been executed by officers of the

<PAGE> 3
Trust in their capacity as officers, and not individually, and (ii) the
shareholders, trustees, officers, employees and other agents of the Trust and
the Fund shall not personally be bound by or liable hereunder, nor shall resort
be had to their private property for the satisfaction of any obligation or
claim hereunder and that any such resort may only be had upon the assets and
property of the Fund.

10. Governing Law. All questions concerning the validity, meaning and
effect of this Agreement shall be determined in accordance with the laws
(without giving effect to the conflict-of-law principles thereof) of the State
of Delaware applicable to contracts made and to be performed in that state.

<PAGE> 4
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year first above written.

VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.

By: /S/ Dennis J. McDonnell
-------------------------------
Dennis J. McDonnell, President

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

By: /S/ Dennis J. McDonnell
-------------------------------
Dennis J. McDonnell, President

<PAGE> 1
EXHIBIT (6) (a)

DISTRIBUTION AND SERVICE AGREEMENT

THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of April 7, 1995 (the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST,
a Delaware business trust (the "Trust"), on behalf of its series, VAN KAMPEN
AMERICAN CAPITAL U.S. GOVERNMENT FUND (the "Fund"), and VAN KAMPEN AMERICAN
CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").

1. Appointment of Distributor. The Fund appoints the Distributor as a
principal underwriter and exclusive distributor of each class of its shares of
beneficial interest (the "Shares") offered for sale from time to time pursuant
to the then current prospectus of the Fund, subject to different combinations
of front-end sales charges, distribution fees, service fees and contingent
deferred sales charges. Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"FESC Classes" and the Shares of such classes are referred to herein as "FESC
Shares." Classes of shares, if any, subject to a contingent-deferred sales
charge and a distribution and/or a service fee are referred to herein as "CDSC
Classes" and Shares of such classes are referred to herein as "CDSC Shares."
Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares." The Fund reserves the right to
refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Board of Trustees of the Fund.

The Distributor will use its best efforts to sell, through its
organization and through other dealers and agents, the Shares which the
Distributor has the right to purchase under Section 2 hereof, but the
Distributor does not undertake to sell any specific number of Shares.

The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan described in the then
current Prospectus of the Fund and except as permitted by Section 2 hereof, and
that so far as it can control the situation, it will prevent any of its
trustees, officers or shareholders from taking any long or short positions in
the Shares, except for legitimate investment purposes.

2. Sale of Shares to Distributor. The Fund hereby grants to the
Distributor the exclusive right, except as herein otherwise provided, to
purchase Shares directly from the Fund upon the terms herein set forth. Such
exclusive right hereby granted shall not apply to Shares issued or transferred
or sold at net asset value: (a) in connection with the merger or consolidation
of the Fund with any other investment company or the acquisition by the Fund of
all or substantially all of the assets of or the outstanding Shares of any
investment company; (b) in connection with a pro rata distribution directly to
the holders of Fund Shares in the nature of a stock dividend or stock split or
in connection with any other recapitalization approved by the Board of
Trustees; (c) upon the exercise of purchase or subscription rights granted to
the holders of Shares on a pro rata basis; (d) in connection with the automatic
reinvestment of dividends and distributions from the Fund; or (e) in connection
with the issue and sale of Shares to trustees, officers and employees of the
Fund; to directors, officers and employees of the investment adviser of the
Fund or any principal underwriter (including the Distributor) of the Fund; to
retirees of the Distributor that purchased shares of any mutual fund
distributed by the Distributor prior to retirement; to directors, officers and
employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt
Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly
VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and
to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").

The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of

1
<PAGE> 2

transmission and cancellation of orders) to fill unconditional orders
for Shares received by the Distributor from dealers, agents and investors
during each period when particular net asset values and public offering prices
are in effect as provided in Section 3 hereof; and the price which the
Distributor shall pay for the Shares so purchased shall be the respective net
asset value used in determining the public offering price on which such orders
were based. The Distributor shall notify the Fund at the end of each such
period, or as soon thereafter on that business day as the orders received in
such period have been compiled, of the number of Shares of each class that the
Distributor elects to purchase hereunder.

3. Public Offering Price. The public offering price per Share shall be
determined in accordance with the then current Prospectus of the Fund. In no
event shall the public offering price exceed the net asset value per Share,
plus, with respect to the FESC Shares, a front-end sales charge not in excess
of the applicable maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., as in effect
from time to time. The net asset value per share for each class of Shares,
respectively, shall be determined in the manner provided in the Declaration of
Trust and By-Laws of the Trust as then amended, the Certificate of Designation
with respect to the Fund, as amended, and in accordance with the then current
Prospectus of the Fund consistent with the terms and conditions of the
exemptive order with respect to the Fund (Release No. IC-19600) issued by the
Securities and Exchange Commission on July 28, 1993, as it may be amended from
time to time or succeeded by other exemptive orders or rules promulgated by the
Securities and Exchange Commission under the 1940 Act. The Fund will cause
immediate notice to be given to the Distributor of each change in net asset
value as soon as it is determined. Discounts to dealers purchasing FESC Shares
from the Distributor for resale and to brokers and other eligible agents making
sales of FESC Shares to investors and compensation payable from the Distributor
to dealers, brokers and other eligible agents making sales of CDSC Shares and
Combination Shares shall be set forth in the selling agreements between the
Distributor and such dealers or agents, respectively, as from time to time
amended, and, if such discounts and compensation are described in the then
current Prospectus for the Fund, shall be as so set forth.

4. Compliance with NASD Rules, SEC Orders, etc. In selling Fund Shares,
the Distributor will in all respects duly comply with all state and federal
laws relating to the sale of such securities and with all applicable rules and
regulations of all regulatory bodies, including without limitation the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and all
applicable rules and regulations of the Securities and Exchange Commission
under the 1940 Act, and will indemnify and save the Fund harmless from any
damage or expense on account of any unlawful act by the Distributor or its
agents or employees. The Distributor is not, however, to be responsible for
the acts of other dealers or agents, except to the extent that they shall be
acting for the Distributor or under its direction or authority. None of the
Distributor, any dealer, any agent or any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus heretofore or hereafter
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act") (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved by
the Fund in connection with the offer or sale of Shares. None of the
Distributor, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise. All such sales shall be made by the Distributor as
principal for its own account.

In selling Shares to investors, the Distributor will adopt and comply with
certain standards, as set forth in Exhibit III attached hereto as to when each
respective class of Shares may appropriately be sold to particular investors.
The Distributor will require every broker, dealer and other eligible agent
participating in the offering of the Shares to agree to adopt and comply with
such standards as a condition precedent to their participation in the offering.

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<PAGE> 3

5. Expenses.

(a) The Fund will pay or cause to be paid:

(i) all expenses in connection with the registration
of Shares under the federal securities laws, and the Fund will
exercise its best efforts to obtain said registration and
qualification;

(ii) all expenses in connection with the printing of
any notices of shareholders' meetings, proxy and proxy
statements and enclosures therewith, as well as any other
notice or communication sent to shareholders in connection
with any meeting of the shareholders or otherwise, any annual,
semiannual or other reports or communications sent to the
shareholders, and the expenses of sending prospectuses
relating to the Shares to existing shareholders;

(iii) all expenses of any federal or state
original-issue tax or transfer tax payable upon the issuance,
transfer or delivery of Shares from the Fund to the
Distributor; and

(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.

(b) The Distributor will pay the costs and expenses of qualifying and
maintaining qualification of the Shares for sale under the securities laws of
the various states. The Distributor will also permit its officers and
employees to serve without compensation as trustees and officers of the Fund if
duly elected to such positions.

(c) The Fund shall reimburse the Distributor for out-of-pocket costs and
expenses actually incurred by it in connection with distribution of each class
of Shares respectively in accordance with the terms of a plan (the "12b-1
Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as such
12b-1 Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Distributor hereunder with respect to a
class of Shares unless and until this Agreement shall have been approved for
each such class by a majority of the Board of Trustees of the Fund and by a
majority of the "Disinterested Trustees" (as such term is defined in such 12b-1
Plan) by vote cast in person at a meeting called for the purpose of voting on
this Agreement. A copy of such 12b-1 Plan as in effect on the date of this
Agreement is attached as Exhibit I hereto. The Fund reserves the right to
terminate such 12b-1 Plan with respect to a class of Shares at any time, as
specified in the Plan. The persons authorized to direct the payment of funds
pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board
of Trustees, and the Trustees shall review, at least quarterly, a written
report with respect to each of the classes of Shares of the amounts so paid and
the purposes for which such expenditures were made for each such class of
Shares.

(d) The Fund shall compensate the Distributor for providing services to,
and the maintenance of, shareholder accounts in the Fund (including prepaying
service fees to eligible brokers, dealers and financial intermediaries and
expenses incurred in connection therewith) and the Distributor may pay as agent
for and on behalf of the Fund a service fee with respect to each class of
Shares to brokers, dealers and financial intermediaries for the provision of
shareholder services and the maintenance of shareholder accounts in the Fund in
the amount with respect to each class of Shares set forth from time to time in
the Fund's prospectus. The Fund shall compensate the Distributor for such
expenses in accordance with the terms of a service plan (the "Service Plan"),
as such Service Plan may be in effect from time to time; provided, however,
that no service fee payments shall be due or paid to the Distributor hereunder
with respect to a class of Shares unless and until this Agreement shall have
been approved for each such class by a majority of the Board of Trustees of the
Fund and by a majority of the Disinterested Trustees by vote cast in person at
a meeting called for the purpose of voting on this Agreement. A copy of such
Service Plan as in effect on the date of this Agreement is attached as Exhibit
II hereto. The Fund reserves the right to terminate such Service Plan with
respect to a class of Shares at
any time, as specified in the Plan. The persons authorized to direct the
payment of funds

3
<PAGE> 4

pursuant to this Agreement and the Service Plan shall provide to the Fund's
Board of Trustees, and the Trustees shall review, at least quarterly, a
written report with respect to each of the classes of Shares of the amounts
paid as service fees for each such class of Shares.

6. Redemption of Shares. In connection with the Fund's redemption of its
Shares, the Fund hereby authorizes the Distributor to repurchase, upon the
terms and conditions hereinafter set forth, as the Fund's agent and for the
Fund's account, such Shares as may be offered for sale to the Fund from time to
time by holders of such Shares or their agents.

(a) Subject to and in conformity with all applicable federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc., and any applicable rules and regulations of the Securities and
Exchange Commission under the 1940 Act, the Distributor may accept offers of
holders of Shares to resell such Shares to the Fund on such terms and
conditions and at such prices as described and provided for in the then current
Prospectus of the Fund.

(b) The Distributor agrees to notify the Fund at such times as the Fund
may specify of the number of each class of Shares, respectively, repurchased
for the Fund's account and the time or times of such repurchases, and the Fund
shall notify the Distributor of the prices and, in the case of a class of CDSC
Shares or Combination Shares, of the deferred sales charge as described below,
if any, applicable to repurchases of Shares of such class.

(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote of
the Board of Trustees of the Fund.

(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant to
the terms and conditions herein set forth.

(e) The Fund agrees to authorize and direct its Custodian to pay, for the
Fund's account, the repurchase price (together with any applicable contingent
deferred sales charge) of any Shares so repurchased for the Fund against the
authorized transfer of book shares from an open account and against delivery of
any other documentation required by the Board of Trustees of the Fund or, in
the case of certificated Shares, against delivery of the certificates
representing such Shares in proper form for transfer to the Fund.

(f) The Distributor shall receive no commissions or other compensation in
respect of any repurchases of FESC Shares for the Fund under the foregoing
authorization and appointment as agent. With respect to any repurchase of CDSC
Shares or Combination Shares, the Distributor shall receive the deferred sales
charge, if any, applicable to the respective class of Shares that have been
held for less than a specified period of time with respect to such class as set
forth from time to time in the Fund's Prospectus. The Distributor shall
receive no other commission or other compensation in respect of any repurchases
of CDSC Shares or Combination Shares for the Fund under the foregoing
authorization and appointment as agent.

(g) If any FESC Shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Distributor's confirmation of the original purchase by the Distributor,
the Distributor shall forfeit the amount above the net asset value received by
it in respect of such Shares, provided that the portion, if any, of such amount
re-allowed by the Distributor to dealers or agents shall be repayable to the
Fund only to the extent recovered by the Distributor from the dealer or agent
concerned. The Distributor shall include in agreements with such dealers and
agents a corresponding provision for the forfeiture by them of their concession
with respect to FESC Shares purchased by them or their principals and redeemed
or repurchased by the Fund or by the Distributor as agent within seven business
days after the date of the Distributor's confirmation of such initial
purchases.

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<PAGE> 5

7. Indemnification. The Fund agrees to indemnify and hold harmless 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, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage,
or expense and reasonable counsel fees incurred in connection therewith),
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 Fund (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading under the 1933 Act or any other statute or the common law. However,
the Fund 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 Fund by or on behalf of the
Distributor. In no case (i) is the indemnity of the Fund 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 securityholders 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 this
Agreement, or (ii) is the Fund to be liable under its indemnity agreement
contained in this Section with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or any such person
shall have notified the Fund in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any claims, but
if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any suit and retain counsel, the Distributor, officers or
trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of any suit, it will reimburse
the Distributor, officers or trustees or controlling person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.

The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act
against any loss, liability, damage, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable counsel fees incurred in connection therewith)
arising by reason of any person acquiring any Shares, based upon the 1933 Act
or any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund or such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligation and duties
under this Amended Agreement, or (ii) is the Distributor to be liable under its
indemnity agreement contained in this paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or person, as the
case may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first

5
<PAGE> 6

written notification giving information of the nature of the claim shall have
been served upon the Fund or person (or after the Fund or such person shall
have received notice of service on any designated agent). However, failure to
notify the Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Fund or any person against whom the action
is brought otherwise than on account of its indemnity agreement contained in
this paragraph. In the case of any notice to the Distributor, it shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce the claim, but if
the Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Fund, to its officers and trustees
and to any controlling person or persons, defendant or defendants in the suit.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the Fund or controlling persons, defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will reimburse
the Fund, officers and trustees or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Distributor agrees to notify the Fund promptly of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any of the Shares.

8. Continuation, Amendment or Termination of This Agreement. This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect year to year with respect to each class of
Shares so long as such continuance is approved at least annually (i) by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the respective class of Shares of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Independent Trustee") cast in person
at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated with respect to
either class of Shares of the Fund without the payment of any penalty either by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the outstanding voting securities of the respective class of Shares of the
Fund, on written notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement
may be terminated by the Distributor on ninety (90) days' written notice to the
Fund. Upon termination of this Agreement with respect to either class of
Shares of the Fund, the obligations of the parties hereunder shall cease and
terminate with respect to such class of Shares as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination.

This Agreement may be amended with respect to either class of Shares at
any time by mutual consent of the parties, provided that such consent on the
part of the Fund shall have been approved (i) by the Board of Trustees of the
Fund, or by a vote of the majority of the outstanding voting securities of the
respective class of Shares of the Fund, and (ii) by vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such amendment.

For the purpose of this section, the terms "vote of a majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the meanings defined in the 1940 Act, as amended.

9. Limited Liability of Shareholder. Notwithstanding anything to the
contrary contained in this Agreement, you acknowledge and agree that, as
provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust,
this Agreement is executed by the Trustees of the Trust and/or Officers of the
Fund by them not individually but as such Trustees and/or Officers, and the
obligations of the Fund hereunder are not binding upon any of the Trustees,
Officers or Shareholders individually, but bind only the trust estate.

10. Notice. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or at such other address as such party shall have designated in
writing.

11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY,

6
<PAGE> 7
THE LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.

VAN KAMPEN AMERICAN CAPITAL U.S.
GOVERNMENT TRUST, on behalf of its
series, VAN KAMPEN AMERICAN CAPITAL
U.S. GOVERNMENT FUND

By: /s/ Ronald A. Nyberg
------------------------------------------
Name: Ronald A. Nyberg
Title: Vice President and Secretary

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.

By: /s/ Ronald A. Nyberg
------------------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President

<PAGE> 1

Exhibit (8)(b)

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the 10th day of July, 1995 by and between each of
THE VAN KAMPEN MERRITT OPEN END FUNDS set forth on Schedule "A" hereto, which
are organized under the laws of the Commonwealth of Massachusetts, having their
principal office and place of business at Oakbrook Terrace, Illinois
(collectively, the "Funds"), and ACCESS INVESTOR SERVICES, INC., a Delaware
corporation, having its principal office at Houston, Texas, and its principal
place of business at Kansas City, Missouri ("ACCESS").

R E C I T A L:

WHEREAS, each of the Funds desires to appoint ACCESS as its transfer
agent, dividend disbursing agent and shareholder service agent, and ACCESS
desires to accept such appointments;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

ARTICLE 1. TERMS OF APPOINTMENT; DUTIES OF ACCESS.

1.01 Subject to the terms and conditions set forth in this
Agreement, each of the Funds hereby employs and appoints ACCESS as its transfer
agent, dividend disbursing agent and shareholder service agent.

1.02 ACCESS hereby accepts such employment and appointments and
agrees that on and after the effective date of this Agreement it will act as
the transfer agent, dividend disbursing agent and shareholder service agent for
each of the Funds on the terms and conditions set forth herein.

1.03 ACCESS agrees that its duties and obligations hereunder
will be performed in a competent, efficient and workmanlike manner with due
diligence in accordance with reasonable industry practice, and that the
necessary facilities, equipment and personnel for such performance will be
provided.

1.04 In order to assure compliance with section 1.03 and to
implement a cooperative effort to improve the quality of transfer agency and
shareholder services received by each of the Funds and its shareholders, ACCESS
agrees to provide and maintain quantitative performance objectives, including
maximum target turn-around times and

1
<PAGE> 2
maximum target error rates, for the various services provided hereunder.
ACCESS also agrees to provide a reporting system designed to provide the Board
of Trustees of each of the Funds (the "Board") on a quarterly basis with
quantitative data comparing actual performance for the period with the
performance objectives. The foregoing procedures are designed to provide a
basis for continuing monitoring by the Board of the quality of services
rendered hereunder.

ARTICLE 2. FEES AND EXPENSES.

2.01 For the services to be performed by ACCESS pursuant to this
Agreement, each of the Funds agrees to pay ACCESS the fees provided in the fee
schedules agreed upon from time to time by each of the Funds and ACCESS.

2.02 In addition to the amounts paid under section 2.01 above,
each of the Funds agrees to reimburse ACCESS promptly for such Fund's
reasonable out-of-pocket expenses or advances paid on its behalf by ACCESS in
connection with its performance under this Agreement for postage, freight,
envelopes, checks, drafts, continuous forms, reports and statements, telephone,
telegraph, costs of outside mailing firms, necessary outside record storage
costs, media for storage of records (e.g., microfilm, microfiche and computer
tapes) and printing costs incurred due to special requirements of such Fund.
In addition, any other special out-of-pocket expenses paid by ACCESS at the
specific request of any of the Funds will be promptly reimbursed by the
requesting Fund. Postage for mailings of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to ACCESS by the
concerned Fund three business days prior to the mailing date of such materials.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF ACCESS.

ACCESS represents and warrants to each of the Funds that:

3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware.

3.02 It is duly qualified to carry on its business in the states
of Texas and Missouri.

3.03 It is empowered under applicable laws and by its charter
and bylaws to enter into and perform this Agreement.

2
<PAGE> 3
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.

3.05 It has and will continue to have during the term of this
Agreement access to the necessary facilities, equipment and personnel to
perform its duties and obligations hereunder.

3.06 It will maintain a system regarding "as of" transactions as
follows:

(a) Each "as of" transaction effected at a price other
than that in effect on the day of processing for which an estimate has
not been given to any of the affected Funds and which is necessitated
by ACCESS' error, or delay for which ACCESS is responsible or which
could have been avoided through the exercise of reasonable care, will
be identified, and the net effect of such transactions determined, on
a daily basis for each such Fund.

(b) The cumulative net effect of the transactions
included in paragraph (a) above will be determined each day throughout
each month. If, on any day during the month, the cumulative net
effect upon any Fund is negative and exceeds an amount equivalent to
1/2 of 1 cent per share of such Fund, ACCESS shall promptly make a
payment to such Fund (in cash or through use of a credit as described
in paragraph (c) below) in such amount as necessary to reduce the
negative cumulative net effect to less than 1/2 of 1 cent per share of
such Fund. If on the last business day of the month the cumulative
net effect (adjusted by the amount of any payments pursuant to the
preceding sentence) upon any Fund is negative, such Fund shall be
entitled to a reduction in the monthly transfer agency fee next
payable by an equivalent amount, except as provided in paragraph (c)
below. If on the last business day of the month the cumulative net
effect (similarly adjusted) upon any Fund is positive, ACCESS shall be
entitled to recover certain past payments and reductions in fees, and
to a credit against all future payments and fee reductions made under
this paragraph to such Fund, as described in paragraph (c) below.

(c) At the end of each month, any positive cumulative
net effect upon any Fund shall be deemed to be a credit to ACCESS
which shall first be applied to recover any payments and fee
reductions made by ACCESS to such Fund under paragraph (b) above
during the calendar year by increasing the amount

3
<PAGE> 4
of the monthly transfer agency fee next payable in an amount equal to
prior payments and fee reductions made during such year, but not
exceeding the sum of that month's credit and credits arising in prior
months during such year to the extent such prior credits have not
previously been utilized as contemplated by this paragraph (c). Any
portion of a credit to ACCESS not so used shall remain as a credit to
be used as payment against the amount of any future negative
cumulative net effects that would otherwise require a payment or fee
reduction to such Fund pursuant to paragraph (b) above.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE FUNDS.

Each of the Funds hereby represents and warrants on behalf
of itself only and not any other Funds that are a party to this Agreement that:

4.01 It is duly organized and existing and in good standing under
the laws of the Commonwealth of Massachusetts.

4.02 It is empowered under applicable laws and regulations and by
its Declaration of Trust and by-laws to enter into and perform this Agreement.

4.03 All requisite proceedings have been taken by its Board to
authorize it to enter into and perform this Agreement.

4.04 It is an open-end, diversified, management investment
company registered under the Investment Company Act of 1940, as amended.

4.05 A registration statement under the Securities Act of 1933,
as amended, is currently effective and will remain effective, and appropriate
state securities laws filings have been made and will continue to be made, with
respect to all of its shares being offered for sale.

ARTICLE 5. INDEMNIFICATION.

5.01 ACCESS shall not be responsible for and each of the Funds
shall indemnify and hold ACCESS harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liabilities arising out of or attributable to:

4
<PAGE> 5
(a) All actions of ACCESS required to be taken by
ACCESS for the benefit of such Fund pursuant to this Agreement,
provided ACCESS has acted in good faith with due diligence and without
negligence or willful misconduct.

(b) The reasonable reliance by ACCESS on, or
reasonable use by ACCESS of, information, records and documents which
have been prepared or maintained by or on behalf of such Fund or have
been furnished to ACCESS by or on behalf of such Fund.

(d) The offer or sale of such Fund's shares in
violation of any requirement under the federal securities laws or
regulations or the securities laws or regulations of any state or in
violation of any stop order or other determination or ruling by any
federal agency or any state with respect to the offer or sale of such
shares in such state unless such violation results from any failure by
ACCESS to comply with written instructions of such Fund that no offers
or sales of such Fund's shares be made in general or to the residents
of a particular state.

(e) Such Fund's refusal or failure to comply with the
terms of this Agreement, or such Fund's lack of good faith, negligence
or willful misconduct or the breach of any representation or warranty
of such Fund hereunder.

5.02 ACCESS shall indemnify and hold each of the Funds harmless
from and against any and all losses, damages, costs, charges, reasonable
counsel fees, payments, expenses and liability arising out of or attributable
to ACCESS' refusal or failure to comply with the terms of this Agreement, or
ACCESS' lack of good faith, negligence or willful misconduct, or the breach of
any representation or warranty of ACCESS hereunder.

5.03 At any time ACCESS may apply to any authorized officer of
any of the Funds for instructions, and may consult with any of the Funds' legal
counsel, at the expense of such concerned Fund, with respect to any matter
arising in connection with the services to be performed by ACCESS under this
Agreement, and ACCESS shall not be liable and shall be indemnified by such
concerned Fund for any action taken or omitted by it in good faith in
reasonable reliance upon such instructions or upon the opinion of such counsel.
ACCESS shall be protected and

5
<PAGE> 6
indemnified in acting upon any paper or document reasonably believed by ACCESS
to be genuine and to have been signed by the proper person or persons and shall
not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the concerned Fund. ACCESS shall also
be protected and indemnified in recognizing stock certificates which ACCESS
reasonably believes to bear the proper manual or facsimile signatures of the
officers of the concerned Fund, and the proper countersignature of any former
transfer agent or registrar, or of a co-transfer agent or co-registrar.

5.04 In the event any party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage, or other causes reasonably beyond
its control, such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from such causes.

5.05 In no event and under no circumstances shall any party to
this Agreement be liable to another party for consequential damages under any
provision of this Agreement or for any act or failure to act hereunder.

5.06 In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which one party
may be required to indemnify another, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.

ARTICLE 6. COVENANTS OF EACH OF THE FUNDS AND ACCESS.

6.01 Each of the Funds shall promptly furnish to ACCESS the
following:

(a) Certified copies of the resolution of its Board
authorizing the appointment of ACCESS and the execution and delivery
of this Agreement.

(b) Certified copies of its Declaration of Trust and
by-laws and all amendments thereto.

6
<PAGE> 7
6.02 ACCESS hereby agrees to maintain facilities and procedures
reasonably acceptable to each of the Funds for safekeeping of share
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.

6.03 ACCESS shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable; provided,
however, that all accounts, books and other records of each of the Funds
(hereinafter referred to as "Fund Records") prepared or maintained by ACCESS
hereunder shall be maintained and kept current in compliance with Section 31 of
the Investment Company Act of 1940 and the Rules thereunder (such Section and
Rules being hereinafter referred to as the "1940 Act Requirements"). To the
extent required by the 1940 Act Requirements, ACCESS agrees that all Fund
Records prepared or maintained by ACCESS hereunder are the property of the
concerned Fund and shall be preserved and made available in accordance with the
1940 Act Requirements, and shall be surrendered promptly to the concerned Fund
on its request. ACCESS agrees at such reasonable times as may be requested by
the Board and at least quarterly to provide (i) written confirmation to the
Board that all Fund Records are maintained and kept current in accordance with
the 1940 Act Requirements, and (ii) such other reports regarding its
performance hereunder as may be reasonably requested by the Board.

6.04 ACCESS and each of the Funds agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.

6.05 In case of any requests or demands for the inspection of
any of the Fund Records, ACCESS will endeavor to notify each of the concerned
Funds and to secure instructions from an authorized officer of each

7
<PAGE> 8
of the concerned Funds as to such inspection. ACCESS reserves the right,
however, to exhibit such Fund Records to any person whenever it is advised by
its counsel that it may be held liable for the failure to exhibit such Fund
Records to such person.

ARTICLE 7. TERM AND TERMINATION OF AGREEMENT.

7.01 This Agreement shall remain in effect from the date hereof
through December 31, 1996; provided, however, that this Agreement may be
terminated by any party with respect to that party for good and reasonable
cause at any time by giving written notice to the other party at least 120 days
prior to the date on which such termination is to be effective. Any unpaid
fees or reimbursable expenses payable to ACCESS shall be due on any such
termination date. ACCESS agrees to use its best efforts to cooperate with each
of the Funds and the successor transfer agent or agents in accomplishing an
orderly transition.

7.02 Subject to the prior approval of the Board, this Agreement
shall be renewed and extended for periods of not more than one year each,
unless and until this Agreement is terminated in accordance with section 7.01
above.

ARTICLE 8. MISCELLANEOUS.

8.01 Except as provided in section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by any party
without the written consent of ACCESS or the concerned Fund, as the case may
be; provided, however, that no consent shall be required for any merger of any
of the Funds with, or any sale of all or substantially all the assets of any of
the Funds to, another investment company.

8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

8.03 ACCESS may, without further consent on the part of any of
the Funds, subcontract with DST, Inc., a Missouri corporation, or any other
qualified servicer, for the performance of data processing activities;
provided, however, that ACCESS shall be as fully responsible to each of the
Funds for the acts and omissions of DST, Inc., or other qualified servicer as
it is for its own acts and omissions.

8
<PAGE> 9
8.04 ACCESS may, without further consent on the part of any of
the Funds, provide services to its affiliated companies. Such services may be
provided at cost.

8.05 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes any
prior agreement with respect thereto, whether oral or written, and this
Agreement may not be modified except by written instrument executed by the
affected parties.

8.06 The Declarations of Trust establishing each Fund as a
Massachusetts Business Trust (each a "Trust"), copies of which, together with
all amendments thereto (the "Declarations") are on file in the office of the
Secretary of the Commonwealth of Massachusetts, provide that the names of each
Fund refer to the Trustees under each of the Declarations collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of any such Trust shall be held to any personal
liability, nor shall resort be had to their respective private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of any such Trust, but that each respective Trust's Estate only shall
be liable.

8.07 For each of those Funds that have one or more portfolios as
set forth in Schedule "A" hereto, all obligations of those Funds under this
Agreement shall apply only on a portfolio-by-portfolio basis and the assets of
one portfolio shall not be liable for the obligations of any other.

8.08 In the event of a change in the business or regulatory
environment affecting all or any portion of this Agreement, the parties hereto
agree to renegotiate such affected portions in good faith.

9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf and through their duly
authorized officers, as of the date first above written.

EACH OF THE VAN KAMPEN MERRITT OPEN END
FUNDS LISTED ON SCHEDULE "A" HERETO

BY: /s/ SCOTT E. MARTIN
------------------------------------
Scott E. Martin, Assistant Secretary

ATTEST:

/s/ DAVID L. KITE
- ------------------------------------

ACCESS INVESTOR SERVICES, INC.

BY: /s/ PAUL R. WOLKENBERG
------------------------------------
Paul R. Wolkenberg, President and
Chief Executive Officer

ATTEST:

/s/ DAVID L.KITE
- ------------------------------------

10
<PAGE> 11
SCHEDULE "A"

VAN KAMPEN MERRITT OPEN-END FUNDS

<TABLE>
<CAPTION>
State of Type
Fund Name Organization [Business Trust "T"]
===========================================================================================================
<S> <C> <C>
Van Kampen Merritt U. S. Government Fund(1) MA T

Van Kampen Merritt Insured Tax Free Income Fund(2) MA T

Van Kampen Merritt Tax Free High Income Fund(2) MA T

Van Kampen Merritt California Insured Tax Free Fund(2) MA T

Van Kampen Merritt Municipal Income Fund(2) MA T

Van Kampen Merritt Limited Term Municipal Income Fund(2) MA T

Van Kampen Merritt Florida Insured Tax Free Income Fund(2) MA T

Van Kampen Merritt New Jersey Tax Free Income Fund(2) MA T

Van Kampen Merritt New York Tax Free Income Fund(2) MA T

Van Kampen Merritt High Yield Fund(3) MA T

Van Kampen Merritt Short-Term Global Income Fund(3) MA T

Van Kampen Merritt Adjustable Rate U.S. Government Fund(3) MA T

Van Kampen Merritt Strategic Income Fund(3) MA T

Van Kampen Merritt Emerging Markets Income Fund(3) MA T

Van Kampen Merritt Growth and Income Fund(4) MA T

Van Kampen Merritt Utility Fund(4) MA T

Van Kampen Merritt Balanced Fund(4) MA T

Van Kampen Merritt Pennsylvania Tax Free Income Fund PA T

Van Kampen Merritt Money Market Fund(5) MA T

Van Kampen Merritt Tax Free Money Fund MA T

</TABLE>
____________________________________________________

(1) A sub-trust of Van Kampen Merritt U. S. Government Trust

(2) A sub-trust of Van Kampen Merritt Tax Free Fund

(3) A sub-trust of Van Kampen Merritt Trust

(4) A sub-trust of Van Kampen Merritt Equity Trust

(5) A series of Van Kampen Merritt Money Market Trust

11
<PAGE> 12
SCHEDULE "A" (CONTINUED)

VAN KAMPEN MERRITT OPEN-END FUNDS

</TABLE>

<PAGE> 1
EXHIBIT (9)(a)

AMENDED AND RESTATED

FUND ACCOUNTING AGREEMENT

THIS AGREEMENT, dated May 12, 1995, by and between the parties set forth
in Schedule A hereto (designated collectively hereafter as the "Funds") and VAN
KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware corporation
("Advisory Corp.').

W I T N E S S E T H:

WHEREAS, each of the Funds is registered as a management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and

WHEREAS, Advisory Corp. has the capability of providing certain accounting
services to the Funds; and

WHEREAS, each desires to utilized Advisory Corp. in the provision of such
accounting services; and

WHEREAS, Advisory Corp. intends to maintain its staff in order to
accommodate the provision of all such services.

NOW THEREFORE, in consideration of the premises and the mutual covenants
spelled out herein, it is agreed between the parties hereto as follows:

1. Appointment of Advisory Corp.. As agent, Advisory Corp. shall provide each
of the Funds the accounting services ("Accounting Services") as set forth in
Paragraph 2 of this Agreement. Advisory Corp. accepts such appointment and
agrees to furnish the Accounting Services in return for the compensation
provided in Paragraph 3 of this Agreement.

2. Accounting Services to be Provided. Advisory Corp. will provide to the Funds
the following accounting related services, including without limitation,
accurate maintenance of the specific Fund's books and records such as are
within the scope of control of Advisory Corp. and are required by the
applicable securities statutes and regulations, preparation of each Fund's
financial reports and other accounting and tax related notice information to
shareholders, the assimilation and interpretation of accounting data for
meaningful management review. Advisory Corp. shall hire persons (collectively
the "Accounting Service Group") as needed to provide such Accounting Services
and in such numbers as the parties to this Agreement may agree from time to
time.

3. Expenses and Reimbursements. The Accounting Service expenses (the
"Accounting Service Expenses") for which Advisory Corp. may be reimbursed are
salary and salary related benefits, including but not limited to bonuses, group
insurances and other regular wages ("Salaries") paid to the personnel of the
Accounting Service Group as discussed from time to time with the Board of
Trustees of each of the Funds.

<PAGE> 2

The Accounting Services Expenses will be paid by Advisory Corp. and
reimbursed by the Funds. Advisory Corp. will tender to each Fund a monthly
invoice as of the last business day of each month which shall certify the total
support service expenses expended. Except as provided herein, Advisory Corp.
will receive no other compensation in connection with Accounting Services
rendered in accordance with this Agreement, and Advisory Corp. will be
responsible for all other expenses relating to the providing of Accounting
Services.

4. Payment for Accounting Service Expenses Among the Funds. As to one quarter
(25%) of the Accounting Service Expenses incurred under the Agreement, the
expense shall be allocated between all Funds based on the number of classes of
shares of beneficial interest that each respective Fund has issued.

5. Maintenance of Records. All records maintained by Advisory Corp. in
connection with the performance of its duties under this agreement will remain
the property of each respective Fund and will be preserved by Advisory Corp.
for the periods prescribed in Section 31 of the 1940 Act and the rules
thereunder or such other applicable rules that may be adopted from time to time
under the act. In the event of termination of the Agreement, such records will
be promptly delivered to the respective Funds. Such records may be inspected
by the respective Funds at reasonable times.

6. Liability of Advisory Corp. Advisory Corp. shall not be liable to any Fund
for any action taken or thing done by it or its agents or contractors on behalf
of the fund in carrying out the terms and provisions of the Agreement if done
in good faith and without negligence or misconduct on the part of Advisory
Corp., its agents or contractors.

7. Indemnification By Funds. Each Fund will indemnify and hold Advisory Corp.
harmless from all lost, cost, damage and expense, including reasonable expenses
for legal counsel, incurred by Advisory Corp. resulting from: (a) any claim,
demand, action or suit in connection with Advisory Corp.'s acceptance of this
Agreement; (b) any action or omission by advisory Corp. in the performance of
its duties hereunder; (c) Advisory Corp.'s acting upon instructions believed by
it to have been executed by a duly authorized officer of the Fund; or (d)
Advisory Corp.'s acting upon information provided by the Fund in form and under
policies agreed to by Advisory Corp. and the Fund. Advisory Corp. shall not be
entitled to such indemnification in respect of actions or omissions
constituting negligence or willful misconduct of Advisory Corp. or its agents
or contractors. Prior to confessing any claim against it which may be subject
to this indemnification, Advisory Corp. shall give the Fund reasonable
opportunity to defend against said claim in its own name or in the name of
Advisory Corp.

8. Indemnification By Advisory Corp. Advisory Corp. will indemnify and hold
harmless each Fund from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the Fund resulting from any
claim, demand, action or suit arising out of Advisory Corp.'s failure to comply
with the terms of this Agreement or which arises out of the negligence or
willful misconduct of Advisory Corp. or its agents or contractors; provided
that such negligence or misconduct is not attributable to the Funds, their
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, the Fund shall give Advisory Corp. reasonable
opportunity to defend against said claim in its own name or in the name of such
Fund.

9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.

10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers or shareholders of both the Funds and Advisory
Corp. (including Advisory Corp.'s affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.

<PAGE> 3

11. Execution, Amendment and Termination. The term of this Agreement shall
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through May 12, 1996,
and thereafter from year to year, if such continuation is specifically approved
at least annually by the Board of Trustees of each Fund, including a majority
of the independent Trustees of each Fund. This Agreement may be modified or
amended from time to time by mutual agreement between the parties hereto and
may be terminated after May 12, 1996, by at least sixty (60) days' written
notice given by one party to the others. Upon termination hereof, each Fund
shall pay to Advisory Corp. such compensation as may be due as of the date of
such termination and shall likewise reimburse Advisory Corp. for its costs,
expenses and disbursements payable under this Agreement to such date. This
Agreement may be amended in the future to include as additional parties to the
Agreement other investment companies for with Advisory Corp., any subsidiary or
affiliate serves as investment advisor or distributor if such amendment is
approved by the President of each Fund.

12. Assignment. Any interest of Advisory Corp. under this Agreement shall not
be assigned or transferred, either voluntarily or involuntarily, by operation
of law or otherwise, without the prior written consent of the Funds. This
agreement shall automatically and immediately terminate in the event of its
assignment without the prior written consent of the Funds.

13. Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President and that of Advisory Corp. for
this purpose is One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
Attention: President.

14. Personal Liability. As provided for in the Agreement and Declaration of
Trust of the various Funds, under which the Funds are organized as
unincorporated trusts, the shareholders, trustees, officers, employees and
other agents of the Fund shall not personally be found by or liable for the
matters set forth hereto, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder.

15. Interpretative Provisions. In connection with the operation of this
Agreement, Advisory Corp. and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor of this
Agreement.

16. State Law. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Illinois.

17. Captions. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.

<PAGE> 4

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

ALL OF THE PARTIES SET FORTH IN SCHEDULE A

By: /s/ Dennis J. McDonnell
---------------------------------
Dennis J. McDonnell, President

VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.

By: /s/ Dennis J. McDonnell
---------------------------------
Dennis J. McDonnell, President

<PAGE> 5

SCHEDULE A

1. VAN KAMPEN MERRITT U.S. GOVERNMENT TRUST, on behalf of its sub-trust, Van
Kampen Merritt U.S. Government Fund

2. VAN KAMPEN MERRITT TAX FREE FUND, on behalf of its sub-trusts, Van Kampen
Merritt Insured Tax Free Income Fund, Van Kampen Merritt Tax Free High
Income Fund, Van Kampen Merritt California Insured Tax Free Fund, Van
Kampen Merritt Municipal Income Fund, Van Kampen Merritt Limited Term
Municipal Income Fund, Van Kampen Merritt New Jersey Tax Free Income Fund,
Van Kampen Merritt New York Tax Free Income Fund, Van Kampen Merritt
Florida Insured Tax Free Income Fund, Van Kampen Merritt California Tax
Free Income Fund, Van Kampen Merrit Michigan Tax Free Income Fund, Van
Kampen Merritt Missouri Tax Free Income Fund and Van Kampen Merritt Ohio
Tax Free Income Fund

3. VAN KAMPEN MERRITT TRUST, on behalf of its sub-trusts, Van Kampen Merritt
High Yield Fund, Van Kampen Merritt Short-Term Global Income Fund, Van
Kampen Merritt Adjustable Rate U.S. Government Fund, Van Kampen Merritt
Strategic Income Fund and Van Kampen Merritt Emerging Markets Income Fund
(formerly Van Kampen Merritt Global High Income Fund; formerly Van Kampen
Merritt Global Income Opportunity Fund)

4. VAN KAMPEN MERRITT EQUITY TRUST, on behalf of its sub-trusts, Van Kampen
Merritt Growth and Income Fund, Van Kampen Merritt Utility Fund and Van
Kampen Merritt Balanced Fund

5. VAN KAMPEN MERRITT PENNSYLVANIA TAX FREE INCOME FUND

6. VAN KAMPEN MERRITT MONEY MARKET TRUST, on behalf of its series, Van
Kampen Merritt Money Market Fund

7. VAN KAMPEN MERRITT TAX FREE MONEY FUND

8. VAN KAMPEN MERRITT SERIES TRUST, on behalf of its series, Quality Income
Portfolio, High Yield Portfolio, Growth and Income Portfolio, Money
Market Portfolio, Stock Index Portfolio, World Equity Portfolio and
Utility Portfolio

9. VAN KAMPEN MERRITT MUNICIPAL INCOME TRUST

10. VAN KAMPEN MERRITT CALIFORNIA MUNICIPAL TRUST

11. VAN KAMPEN MERRITT INTERMEDIATE TERM HIGH INCOME TRUST

12. VAN KAMPEN MERRITT LIMITED TERM HIGH INCOME TRUST

13. VAN KAMPEN MERRITT INVESTMENT GRADE MUNICIPAL TRUST

14. VAN KAMPEN MERRITT MUNICIPAL TRUST

15. VAN KAMPEN MERRITT CALIFORNIA QUALITY MUNICIPAL TRUST

16. VAN KAMPEN MERRITT FLORIDA QUALITY MUNICIPAL TRUST

17. VAN KAMPEN MERRITT NEW YORK QUALITY MUNICIPAL TRUST

18. VAN KAMPEN MERRITT OHIO QUALITY MUNICIPAL TRUST

<PAGE> 6

19. VAN KAMPEN MERRITT PENNSYLVANIA QUALITY MUNICIPAL TRUST

20. VAN KAMPEN MERRITT TRUST FOR INSURED MUNICIPALS

21. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE MUNICIPALS

22. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS

23. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS

24. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS

25. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS

26. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE PENNSYLVANIA MUNICIPALS

27. VAN KAMPEN MERRITT MUNICIPAL OPPORTUNITY TRUST

28. VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST

29. VAN KAMPEN MERRITT ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST

30. VAN KAMPEN MERRITT STRATEGIC SECTOR MUNICIPAL TRUST

31. VAN KAMPEN MERRITT VALUE MUNICIPAL INCOME TRUST

32. VAN KAMPEN MERRITT CALIFORNIA VALUE MUNICIPAL INCOME TRUST

33. VAN KAMPEN MERRITT MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
(formerly known as Van Kampen Merritt Advantage Massachusetts Municipal
Income Trust)

34. VAN KAMPEN MERRITT NEW JERSEY VALUE MUNICIPAL INCOME TRUST
(formerly known as Van Kampen Merritt Advantage New Jersey Municipal
Income Trust)

35. VAN KAMPEN MERRITT NEW YORK VALUE MUNICIPAL INCOME TRUST

36. VAN KAMPEN MERRITT OHIO VALUE MUNICIPAL INCOME TRUST
(formerly known as Van Kampen Merritt Florida Value Municipal Income
Trust and Van Kampen Merritt Advantage Virginia Municipal Income Trust)

37. VAN KAMPEN MERRITT PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST

38. VAN KAMPEN MERRITT MUNICIPAL OPPORTUNITY TRUST II

39. VAN KAMPEN MERRITT FLORIDA MUNICIPAL OPPORTUNITY TRUST
(formerly known as Van Kampen Merritt Florida Value Municipal Income Trust)

40. VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST II

41. VAN KAMPEN MERRITT SELECT SECTOR MUNICIPAL TRUST

<PAGE> 1
EXHIBIT (9)(b)

AMENDED AND RESTATED
LEGAL SERVICES AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT, dated as of January 1, 1995, by and
between the parties as set forth in Schedule 1, attached hereto and
incorporated by reference (designated collectively hereafter as the "Funds"),
and VAN KAMPEN AMERICAN CAPITAL, INC. (formerly Van Kampen Merritt Holdings
Corp.), a Delaware corporation ("Van Kampen").

W I T N E S S E T H:

WHEREAS, each of the Funds is registered as a management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and

WHEREAS, Van Kampen has the capability of providing certain legal services
to the Funds; and

WHEREAS, each Fund desires to utilize Van Kampen in the provision of such
legal services; and

WHEREAS, Van Kampen intends to increase its staff in order to accommodate
the provision of all such services.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
spelled out herein, it is agreed between the parties hereto as follows:

1. Appointment of Van Kampen. As agent, Van Kampen shall provide each of the
Funds the legal services (the "Legal Services") as set forth in Paragraph 2 of
this Agreement. Van Kampen accepts such appointments and agrees to furnish the
Legal Services in return for the compensation provided in Paragraph 3 of this
Agreement.

2. Legal Services to be Provided. Van Kampen will provide to the Funds the
following legal services, including without limitation: accurate maintenance of
the Funds' Corporate Minute books and records, preparation and oversight of
each Fund's regulatory reports and other information provided to shareholders
as well as responding to day-to-day legal issues on behalf of the Funds. Van
Kampen shall hire persons (collectively the "Legal Services Group") as needed
to provide such Legal Services and in such numbers as may be agreed from time
to time.

3. Expenses and Reimbursement. The Legal Services expenses (the "Legal Services
Expenses") for which Van Kampen may be reimbursed are salary and salary related
benefits, including but not limited to bonuses, group insurance and other
regular wages paid to the personnel of the Legal Services Group, as well as
overhead and expenses related to office space and necessary equipment. The
Legal Services

1
<PAGE> 2

Expenses will be paid by Van Kampen and reimbursed by the Funds. Van Kampen
will tender to each Fund a monthly invoice as of the last business day of each
month which shall certify the total Legal Service Expenses expended. Except as
provided herein, Van Kampen will receive no other compensation in connection
with Legal Services rendered in accordance with this Agreement, and Van Kampen
will be responsible for all other expenses relating to the providing of Legal
Services.

4. Payment for Legal Services Expense Among the Funds. One half (50%) of the
Legal Services Expenses incurred under the Agreement shall be attributable
equally to each respective Fund and all other funds to whom Van Kampen provides
Legal Services, including all other Funds for which Van Kampen serves as
investment adviser and distributor and the Govett Funds (the Non-Participating
Funds"). Van Kampen shall assume the costs of Legal Services for the
Non-Participating Funds for which reimbursement is not received. The remaining
one half (50%) of the Legal Services Expenses shall be in allocated (a) in the
event services are attributable to specific funds (including the
Non-Participating Funds) based on such specific time allocations; and (b) in
the event services are attributable only to types of funds (i.e. closed-end and
open-end funds), the relative amount of time spent on each type of fund and
then further allocated between funds of that type on the basis of relative net
assets at the end of the period.

5. Maintenance of Records. All records maintained by Van Kampen in connection
with the performance of its duties under this Agreement will remain the
property of each respective Fund and will be preserved by Van Kampen for the
periods prescribed in Section 31 of the 1940 Act and the rules thereunder or
such other applicable rules that may be adopted from time to time under the
Act. In the event of termination of the Agreement, such records will be
promptly delivered to the respective Funds. Such records may be inspected by
the respective Funds at reasonable times.

6. Liability of Van Kampen. Van Kampen shall not be liable to any Fund for any
action taken or thing done by it or its agents or contractors on behalf of the
Fund in carrying out the terms and provisions of the Agreement if done in good
faith and without negligence or misconduct on the part of Van Kampen, its
agents or contractors.

7. Indemnification By Funds. Each Fund will indemnify and hold Van Kampen
harmless from all loss, cost, damage and expense, including reasonable expenses
for legal counsel, incurred by Van Kampen resulting from (a) any claim, demand,
action or suit in connection with Van Kampen's acceptance of this Agreement;
(b) an action or omission by Van Kampen in the performance of its duties
hereunder; (c) Van Kampen's acting upon instructions believed by it to have
been executed by a duly authorized office of the Fund; or (d) Van Kampen's
acting upon information provided by the Fund in form and under policies agreed
to by Van Kampen and the Fund. Van Kampen shall not be entitled to such
indemnification in respect of action or omissions constituting negligence or
willful misconduct of Van Kampen or its agents or contractors. Prior to
confessing any claim against it which may be subject to this indemnification,
Van

2
<PAGE> 3

Kampen shall give the Fund reasonable opportunity to defend against said claim
on its own name or in the name of Van Kampen.

8. Indemnification By Van Kampen. Van Kampen will indemnify and hold harmless
each Fund from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by the Fund resulting from any claim,
demand, action or suit arising out of Van Kampen's failure to comply with the
terms of this Agreement or which arises out of the negligence or willful
misconduct of Van Kampen or its agents or contractors; provided, that such
negligence or misconduct is not attributable to the Funds, their agents or
contractors. Prior to confessing any claim against it which may be subject to
this indemnification, the Fund shall give Van Kampen reasonable opportunity to
defend against said claim in its own name or in the name of such Fund.

9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as necessary to effectuate the purposes hereof.

10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers, or shareholders of both the Funds and Van Kampen
(including Van Kampen's affiliates), and that the existence of any such dual
interest shall not affect the validity hereof or of any transactions hereunder
except as otherwise provided by a specific provision of applicable law.

11. Execution, Amendment and Termination. The term of this Agreement shall
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through May 31, 1996,
and thereafter from year to year if such continuation is specifically approved
at least annually by the Board of Trustees of each Fund, including a majority
of the independent Trustees of each Fund. The Agreement may be modified or
amended from time to time by mutual agreement between the and shall likewise
reimburse Van Kampen for its costs, expenses and disbursements payable under
this Agreement to such date. This Agreement may be amended in the future to
include as additional parties to the Agreement other investment companies for
which Van Kampen, any subsidiary or affiliate serves as investment advisor or
distributor.

12. Assignment. Any interest of Van Kampen under this Agreement shall not be
assigned or transferred, either voluntarily or involuntarily, by operation of
law or otherwise, without the prior written consent of the Fund. This Agreement
shall automatically and immediately terminate in the event of its assignment
without the prior written consent of the Fund.

13. Notice. Any notice under this agreement shall be in writing, addressed and
delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President

3
<PAGE> 4

and the address of Van Kampen. for this purpose is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: General Counsel.

14. Personal Liability. As provided for in the Declaration of Trust of the
various Funds, under which the Funds are organized as unincorporated trust
under the laws of the State of Delaware and Pennsylvania, as the case may be,
the shareholders, trustees, officers, employees and other agents of the Fund
shall not personally be found by or liable for the matters set forth hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder.

15. Interpretative Provisions. In connection with the operation of this
agreement, Van Kampen and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their opinion be consistent with the general tenor of this Agreement.

16. State Law. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Illinois.

17. Captions. The captions in the Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction effect.

4
<PAGE> 5

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

ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO

By: /s/ Dennis J. McDonnell
-------------------------------
Dennis J. McDonnell
President

VAN KAMPEN AMERICAN CAPITAL, INC.

By: /s/ Ronald A. Nyberg
-------------------------------
Ronald A. Nyberg
Executive Vice President

5
<PAGE> 6

SCHEDULE 1

1. VAN KAMPEN MERRITT U.S. GOVERNMENT TRUST, on behalf of its sub-trust, Van
Kampen Merritt U.S. Government Fund

2. VAN KAMPEN MERRITT TAX FREE FUND, on behalf of its sub-trust, Van Kampen
Merritt Insured Tax Free Income Fund, Van Kampen Merritt Tax Free High
Income Fund, Van Kampen Merritt California Insured Tax Free Fund, Van
Kampen Merritt Municipal Income Fund, Van Kampen Merritt Limited Term
Municipal Income Fund, Van Kampen Merritt New York Tax Free Income Fund,
Van Kampen Merritt New Jersey Tax Free Income Fund, Van Kampen Merritt
Florida Insured Tax Free Income Fund, Van Kampen Merritt California Tax
Free Income Fund, Van Kampen Merritt Michigan Tax Free Income Fund, Van
Kampen Merritt Missouri Tax Free Income Fund and Van Kampen Merritt Ohio
Tax Free Income Fund

3. VAN KAMPEN MERRITT TRUST, on behalf of its sub-trust, Van Kampen Merritt
High Yield Fund, Van Kampen Merritt Short-Term Global Income Fund, Van
Kampen Merritt Adjustable Rate U.S. Government Fund, Van Kampen Merritt
Strategic Income Fund and Van Kampen Merritt Emerging Markets Income Fund
(formerly known as Van Kampen Merritt High Income Fund; formerly known as
Van Kampen Merritt Global Income Opportunity Fund)

4. VAN KAMPEN MERRITT EQUITY TRUST, on behalf of its sub-trust, Van Kampen
Merritt Growth and Income Fund, Van Kampen Merritt Utility Fund and Van
Kampen Merritt Balanced Fund

5. VAN KAMPEN MERRITT PENNSYLVANIA TAX FREE INCOME FUND

6. VAN KAMPEN MERRITT MONEY MARKET TRUST, on behalf of its series, Van
Kampen Merritt Money Market Fund

7. VAN KAMPEN MERRITT TAX FREE MONEY FUND

8. VAN KAMPEN MERRITT SERIES TRUST, on behalf of its series, Quality Income
Portfolio, High Yield Portfolio, Growth and Income Portfolio, Money Market
Portfolio, Stock Index Portfolio, World Equity Portfolio, and Utility
Portfolio

9. VAN KAMPEN MERRITT MUNICIPAL INCOME TRUST

10. VAN KAMPEN MERRITTL CALIFORNIA MUNICIPAL TRUST

11. VAN KAMPEN MERRITT INTERMEDIATE TERM HIGH INCOME TRUST

12. VAN KAMPEN MERRITT LIMITED TERM HIGH INCOME TRUST

13. VAN KAMPEN MERRITT PRIME RATE INCOME TRUST

14. VAN KAMPEN MERRITT INVESTMENT GRADE MUNICIPAL TRUST

15. VAN KAMPEN MERRITT MUNICIPAL TRUST

16. VAN KAMPEN MERRITT CALIFORNIA QUALITY MUNICIPAL TRUST

17. VAN KAMPEN MERRITT FLORIDA QUALITY MUNICIPAL TRUST

18. VAN KAMPEN MERRITT NEW YORK QUALITY MUNICIPAL TRUST

6
<PAGE> 7

19. VAN KAMPEN MERRITT OHIO QUALITY MUNICIPAL TRUST

20. VAN KAMPEN MERRITT PENNSYLVANIA QUALITY MUNICIPAL TRUST

21. VAN KAMPEN MERRITT TRUST FOR INSURED MUNICIPALS

22. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE MUNICIPALS

23. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS

24. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS

25. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS

26. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS

27. VAN KAMPEN MERRITT TRUST FOR INVESTMENT GRADE PENNSYLVANIA MUNICIPALS

28. VAN KAMPEN MERRITT MUNICIPAL OPPORTUNITY TRUST

29. VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST

30. VAN KAMPEN MERRITT ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST

31. VAN KAMPEN MERRITT STRATEGIC SECTOR MUNICIPAL TRUST

32. VAN KAMPEN MERRITT VALUE MUNICIPAL INCOME TRUST

33. VAN KAMPEN MERRITT CALIFORNIA VALUE MUNICIPAL INCOME TRUST

34. VAN KAMPEN MERRITT MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST

35. VAN KAMPEN MERRITT NEW JERSEY VALUE MUNICIPAL INCOME TRUST

36. VAN KAMPEN MERRITT NEW YORK VALUE MUNICIPAL INCOME TRUST

37. VAN KAMPEN MERRITT OHIO VALUE MUNICIPAL INCOME TRUST

38. VAN KAMPEN MERRITT PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST

39. VAN KAMPEN MERRITT MUNICIPAL OPPORTUNITY TRUST II

40. VAN KAMPEN MERRITT FLORIDA MUNICIPAL OPPORTUNITY TRUST

41. VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST II

42. VAN KAMPEN MERRITT SELECT SECTOR MUNICIPAL TRUST

<PAGE> 1
EXHIBIT 10

April 25, 1996

Van Kampen American Capital
U.S. Government Trust
One Parkview Plaza
Oakbrook Terrace, IL 60181

Re: Van Kampen American Capital
U.S. Government Trust -- Registration
Statement on form N-1A (File Nos.
2-89190 and 811-3950)

Ladies and Gentlemen:

We have acted as special counsel to Van Kampen American Capital
U.S. Government Trust (the "Trust"), a Delaware business trust, which
was formerly known as Van Kampen Merritt U.S. Government Trust (the "Former
Trust"), a Massachusetts business trust, in connection with the preparation of
Post-Effective Amendment No. 28 to the Trust's Registration Statement on Form
N-1A (as amended, the "Registration Statement") to be filed under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), with the Securities and Exchange
Commission (the "Commission") on April 25, 1996. The Registration Statement
relates to the registration under the 1933 Act and 1940 Act of 15,909,849
shares of beneficial interest, par value $.01 per share, of the Trust
(collectively, the "Shares"). As of July 31, 1995, the Former Trust was
reorganized from

<PAGE> 2
Van Kampen American Capital
U.S. Government Trust
April 25, 1996
Page 2

a Massachusetts business trust into the Trust as a Delaware business
trust, and the Trust has adopted and succeeded, pursuant to Rule 414 under
the Securities Act of 1933, as amended (the "Securities Act"), to the
registration statement and prior Rule 24f-2 notices of the Former Trust.

This opinion is delivered in accordance with the requirements of Item
24(b)(10) of Form N-1A under the 1933 Act and the 1940 Act.

In connection with this opinion, we have examined the originals or
copies, certified or otherwise identified to our satisfaction, of the following
documents:

(i) the Agreement and Declaration of Trust of the Trust dated
May 10, 1995, as amended to the date hereof;

(ii) the Certificate of Trust of the Trust, dated May 10, 1995, as
amended to the date hereof;

(iii) the Certificate of Designation of Van Kampen American Capital
U.S. Government Fund, currently the only series of the Trust, dated May 10,
1995, as amended to the date hereof;

(iv) the By-laws of the Trust, as amended to the date hereof;

<PAGE> 3
Van Kampen American Capital
U.S. Government Trust
April 25, 1996
Page 3

(v) the Agreement and Plan of Reorganization dated as of July 21,
1995 providing for the reorganization of the Former Trust into the Trust;

(vi) copies of certain resolutions adopted by the Board of Trustees of
the Trust relating to the authorization, issuance and sale of the Shares and
furnished to us by the Trust; and

(vii) such other agreements, documents, certificates and other records
as we have deemed necessary or appropriate as a basis for the opinions set
forth herein.

In such examination, we have assumed the legal capacity of natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed, photostatic, or other copies
and the authenticity of the originals of such latter documents. As to any
facts material to such opinion which were not independently established, we
have relied on statements or representations of officers and other
representatives of the Trust or others.

Members of this Firm are admitted to the practice of law in the State
of Delaware and we express no opinion as to the law of any other jurisdiction.
<PAGE> 4
Van Kampen American Capital
U.S. Government Trust
April 25, 1996
Page 4

Based upon and subject to the foregoing, we are of the opinion that the
issuance and sale of the Shares by the Trust have been validly authorized and,
assuming certificates therefor have been duly executed and delivered or the
shareholders' accounts have been duly credited and the Shares represented
thereby have been fully paid for, such Shares were validly issued, fully paid
and nonassessable.
<PAGE> 5
Van Kampen American Capital
U.S. Government Trust
April 25, 1996
Page 5

We hereby consent to the filing of this opinion with the Commission as
Exhibit 10 to the Registration Statement. We also 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 1933 Act or the rules
and regulations of the Commission.

Very truly yours,

/s/ Skadden, Arps, Slate,
Meagher & Flom

<PAGE> 1
EXHIBIT 11

CONSENT OF INDEPENDENT AUDITORS

The Board of Trustees and Shareholders
Van Kampen American Capital U.S. Government Fund:

We consent to the use of our report included in the Statement of Additional
Information which is incorporated by reference into the Prospectus and to the
reference to our Firm under the headings "Financial Highlights" in the
Prospectus and "Custodian and Independent Auditors" in the Statement of
Additional Information.

/s/ KPMG Peat Marwick LLP

Chicago, Illinois
April 23, 1996

<PAGE> 1
EXHIBIT 15(a)

PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL U.S.
GOVERNMENT FUND (the "Fund"), a series of the Van Kampen American Capital U.S.
GOVERNMENT Trust (the "Trust"). This Distribution Plan describes the material
terms and conditions under which assets of the Fund may be used in connection
with financing distribution related activities with respect to each of its
classes of shares of beneficial interest (the "Shares"), each of which is
offered and sold subject to a different combination of front-end sales charges,
distribution fees, service fees and contingent deferred sales charges.(1)
Classes of shares, if any, subject to a front-end sales charge and a
distribution and/or service fee are referred to herein as "Front-End Classes"
and the Shares of such classes are referred to herein as "Front-End Shares."
Classes of shares, if any, subject to a contingent-deferred sales charge and a
distribution and/or a service fee are referred to herein as "CDSC Classes" and
Shares of such classes are referred to herein as "CDSC Shares." Classes of
shares, if any, subject to a front-end sales charge, a contingent-deferred
sales charge and a distribution and/or service fee are referred to herein as
"Combination Classes" and Shares of such class are referred to herein as
"Combination Shares."

The Fund has adopted a service plan (the "Service Plan") pursuant to which
the Fund is authorized to expend on an annual basis a portion of its average
net assets attributable to any or each class of Shares in connection with the
provision by the principal underwriter (within the meaning of the 1940 Act) of
the Shares and by brokers, dealers and other financial intermediaries
(collectively, "Financial Intermediaries") of personal services to holders of
Shares and/or the maintenance of shareholder accounts. The Fund also has
entered into a distribution and services agreement (the "Distribution and
Services Agreement") with Van Kampen American Capital Inc. (the "Distributor"),
pursuant to which the Distributor acts as the principal underwriter with
respect to each class of Shares and provides services to the Fund and acts as
agent on behalf of the Fund in connection with the implementation of the
Service Plan. The Distributor may enter into selling agreements (the "Selling
Agreements") with Financial Intermediaries in order to implement the
Distribution and Services Agreement, the Service Plan and this Distribution
Plan.

The Fund hereby is authorized to pay the Distributor a distribution fee
with respect to each class of its Shares to compensate the Distributor for
activities which are primarily intended to result in the sale of such Shares
("distribution related activities") performed by the Distributor with respect
to the respective class of Shares of the Fund. Such distribution related
activities include without limitation: (a) printing and distributing copies of
any prospectuses and annual and interim reports of the Fund (after the Fund has
prepared and set in type such materials) that are used by such Distributor in
connection with the offering of Shares; (b) preparing, printing or otherwise
manufacturing and distributing any other literature or materials of any nature
used by such Distributor in connection with promoting, distributing or offering
the Shares; (c) advertising, promoting and selling Shares to broker-dealers,
banks and the public; (d) distribution related overhead and the provision of
information programs and shareholder services intended to enhance the
attractiveness of investing in the Fund; (e) incurring initial outlay expenses
in connection with compensating Financial Intermediaries for (i) selling CDSC
Shares and

- ---------------
(1) The Fund is authorized to offer multiple classes of shares pursuant to an
order of the Securities and Exchange Commission exempting the Fund from
certain provisions of the 1940 Act.

1
<PAGE> 2

Combination Shares and (ii) providing personal services to shareholders and
the maintenance of shareholder accounts of all classes of Shares, including
paying interest on and incurring other carrying costs on funds borrowed to pay
such initial outlays; and (f) acting as agent for the Fund in connection with
implementing this Distribution Plan pursuant to the Selling Agreements.

The amount of the distribution fee hereby authorized with respect to each
class of Shares of the Fund shall be as follows:

With respect to Class A Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 0.25% of the Fund's average daily net
assets attributable to Class A Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to Class A Shares. The
Fund may pay a distribution fee as determined from time to time by its Board of
Trustees in an annual amount not to exceed the lesser of (i) (A) 0.25% of the
Fund's average daily net asset value during such year attributable to Class A
Shares sold on or after the date on which this Distribution Plan was first
implemented with respect to Class A Shares minus (B) the amount of the service
fee with respect to the Class A Shares actually expended during such year by
the Fund pursuant to the Service Plan and (ii) the actual amount of
distribution related expenses incurred by the Distributor with respect to Class
A Shares.

With respect to Class B Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class B Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class B Shares. The
Fund may pay a distribution fee with respect to the Class B Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class B Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class B
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class B Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class B Shares.

With respect to Class C Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class C Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class C Shares. The
Fund may pay a distribution fee with respect to the Class C Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class C Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class C
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class C Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class C Shares.

Payments pursuant to this Distribution Plan shall not be made more often
than monthly upon receipt by the Fund of a separate written expense report with
respect to each class of Shares setting forth the expenses qualifying for such
reimbursement allocated to each class of Shares and the purposes thereof.

In the event that amounts payable hereunder with respect to shares of a
Front-End Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of such
class, there is no carryforward of reimbursement obligations to succeeding
years. In the event the amounts payable hereunder with respect to a shares of
a CDSC Class or a Combination Class do not fully reimburse the Distributor for
its actual distribution related expenses with respect to the Shares of the
respective class, such unreimbursed distribution expenses will be carried
forward and paid by the Fund

2
<PAGE> 3

hereunder in future years so long as this Distribution Plan remains in effect,
subject to applicable laws and regulations. Reimbursements for distribution
related expenses payable hereunder with respect to a particular class of Shares
may not be used to subsidize the sale of Shares of any other class of Shares.

The Fund shall not compensate the Distributor, and neither the Fund nor
the Distributor shall compensate any Financial Intermediary, for any
distribution related expenses incurred with respect to a class of Shares prior
to the later of (a) the implementation of this Distribution Plan with respect
to such class of Shares or (b) the date that such Financial Intermediary enters
into a Selling Agreement with the Distributor.

The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. The Distributor may reallocate all or a
portion of its distribution fee to such Financial Intermediaries as
compensation for the above-mentioned activities and services. Such
reallocation shall be in an amount as set forth from time to time in the Fund's
prospectus. Such Selling Agreements shall provide that the Financial
Intermediaries shall provide the Distributor with such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Paragraphs 3 and 8 hereof.

Subject to the provisions of this Distribution Agreement, the Fund is
hereby authorized to pay a distribution fee to any person that is not an
"affiliated person" or "interested person" of the Fund or its "investment
adviser" or "principal underwriter" (as such terms are defined in the 1940 Act)
who provides any of the foregoing services for the Fund. Such fee shall be
paid only pursuant to written agreements between the Fund and such other person
the terms of which permit payments to such person only in accordance with the
provisions of this Distribution Agreement and which have the approval of a
majority of the Disinterested Trustees by vote cast separately with respect to
each class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.

The Fund and the Distributor shall prepare separate written reports for
each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Distribution Plan, the Service
Plan and the agreements contemplated hereby, the purposes for which such
payments were made and such other information as the Board of Trustees or the
Disinterested Trustees may reasonably request from time to time, and the Board
of Trustees shall review such reports and other information.

This Distribution Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.

This Distribution Plan and any agreement contemplated hereby shall
continue in effect beyond the first anniversary of its adoption by the Board of
Trustees of the Fund only so long as (a) its continuation is approved at least
annually in the manner set forth in clause (a) of paragraph 9 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.

This Distribution Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.

This Distribution Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting
3

<PAGE> 4

securities" of the respective class of Shares of the Fund and may not be
amended in any other material respect except with the approval of a majority of
the Disinterested Trustees. Amendments required to conform this Distribution
Plan to changes in the Rule or to other changes in the 1940 Act or the rules
and regulations thereunder shall not be deemed to be material amendments.

To the extent any service fees paid by the Fund pursuant to the Service
Plan are deemed to be payments for the financing of any activity primarily
intended to result in the sale of Shares issued by the Fund within the meaning
of the Rule, the terms and provisions of such plan and any payments made
pursuant to such plan hereby are authorized pursuant to this Distribution Plan
in the amounts and for the purposes authorized in the Service Plan without any
further action by the Board of Trustees or the shareholders of the Fund. To
the extent the terms and provisions of the Service Plan conflict with the terms
and provisions of this Distribution Plan, the terms and provisions of the
Service Plan shall prevail with respect to amounts payable pursuant thereto.
This paragraph 13 is adopted solely due to the uncertainty that may exist with
respect to whether payments to be made by the Fund pursuant to the Service Plan
constitute payments primarily intended to result in the sale of Shares issued
by the Fund within the meaning of the Rule.

The Trustees of the Trust have adopted this Distribution Plan as trustees
under the Declaration of Trust of the Trust and the policies of the Trust
adopted hereby are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the trust estate.

<PAGE> 1
EXHIBIT 15(d)

VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT FUND

SERVICE PLAN

The plan set forth below (the "Service Plan") for the VAN KAMPEN
AMERICAN CAPITAL U.S. GOVERNMENT FUND (the "Fund"), a series of the Van Kampen
American Capital Trust (the "Trust") describes the material terms and
conditions under which assets of the Fund may be used to compensate the Fund's
principal underwriter, within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act"), brokers, dealers and other financial
intermediaries (collectively "Financial Intermediaries") for providing personal
services to shareholders and/or the maintenance of shareholder accounts with
respect to each of its Class A Shares of beneficial interest (the "Class A
Shares"), its Class B Shares of beneficial interest (the "Class B Shares"), and
its Class C Shares of beneficial interest (the "Class C Shares"). The Class A
Shares, Class B Shares and Class C Shares sometimes are referred to herein
collectively as the "Shares." Each class of Shares is offered and sold subject
to a different combination of front-end sales charges, distribution fees,
service fees and contingent deferred sales charges.(1) Classes of shares, if
any, subject to a front-end sales charge and a distribution and/or service fee
are referred to herein as "Front-End Classes" and the Shares of such classes
are referred to herein as "Front-End Shares." Classes of shares, if any,
subject to a contingent-deferred sales charge and a distribution and or a
service fee are referred to herein as "CDSC Classes" and Shares of such classes
are referred to herein as "CDSC Shares." Classes of shares, if any, subject to
a front-end sales charge, a contingent-deferred sales charge and a distribution
and/or service fee are referred to herein as "Combination Classes" and Shares
of such class are referred to herein as "Combination Shares."

The Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to which the Fund is authorized to expend on an annual basis a portion
of its average net assets attributable to each class of Shares in connection
with financing distribution related activities. The Fund also has entered into
a distribution and services agreement (the "Distribution and Services
Agreement") with Van Kampen American Capital Distributors, Inc. (formerly Van
Kampen Merritt, Inc.) (the "Distributor"), pursuant to which the Distributor
acts as agent on behalf of the Fund in connection with the implementation of
the Service Plan and acts as the principal underwriter with respect to each
class of Shares. The Distributor may enter into selling agreements (the
"Selling Agreements") with brokers, dealers and other financial intermediaries
("Financial Intermediaries") in order to implement the Distribution Agreement,
the Distribution Plan and this Service Plan.

The Fund hereby is authorized to pay a service fee with respect to its
Class A Shares, Class B Shares and Class C Shares to any person who sells such
Shares and provides personal services to shareholders and/or maintains
shareholder accounts in an annual amount not to exceed 0.25% of the average
annual net asset value of the Shares maintained in the Fund by such person that
were sold on or after the date on which this Service Plan was first
implemented. The aggregate annual amount of all such payments with respect to
each such class of Shares may not exceed 0.25% of the Fund's average annual net
assets attributable to the respective class of Shares sold on or after the date
on which this Service Plan was first implemented and maintained in the Fund
more than one year.

- --------------------
(1) The Fund is authorized to offer multiple classes of shares pursuant to
an order of the Securities and Exchange Commission exempting the Fund
from certain provisions of the 1940 Act.

1
<PAGE> 2
Payments pursuant to this Service Plan may be paid or prepaid on
behalf of the Fund by the Distributor acting as the Fund's agent.

Payments by the Fund to the Distributor pursuant to this Service Plan
shall not be made more often than monthly upon receipt by the Fund of a
separate written expense report with respect to each class of Shares setting
forth the expenses qualifying for such reimbursement allocated to each class
of Shares and the purposes thereof.

In the event that amounts payable hereunder with respect to a class of
Shares do not fully reimburse the Distributor for pre-paid service fees, such
unreimbursed service fee expenses will be carried forward and paid by the Fund
hereunder in future years so long as this Service Plan remains in effect,
subject to applicable laws and regulations. Reimbursements for service fee
related expenses payable hereunder with respect to a particular class of Shares
may not be used to subsidize services provided with respect to any other class
of Shares.

The Fund shall not compensate the Distributor, and neither the Fund nor
the Distributor shall compensate any Financial Intermediary, for any service
related expenses incurred with respect to a class of Shares prior to the later
of (a) the implementation of this Service Plan with respect to such class of
Shares or (b) the date that such Financial Intermediary enters into a Selling
Agreement with the Distributor.

The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to such
Financial Intermediaries for activities and services of the type referred to in
Paragraph 1 hereof. Prior to the implementation of a Selling Agreement, such
agreement shall be approved by a majority of the Board of Trustees of the Trust
and a majority of the Disinterested Trustees (within the meaning of the 1940
Act) by a vote cast in person at a meeting called for the purpose of voting on
such Selling Agreements. Such Selling Agreements shall provide that the
Financial Intermediaries shall provide the Distributor with such information
as is reasonably necessary to permit the Distributor to comply with the
reporting requirements set forth in Paragraphs 3 and 8 hereof.

Subject to the provisions of this Service Agreement, the Fund is hereby
authorized to pay a service fee to any person that is not an "affiliated
person" or "interested person" of the Fund or its "investment adviser" or
"principal underwriter" (as such terms are defined in the 1940 Act) who
provides any of the foregoing services for the Fund. Such fee shall be paid
only pursuant to written agreements between the Fund and such other person the
terms of which permit payments to such person only in accordance with the
provisions of this Service Agreement and which have the approval of a majority
of the Disinterested Trustees by vote cast separately with respect to each
class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.

The Fund and the Distributor shall prepare separate written reports for
each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Service Plan and the
agreements contemplated hereby, the purposes for which such payments were made
and such other information as the Board of Trustees or the Disinterested
Trustees may reasonably request from time to time, and the Board of Trustees
shall review such reports and other information.

This Service Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.

This Service Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at a
meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.

2
<PAGE> 3
This Service Plan and any agreement contemplated hereby shall continue in
effect beyond the first anniversary of its adoption by the Board of Trustees
of the Fund only so long as (a) its continuation is approved at least annually
in the manner set forth in clause (a) of paragraph 10 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.

This Service Plan may not be amended to increase materially the maximum
amounts permitted to be expended hereunder except with the approval of a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund. This Service Plan may not be amended in any material
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Service Plan to changes in Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act"), the 1940 Act,
the rules and regulations thereunder or the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. shall not be deemed to be
material amendments.

The Trustees of the Trust have adopted this Service Plan as trustees under
the Declaration of Trust of the Trust and the policies of the Trust adopted
hereby are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the trust estate.

<PAGE> 1
EXHIBIT 16

U.S. GOVERNMENT FUND
30 DAY SEC YIELD WORKSHEET
FOR PERIOD ENDING DECEMBER 30, 1995

Class A Shares

Formula Total Income - Total Expenses 6
[((((------------------------ ----------------------)+1) )-1)*2]= SEC Yield
Class A Shares Average Dividend Shares X Public Offering Price ---------

$19,035,769.68 - $2,812,854.61 6
Class A Shares [((((------------------------ ----------------------)+1) )-1)*2]= 6.32%
198,624,053.800 X $15.70 -----

Class A Shares $19,035,769.68 - $2,814,109.85 6
Without [((((------------------------ ----------------------)+1) )-1)*2]= 6.32%
Expense Waiver 198,624,053.800 X $15.70 -----

Waived Expense Adjustment (6.32%-6.32%) 0.00%
=====

</TABLE>

<TABLE>
<S> <C>
Class B Shares

Formula

Class A Share Yield + Sales Charge Effect - Expense Differential

Class A Share Yield 6.32%
+ Sales Charge Effect (Maximum Sales Charge x Class A Share SEC Yield)
4.75% x 6.32% .30%
- Expense Differential between Class A Shares and Class B Shares .83%
-----
Class B Share SEC Yield 5.79%
=====

- Waived Expense Adjustment .00%
-----
Class B Share SEC Yield (Without Expense Waiver) 5.79%
=====
Class C Shares

Formula

Class A Share Yield + Sales Charge Effect - Expense Differential

Class A Share Yield 6.32%
+ Sales Charge Effect (Maximum Sales Charge x Class A Share SEC Yield)
4.75% x 6.32% .30%
- Expense Differential between Class A Shares and Class C Shares .83%
-----
Class C Share SEC Yield 5.79%
=====

- Waived Expense Adjustment .00%
-----
Class C Share SEC Yield (Without Expense Waiver) 5.79%
=====

</TABLE>

<PAGE> 2
U.S. GOVERNMENT FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED DECEMBER 31, 1995

Current Annual Income Per Share
-------------------------------
Current Offering Price

Class A Shares

$1.080
------
$15.70 = 6.88%

Class B Shares
$.972
------
$14.95 = 6.50%

Class C Shares
$.972
------
$14.95 = 6.50%

<PAGE> 3

U.S. GOVERNMENT FUND - CLASS A SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1995

<TABLE>

<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $2,699.58 = P
Ending Redeemable Value $3,024.18 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 12.02% = T

Excluding Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $2,571.35 = P
Ending Redeemable Value $3,024.18 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 17.61% = T

TOTAL RETURN CALCULATION FIVE YEARS ENDED DECEMBER 31, 1995
<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $2,141.25 = P
Ending Redeemable Value $3,024.18 = ERV
Five years ended 12/31/95 = (60 Mos.) 5 = n

TOTAL RETURN FOR THE PERIOD 7.15% = T

Excluding Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $2,039.54 = P
Ending Redeemable Value $3,024.18 = ERV
Five years ended 12/31/95 = (60 Mos.) 5 = n

TOTAL RETURN FOR THE PERIOD 8.20% = T

</TABLE>

<PAGE> 4
U.S. GOVERNMENT FUND - CLASS A SHARES

TOTAL RETURN CALCULATION TEN YEARS ENDED DECEMBER 31, 1995

<TABLE>

<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $1,378.83 = P
Ending Redeemable Value $3,024.18 = ERV
Ten years ended 12/31/95 = (120 Mos.) 10 = n

TOTAL RETURN FOR THE PERIOD 8.17% = T

Excluding Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $1,313,34 = P
Ending Redeemable Value $3,024.18 = ERV
Ten years ended 12/31/95 = (120 Mos.) 10 = n

TOTAL RETURN FOR THE PERIOD 8.70% = T

TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1995

<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $3,024.18 = ERV
Inception through 12/31/95 = (139 Mos.) 11.58333 = n

TOTAL RETURN FOR THE PERIOD 10.02% = T

Excluding Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $952.67 = P
Ending Redeemable Value $3,024.18 = ERV
Inception through 12/31/95 = (139 Mos.) 11.58333 = n

TOTAL RETURN FOR THE PERIOD 10.49% = T

</TABLE>

<PAGE> 5
U.S. GOVERNMENT FUND - CLASS A SHARES

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1995

Formula ERV - P
-------
P = T
<S> <C> <C>
Including Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $3,024.18 = ERV

TOTAL RETURN FOR THE PERIOD 202.42% = T

Excluding Payment of the Sales Charge
Net Asset Value $14.95
Initial Investment $952.67 = P
Ending Redeemable Value $3,024.18 = ERV

TOTAL RETURN FOR THE PERIOD 217.44% = T

</TABLE>

<PAGE> 6

U.S. GOVERNMENT FUND - CLASS B SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1995

<TABLE>

<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,023.14 = P
Ending Redeemable Value $1,153.92 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 12.78% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,023.14 = P
Ending Redeemable Value $1,194.85 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 16.78% = T

TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1995
<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,171.33 = ERV
Inception through 12/31/95 = (41 Mos.) 3.41667 = n

TOTAL RETURN FOR THE PERIOD 4.74% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,194.85 = ERV
Inception through 12/31/95 = (41 Mos.) 3.41667 = n

TOTAL RETURN FOR THE PERIOD 5.35% = T

</TABLE>

<PAGE> 7

U.S. GOVERNMENT FUND - CLASS B SHARES

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1995

Formula ERV - P
-------
P = T
<S> <C> <C>
Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,171.33 = ERV

TOTAL RETURN FOR THE PERIOD 17.13% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,194.85 = ERV

TOTAL RETURN FOR THE PERIOD 19.49% = T

</TABLE>

<PAGE> 8

U.S. GOVERNMENT FUND - CLASS C SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1995

<TABLE>

<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $945.75 = P
Ending Redeemable Value $1,094.99 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 15.78% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $945.75 = P
Ending Redeemable Value $1,104.45 = ERV
One year period ended 12/31/95 = (12 Mos.) 1 = n

TOTAL RETURN FOR THE PERIOD 16.78% = T

TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1995
<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,104.45 = ERV
Inception through 12/31/95 = (29 Mos.) 2.41667 = n

TOTAL RETURN FOR THE PERIOD 4.20% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,104.45 = ERV
Inception through 12/31/95 = (29 Mos.) 2.41667 = n

TOTAL RETURN FOR THE PERIOD 4.20% = T

</TABLE>

<PAGE> 9

U.S. GOVERNMENT FUND - CLASS C SHARES

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1995

Formula ERV - P
------- = T
P
<S> <C> <C>
Including Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,104.45 = ERV

TOTAL RETURN FOR THE PERIOD 10.45% = T

Excluding Payment of the CDSC
Net Asset Value $14.95
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,104.45 = ERV

TOTAL RETURN FOR THE PERIOD 10.45% = T

</TABLE>

<PAGE> 1
Exhibit 17(a)

INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
MARCH 21, 1996

Van Kampen American Capital U.S. Government Trust
Van Kampen American Capital U.S. Government Fund
Van Kampen American Capital Tax Free Trust
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital Trust
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund
Van Kampen American Capital Strategic Income Fund
Van Kampen American Capital Emerging Markets Income Fund
Van Kampen American Capital Equity Trust
Van Kampen American Capital Utility Fund
Van Kampen American Capital Balanced Fund
Van Kampen American Capital Pennsylvania Tax Free Income Fund
Van Kampen American Capital Tax Free Money Fund
Van Kampen American Capital Prime Rate Income Trust
Van Kampen Merritt Series Trust
Van Kampen Merritt Quality Income Portfolio
Van Kampen Merritt High Yield Portfolio
Van Kampen Merritt Growth and Income Portfolio
Van Kampen Merritt Money Market Portfolio
Van Kampen Merritt Stock Index Portfolio
Van Kampen American Capital Comstock Fund
Van Kampen American Capital Corporate Bond Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Enterprise Fund
Van Kampen American Capital Equity Income Fund
Van Kampen American Capital Limited Maturity Government Fund
Van Kampen American Capital Global Managed Assets Fund
Van Kampen American Capital Government Securities Fund
Van Kampen American Capital Government Target Fund
Van Kampen American Capital Growth and Income Fund
Van Kampen American Capital Harbor Fund
Van Kampen American Capital High Income Corporate Bond Fund
Van Kampen American Capital Life Investment Trust
Van Kampen American Capital Common Stock Fund
Van Kampen American Capital Domestic Strategic Income Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Government Fund
Van Kampen American Capital Money Market Fund
Van Kampen American Capital Multiple Strategy Fund
Van Kampen American Capital Real Estate Securities Fund
<PAGE> 2
Van Kampen American Capital Pace Fund
Van Kampen American Capital Real Estate Securities Fund
Van Kampen American Capital Reserve Fund
Van Kampen American Capital Tax-Exempt Trust
Van Kampen American Capital High Yield Municipal Fund
Van Kampen American Capital Texas Tax Free Income Fund
Van Kampen American Capital U.S. Government Trust for Income
Van Kampen American Capital World Portfolio Series Trust
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
Internet Trust
Michigan Real Estate Income and Growth Trust
Van Kampen American Capital Insured Income Trust
Strategic Ten Trust, United States
Strategic Ten Trust, United Kingdom
Strategic Ten Trust, Hong Kong
Strategic Five Trust, United States
Van Kampen American Capital Equity Opportunity Trust
Principal Trust Princor Emerging Growth and Treasury
International Assets Advisory Corporation Global Blue Chip Trust
<PAGE> 3
<TABLE>
<S> <C>

Emerging Markets Municipal Income Trust . . . . . . . . . . . . . . . . . . . Series 1
Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 368
Insured Municipals Income Trust (Discount) . . . . . . . . . . . . . . . . . Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term) . . . . . . . . . . Series 1 through 103
1000 Insured Municipals Income Trust (Intermediate Term) . . . . . . . . . . Series 5 through 86
Insured Municipals Income Trust (Limited Term) . . . . . . . . . . . . . . . Series 9 through 83
Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . Series 1 through 3
Insured Municipals Income Trust (Intermediate Laddered Maturity) . . . . . . Series 1 and 2
Insured Tax Free Bond Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 6
Insured Tax Free Bond Trust (Limited Term) . . . . . . . . . . . . . . . . . Series 1
Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 93
Investors' Quality Tax-Exempt Trust-Intermediate . . . . . . . . . . . . . . Series 1
Investors' Corporate Income Trust . . . . . . . . . . . . . . . . . . . . . . Series 1 through 12
Investors' Governmental Securities Income Trust . . . . . . . . . . . . . . . Series 1 through 7
Van Kampen Merritt International Bond Income Trust . . . . . . . . . . . . . Series 1 through 21
Alabama Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1
Alabama Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 9
Arizona Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1 through 18
Arizona Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 15
Arkansas Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 2
Arkansas Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1
California Insured Municipals Income Trust . . . . . . . . . . . . . . . . . Series 1 through 150
California Insured Municipals Income Trust (Premium Bond Series) . . . . . . Series 1
California Insured Municipals Income Trust (1st Intermediate Series) . . . . Series 1 through 3
California Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . Series 1 through 21
California Insured Municipals Income Trust (Intermediate Laddered) . . . . . Series 1 through 22
Colorado Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 79
Colorado Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 18
Connecticut Insured Municipals Income Trust . . . . . . . . . . . . . . . . . Series 1 through 29
Connecticut Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . Series 1
Delaware Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipal Income Trust - Intermediate . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 101
Florida Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipals Income Trust (Intermediate Laddered) . . . . . . . Series 1 through 13
Georgia Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 78
Georgia Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1 through 16
Hawaii Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1
Investors' Quality Municipals Trust (AMT) . . . . . . . . . . . . . . . . . . Series 1 through 9
Kansas Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1 through 11
Kentucky Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 57
Louisiana Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 13
Maine Investor's Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . Series 1
Maryland Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 75
Massachusetts Insured Municipals Income Trust . . . . . . . . . . . . . . . . Series 1 through 31
Massachusetts Insured Municipals Income Trust (Premium Bond Series) . . . . . Series 1
Michigan Financial Institutions Trust . . . . . . . . . . . . . . . . . . . . Series 1
Michigan Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 135
Michigan Insured Municipals Income Trust (Premium Bond Series) . . . . . . . Series 1
Michigan Insured Municipals Income Trust (1st Intermediate Series) . . . . . Series 1 through 3
Michigan Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 30
Minnesota Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 57
Minnesota Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 21
Missouri Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 94
Missouri Insured Municipals Income Trust (Premium Bond Series) . . . . . . . Series 1
Missouri Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 15
Missouri Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . Series 1
Nebraska Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 9

</TABLE>
<PAGE> 4
<TABLE>
<S> <C>

New Mexico Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 18
New Jersey Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 109
New Jersey Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . Series 1 through 22
New Jersey Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . Series 1 and 4
New York Insured Municipals Income Trust-Intermediate . . . . . . . . . . . . . Series 1 through 6
New York Insured Municipals Income Trust (Limited Term) . . . . . . . . . . . . Series 1
New York Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . Series 1 through 131
New York Insured Tax-Free Bond Trust . . . . . . . . . . . . . . . . . . . . . . Series 1
New York Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 17
New York Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . Series 1
North Carolina Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . Series 1 through 85
Ohio Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . Series 1 through 101
Ohio Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . Series 1 and 2
Ohio Insured Municipals Income Trust (Intermediate Term) . . . . . . . . . . . . Series 1
Ohio Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . Series 3 through 6
Ohio Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . Series 1 through 16
Oklahoma Insured Municipal Income Trust . . . . . . . . . . . . . . . . . . . . Series 1 through 17
Oregon Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . Series 1 through 53
Pennsylvania Insured Municipals Income Trust - Intermediate . . . . . . . . . . Series 1 through 6
Pennsylvania Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 215
Pennsylvania Insured Municipals Income Trust (Premium Bond Series) . . . . . . . Series 1
Pennsylvania Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 14
South Carolina Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . Series 1 through 81
Stepstone Growth Equity and Treasury Securities Trust . . . . . . . . . . . . . Series 1
Tennessee Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1-3 and 5-34
Texas Insured Municipal Income Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 40
Texas Insured Municipals Income Trust (Intermediate Ladder) . . . . . . . . . . Series 1
Virginia Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . Series 1 through 69
Van Kampen American Capital Equity Opportunity Trust . . . . . . . . . . . . . . Series 1 through 28
Van Kampen Merritt Utility Income Trust . . . . . . . . . . . . . . . . . . . . Series 1 through 6
Van Kampen American Capital Insured Income Trust . . . . . . . . . . . . . . . . Series 1 through 53
Van Kampen Merritt Insured Income Trust (Intermediate Term) . . . . . . . . . . Series 1 through 44
Van Kampen Merritt Select Equity Trust . . . . . . . . . . . . . . . . . . . . . Series 1
Van Kampen Merritt Select Equity and Treasury Trust . . . . . . . . . . . . . . Series 1
Washington Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1
West Virginia Insured Municipals Income Trust . . . . . . . . . . . . . . . . . Series 1 through 6
Principal Financial Institutions Trust . . . . . . . . . . . . . . . . . . . . . Series 1
Internet Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Michigan Real Estate Income and Growth Trust . . . . . . . . . . . . . . . . . . Series 1
Strategic Ten Trust, United States . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Ten Trust, United Kingdom . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Ten Trust, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Five Trust, United States . . . . . . . . . . . . . . . . . . . . . . Series 1
Equity Opportunity Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 29
Emerging Growth and Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Global Blue Chip Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1

</TABLE>

<PAGE> 1
Exhibit 17(b)

OFFICERS

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman & Chief Executive Officer Houston, TX

William R. Molinari President & Chief Operating Oakbrook Terrace, IL
Officer

Ronald A. Nyberg Executive Vice President & General Oakbrook Terrace, IL
Counsel
William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL
Financial Officer
Paul R. Wolkenberg Executive Vice President Houston, TX

Robert A. Broman Sr. Vice President Oakbrook Terrace, IL
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
Keith K. Furlong Sr. Vice President Oakbrook Terrace, IL
Douglas B. Gehrman Sr. Vice President Houston, TX
Richard D. Humphrey Sr. Vice President Houston, TX
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Debra A. Nichols Sr. Vice President Houston, TX
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL
Colette Saucedo Sr. Vice President Houston, TX
Robert S. West Sr. Vice President Oakbrook Terrace, IL
John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL

Timothy K. Brown 1st Vice President Laguna Niguel, CA
James S. Fosdick 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President San Francisco, CA
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
Mark T. McGannon 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
Michael L. Stallard 1st Vice President Oakbrook Terrace, IL

Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL
James K. Ambrosio Vice President Massapequa, NY
Patricia A. Bettlach Vice President St. Louis, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
James J. Boyne Vice President & Assistant Secretary Oakbrook Terrace, IL
Linda Mae Brown Vice President Oakbrook Terrace, IL
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Thomas M. Byron Vice President Oakbrook Terrace, IL
Glenn M. Cackovic Vice President Laguna Niguel, CA
Joseph N. Caggiano Vice President New York, NY
Richard J. Charlino Vice President Oakbrook Terrace, IL
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Suzanne Cummings Vice President Houston, TX
David B. Dibo Vice President Oakbrook Terrace, IL

</TABLE>

<PAGE> 2

<TABLE>
<S> <C> <C>
Howard A. Doss Vice President Tampa, FL
Jonathan Eckhard Vice President Boulder, CO
Charles Edward Fisher Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas Joseph Foxhoven Vice President Denver, CO
Charles Friday Vice President Gibsonia, PA
Nori L. Gabert Vice President, Assoc. General Houston, TX
Counsel & Asst. Secretary
Erich P. Gerth Vice President Dallas, TX
Daniel Hamilton Vice President Houston, TX
John A. Hanhauser Vice President Philadelphia, PA
Eric J. Hargens Vice President Orlando, FL
Susan J. Hill Vice President Oakbrook Terrace, IL
J. Christopher Jackson Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Lowell Jackson Vice President Norcross, GA
Dana R. Klein Vice President Oakbrook Terrace, IL
Ann Marie Klingenhagen Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Director Oakbrook Terrace, IL
of Compliance
S. William Lehew III Vice President Charlotte, NC
Robert C. Lodge Vice President Philadelphia, PA
Walter Lynn Vice President Flower Mound, TX
Michele L. Manley Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Carl Mayfield Vice President Lakewood, CO
Ruth L. McKeel Vice President Oakbrook Terrace, IL
John Mills Vice President Kenner, LA
Robert Muller, Jr. Vice President Houston, TX
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Oakbrook Terrace, IL
Walter E. Rein Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
James B. Ross Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, Va
Stephanie Scarlata Vice President Lynbrook, NY
Lisa A. Schomer Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Jeffrey C. Shirk Vice President Boston, MA
Kimberly M. Spangler Vice President Atlanta, GA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
William C. Strafford Vice President Granger, IN
James C. Taylor Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Jeff Warland Vice President Oakbrook Terrace, IL
Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL
Secretary
Steven T. West Vice President Wayne, PA
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
James R. Yount Vice President Seattle, WA
Richard P. Zgonina Vice President Oakbrook Terrace, IL

Brian P. Arcara Asst. Vice President Philadelphia, PA
Christopher M. Bisaillon Asst. Vice President Oakbrook Terrace, IL
Eric J. Bridges Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Robert C. Brooks Asst. Vice President Manchester, MA
Richard B. Callaghan Asst. Vice President Oakbrook Terrace, IL

</TABLE>

<PAGE> 3

<TABLE>
<S> <C> <C>
Stephen M. Cutka Asst. Vice President Oakbrook Terrace, IL
Nicholas Dalmaso Asst. Vice President & Asst. Oakbrook Terrace, IL
Secretary
Gerald A. Davis Asst. Vice President Oakbrook Terrace, IL
Daniel R. DeJong Asst. Vice President Oakbrook Terrace, IL
Jerome M. Dybzinski Asst. Vice President Oakbrook Terrace, IL
Melissa B. Epstein Asst. Vice President Houston, TX
Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX
Rocco Fiordelisi III Asst. Vice President St. Louis, MO
Robert D. Gorski Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Joseph Hays Asst. Vice President Philadelphia, PA
Hunter Knapp Asst. Vice President Laguna, CA
Natalie N. Hurdle Asst. Vice President New York, NY
Laurie L. Jones Asst. Vice President Houston, TX
Jeffrey Scott Kinney Asst. Vice President Oakbrook Terrace, IL
Patricia D. Lathrop Asst. Vice President Tampa, FL
Tony E. Leal Asst. Vice President Houston, TX
Linda S. MacAyeal Asst. Vice President Oakbrook Terrace, IL
Ann Therese McGrath Asst. Vice President Oakbrook Terrace, IL
Peggy E. Moro Asst. Vice President Oakbrook Terrace, IL
David R. Niemi Asst. Vice President Oakbrook Terrace, IL
Daniel J. O'Keefe Asst. Vice President Oakbrook Terrace, IL
Allison Okun Asst. Vice President Oakbrook Terrace, IL
David B. Partain Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Michael Quinn Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Jeffrey S. Rourke Asst. Vice President Oakbrook Terrace, IL
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
Andrew J. Scherer Asst. Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Asst. Vice President Philadelphia, PA
Traci T. Sorensen Asst. Vice President Oakbrook Terrace, IL
Gary Steele Asst. Vice President Philadelphia, PA
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Robert A. Watson Asst. Vice President Oakbrook Terrace, IL
Kathleen M. Wennerstrum Asst. Vice President Oakbrook Terrace, IL
Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL
Melinda K. Yeager Asst. Vice President Houston, TX

David C. Goodwin Asst. Secretary Oakbrook Terrace, IL
Gina M. Scumaci Asst. Secretary Oakbrook Terrace, IL

Elizabeth M. Brown Officer Houston, TX
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
Gina Grippo Officer Houston, TX
Sarah Kessler Officer Oakbrook Terrace, IL
Francis McGarvey Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Becky Newman Officer Houston, TX
Rosemary Pretty Officer Houston, TX
Colette Saucedo Officer Houston, TX
Frederick Shepherd Officer Houston, TX
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX

</TABLE>

<PAGE> 4

DIRECTORS

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman & CEO 2800 Post Oak Blvd.
Houston, TX 77056

William R. Molinari President & COO One Parkview Plaza
Oakbrook Terrace, IL 60181

Ronald A. Nyberg Executive Vice President One Parkview Plaza
& General Counsel Oakbrook Terrace, IL 60181

William R. Rybak Executive Vice President One Parkview Plaza
& CFO Oakbrook Terrace, IL 60181

</TABLE>

<ARTICLE> 6
<CIK> 0000739714
<NAME> VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST A
<SERIES>
<NUMBER> 011
<NAME> CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,282,930,048<F1>
<INVESTMENTS-AT-VALUE> 4,419,433,560<F1>
<RECEIVABLES> 132,766,726<F1>
<ASSETS-OTHER> 283,088<F1>
<OTHER-ITEMS-ASSETS> 2,906,946<F1>
<TOTAL-ASSETS> 4,555,390,320<F1>
<PAYABLE-FOR-SECURITIES> 976,512,501<F1>
<SENIOR-LONG-TERM-DEBT> 115,954,000<F1>
<OTHER-ITEMS-LIABILITIES> 20,116,666<F1>
<TOTAL-LIABILITIES> 1,112,583,167<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 3,241,403,229
<SHARES-COMMON-STOCK> 198,186,689
<SHARES-COMMON-PRIOR> 213,486,730
<ACCUMULATED-NII-CURRENT> 4,934,355<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (453,692,887)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 137,483,539<F1>
<NET-ASSETS> 2,962,872,443
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 292,245,019<F1>
<OTHER-INCOME> 13,105,469<F1>
<EXPENSES-NET> 45,117,622<F1>
<NET-INVESTMENT-INCOME> 260,232,866<F1>
<REALIZED-GAINS-CURRENT> (3,771,774)<F1>
<APPREC-INCREASE-CURRENT> 299,944,544<F1>
<NET-CHANGE-FROM-OPS> 556,405,636<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (224,639,172)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,450,487
<NUMBER-OF-SHARES-REDEEMED> (27,345,845)
<SHARES-REINVESTED> 7,595,317
<NET-CHANGE-IN-ASSETS> 38,441,808
<ACCUMULATED-NII-PRIOR> 766,993<F1>
<ACCUMULATED-GAINS-PRIOR> (524,023,042)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 17,475,740<F1>
<INTEREST-EXPENSE> 9,371,512<F1>
<GROSS-EXPENSE> 45,130,747<F1>
<AVERAGE-NET-ASSETS> 2,973,498,899
<PER-SHARE-NAV-BEGIN> 13.698
<PER-SHARE-NII> 1.111
<PER-SHARE-GAIN-APPREC> 1.233
<PER-SHARE-DIVIDEND> (1.092)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.950
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 158,300,000<F1>
<AVG-DEBT-PER-SHARE> 1<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0000739714
<NAME> VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST B
<SERIES>
<NUMBER> 012
<NAME> CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,282,930,048<F1>
<INVESTMENTS-AT-VALUE> 4,419,433,560<F1>
<RECEIVABLES> 132,766,726<F1>
<ASSETS-OTHER> 283,088<F1>
<OTHER-ITEMS-ASSETS> 2,906,946<F1>
<TOTAL-ASSETS> 4,555,390,320<F1>
<PAYABLE-FOR-SECURITIES> 976,512,501<F1>
<SENIOR-LONG-TERM-DEBT> 115,954,000<F1>
<OTHER-ITEMS-LIABILITIES> 20,116,666<F1>
<TOTAL-LIABILITIES> 1,112,583,167<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 498,757,767
<SHARES-COMMON-STOCK> 31,218,386
<SHARES-COMMON-PRIOR> 31,861,261
<ACCUMULATED-NII-CURRENT> 4,934,355<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (453,692,887)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 137,483,539<F1>
<NET-ASSETS> 466,659,324
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 292,245,019<F1>
<OTHER-INCOME> 13,105,469<F1>
<EXPENSES-NET> 45,117,622<F1>
<NET-INVESTMENT-INCOME> 260,232,866<F1>
<REALIZED-GAINS-CURRENT> (3,771,774)<F1>
<APPREC-INCREASE-CURRENT> 299,944,544<F1>
<NET-CHANGE-FROM-OPS> 556,405,636<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (30,640,126)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,196,962
<NUMBER-OF-SHARES-REDEEMED> (4,846,397)
<SHARES-REINVESTED> 1,006,560
<NET-CHANGE-IN-ASSETS> 30,324,790
<ACCUMULATED-NII-PRIOR> 766,993<F1>
<ACCUMULATED-GAINS-PRIOR> (524,023,042)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 17,475,740<F1>
<INTEREST-EXPENSE> 9,371,512<F1>
<GROSS-EXPENSE> 45,130,747<F1>
<AVERAGE-NET-ASSETS> 453,566,026
<PER-SHARE-NAV-BEGIN> 13.694
<PER-SHARE-NII> .991
<PER-SHARE-GAIN-APPREC> 1.241
<PER-SHARE-DIVIDEND> (.978)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.948
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 158,300,000<F1>
<AVG-DEBT-PER-SHARE> 1<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0000739714
<NAME> VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST C
<SERIES>
<NUMBER> 013
<NAME> CLASS C

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,282,930,048<F1>
<INVESTMENTS-AT-VALUE> 4,419,433,560<F1>
<RECEIVABLES> 132,766,726<F1>
<ASSETS-OTHER> 283,088<F1>
<OTHER-ITEMS-ASSETS> 2,906,946<F1>
<TOTAL-ASSETS> 4,555,390,320<F1>
<PAYABLE-FOR-SECURITIES> 976,512,501<F1>
<SENIOR-LONG-TERM-DEBT> 115,954,000<F1>
<OTHER-ITEMS-LIABILITIES> 20,116,666<F1>
<TOTAL-LIABILITIES> 1,112,583,167<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 13,921,150
<SHARES-COMMON-STOCK> 888,082
<SHARES-COMMON-PRIOR> 834,804
<ACCUMULATED-NII-CURRENT> 4,934,355<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (453,692,887)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 137,483,539<F1>
<NET-ASSETS> 13,275,386
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 292,245,019<F1>
<OTHER-INCOME> 13,105,469<F1>
<EXPENSES-NET> 45,117,622<F1>
<NET-INVESTMENT-INCOME> 260,232,866<F1>
<REALIZED-GAINS-CURRENT> (3,771,774)<F1>
<APPREC-INCREASE-CURRENT> 299,944,544<F1>
<NET-CHANGE-FROM-OPS> 556,405,636<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (786,177)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 223,253
<NUMBER-OF-SHARES-REDEEMED> (202,889)
<SHARES-REINVESTED> 32,914
<NET-CHANGE-IN-ASSETS> 1,843,607
<ACCUMULATED-NII-PRIOR> 766,993<F1>
<ACCUMULATED-GAINS-PRIOR> (524,023,042)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 17,475,740<F1>
<INTEREST-EXPENSE> 9,371,512<F1>
<GROSS-EXPENSE> 45,130,747<F1>
<AVERAGE-NET-ASSETS> 11,713,434
<PER-SHARE-NAV-BEGIN> 13.693
<PER-SHARE-NII> .996
<PER-SHARE-GAIN-APPREC> 1.237
<PER-SHARE-DIVIDEND> (.978)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.948
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 158,300,000<F1>
<AVG-DEBT-PER-SHARE> 1<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>

</TABLE>