VAN KAMPEN PACE FUND, 485BPOS, 2000-10-25

VAN KAMPEN PACE FUND
485BPOS, 2000-10-25

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 2000

REGISTRATION NOS. 2-31417
811-1792
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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. 51 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 36 [X]
</TABLE>

VAN KAMPEN PACE FUND
(Exact Name of Registrant as Specified in Declaration of Trust)

1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555
(Address of Principal Executive Offices) (Zip Code)

(630) 684-6000
Registrant's Telephone Number, Including Area Code

A. THOMAS SMITH III
Executive Vice President,
General Counsel and Secretary
Van Kampen Investments Inc.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, Illinois 60181-5555
(Name and Address of Agent for Service)

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

Copies To:

WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
------------------------

Approximate Date of Proposed Public Offering: As soon as practicable following
effectiveness of this Registration Statement.
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)

[X] on October 27, 2000 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest, par value
$0.01 per share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

VAN KAMPEN
PACE FUND

Van Kampen Pace Fund's investment objective is to seek capital growth. The
Fund's investment adviser seeks to achieve the Fund's investment objective by
investing in a portfolio of securities consisting primarily of common stocks
that the Fund's investment adviser believes have above-average potential for
capital growth.

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

This prospectus is dated OCTOBER 27, 2000

[VAN KAMPEN FUNDS LOGO]
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 9
Purchase of Shares................................. 10
Redemption of Shares............................... 16
Distributions from the Fund........................ 18
Shareholder Services............................... 18
Federal Income Taxation............................ 20
Financial Highlights............................... 22
</TABLE>

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

<PAGE> 4

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

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

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's
investment adviser seeks to achieve the Fund's investment objective by investing
in a portfolio of securities consisting primarily of common stocks of companies
that the Fund's investment adviser believes have above-average potential for
capital growth. The Fund's investment adviser uses a "bottom up" investment
strategy that focuses on individual stock selection rather than economic and
industry trends. In selecting securities for investment, the Fund emphasizes
securities of large, well-established companies with established records of
growth in sales or earnings. Portfolio securities are typically sold when sales
or earnings expectations flatten or decline. The Fund may invest up to 25% of
its total assets in securities of foreign issuers. The Fund may purchase and
sell certain derivative instruments, such as options, futures, options on
futures and stock index options and futures, for various portfolio management
purposes.

INVESTMENT RISKS

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

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

FOREIGN RISKS. Because the Fund may own securities of foreign issuers, it may be
subject to risks not usually associated with owning securities of U.S. issuers.
These risks can include fluctuations in foreign currencies, foreign currency
exchange controls, political and economic instability, differences in financial
reporting, differences in securities regulation and trading, and foreign
taxation issues.

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

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

INVESTOR PROFILE

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

- Seek capital growth over the long term

- Do not seek current income from their investment

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

- Wish to add to their investment portfolio a fund that emphasizes a growth
style of investing primarily in common stocks of large, well-established
companies

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

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

3
<PAGE> 5

intended to be a long-term investment, and the Fund should not be used as a
trading vehicle.

ANNUAL PERFORMANCE

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

[BAR GRAPH]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1990 -5.85
1991 31.73
1992 4.39
1993 10.83
1994 -3.70
1995 32.80
1996 20.56
1997 30.22
1998 21.98
1999 13.85
</TABLE>

The Fund's return for the nine-month period ended September 30, 2000 was -3.04%.
As a result of market activity, current performance may vary from the figures
shown.

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

During the ten-year period shown in the bar chart, the highest quarterly return
for Class A Shares was 20.49% (for the quarter ended December 31, 1998) and the
lowest quarterly return for Class A Shares was -14.58% (for the quarter ended
September 30, 1990).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Standard & Poor's 500 Index*,
a broad-based market index that the Fund's investment adviser believes is an
appropriate benchmark for the Fund, and the Lipper Growth Fund Index**, an index
of funds with similar investment objectives. The Fund's performance figures
listed below include the maximum sales charges paid by investors. The indices'
performance figures do not include any commissions or sales charges that would
be paid by investors purchasing the securities represented by the indices. An
investment cannot be made directly in the indices. Average annual total returns
are shown for the periods ended December 31, 1999 (the most recently completed
calendar year prior to the date of this prospectus). Remember that the past
performance of the Fund is not indicative of its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns Past
for the 10 Years
Periods Ended Past Past or Since
December 31, 1999 1 Year 5 Years Inception
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Van Kampen Pace
Fund -- Class A
Shares 7.33% 22.23% 14.20%

Standard & Poor's
500 Index 21.04% 28.56% 18.21%

Lipper Growth
Fund Index 27.96% 26.27% 17.25%
.................................................................
Van Kampen Pace
Fund -- Class B
Shares 8.17% 22.60% 14.99%(1)***

Standard & Poor's
500 Index 21.04% 28.56% 19.70%(3)

Lipper Growth
Fund Index 27.96% 26.27% 18.19%(3)
.................................................................
Van Kampen Pace
Fund -- Class C
Shares 11.99% 22.69% 17.02%(2)

Standard & Poor's
500 Index 21.04% 28.56% 22.48%(4)

Lipper Growth
Fund Index 27.96% 26.27% 20.47%(4)
.................................................................
</TABLE>

Inception date: (1) 1/10/92, (2) 8/27/93, (3) 1/16/92, (4) 8/31/93.

* The Standard & Poor's 500 Index is a broad-based index of 500 widely-held
common stocks of companies chosen for market size, liquidity and industry
group representation.

** The Lipper Growth Fund Index is an unmanaged index that reflects the average
performance of the 30 largest growth funds.

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

4
<PAGE> 6

FEES AND EXPENSES
OF THE FUND

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

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

SHAREHOLDER FEES

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

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

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------
Management fees 0.43% 0.43% 0.43%
................................................................
Distribution and/or
service (12b-1) 0.23% 1.00%(6) 1.00%(6)
fees(5)
................................................................
Other expenses 0.16% 0.19% 0.19%
................................................................
Total annual fund
operating expenses 0.82% 1.62% 1.62%
................................................................
</TABLE>

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

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

Example:

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

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $654 $822 $1,004 $1,530
..............................................................
Class B Shares $665 $811 $1,031 $1,708*
..............................................................
Class C Shares $265 $511 $ 881 $1,922
..............................................................
</TABLE>

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $654 $822 $1,004 $1,530
..............................................................
Class B Shares $165 $511 $ 881 $1,708 *
..............................................................
Class C Shares $165 $511 $ 881 $1,922
..............................................................
</TABLE>

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

5
<PAGE> 7

INVESTMENT OBJECTIVE,
POLICIES AND RISKS

The Fund's investment objective is to seek capital growth. Any income received
from the investment of portfolio securities is incidental to the Fund's
investment objective. The Fund's investment objective is a fundamental policy
and may not be changed without shareholder approval of a majority of the Fund's
outstanding voting securities, as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"). There are risks inherent in all investments in
securities; accordingly, there can be no assurance that the Fund will achieve
its investment objective.

Under normal market conditions, the Fund's investment adviser seeks to achieve
the Fund's investment objective by investing in a portfolio of securities
consisting primarily of common stocks of companies that the Fund's investment
adviser believes have above-average potential for capital growth. The Fund
emphasizes securities of large well-established companies. Because prices of
common stocks and other equity securities fluctuate, the value of an investment
in the Fund will vary based upon the Fund's investment performance. The Fund
attempts to reduce overall exposure to risk from declines in securities prices
by spreading its investments over many different companies in a variety of
industries.

The Fund's primary investment approach is to seek companies that the Fund's
investment adviser believes have unusually attractive growth opportunities on an
individual company basis. The Fund's investment adviser uses a "bottom-up" style
of investing which focuses on selecting particular companies before looking at
economic and industry trends. Because of this style of stock selection, the
Fund's investment adviser does not attempt to invest in a predetermined mix of
industry sectors. The Fund's portfolio generally includes securities of
companies from a broad range of industries, preserving an economically,
diversified portfolio.

In selecting securities for investment, the Fund focuses on common stocks of
"growth" companies which generally include those companies with established
records of growth in sales or earnings, that the Fund's investment adviser
believes offer above-average potential for capital growth. Stocks of different
types, such as "growth" or "value" stocks tend to shift in and out of favor
depending on market and economic conditions. Thus, the value of the Fund's
investments will vary and at times may be lower or higher than that of other
types of investments. The securities of growth-oriented companies may trade at
higher prices to earnings ratios relative to value stocks due to their higher
expected earnings growth.

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

The Fund may dispose of a security whenever, in the opinion of the Fund's
investment adviser, factors indicate it is desirable to do so. Such factors
include changes in the relative market performance or appreciation possibilities
offered by individual securities, a change in the market trend or other factors
affecting an individual security, a change in economic or market factors in
general or with respect to a particular industry, and other circumstances
bearing on the desirability of a given investment.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

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

6
<PAGE> 8

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

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

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

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

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

USING OPTIONS, FUTURES CONTRACTS

AND RELATED OPTIONS

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

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

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

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

In certain cases, the options and futures markets provide investment or risk
management opportunities

7
<PAGE> 9

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

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

OTHER INVESTMENTS AND RISK FACTORS

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

The Fund may invest up to 10% of the Fund's net assets in illiquid securities
and certain restricted securities. Such securities may be difficult or
impossible to sell at the time and the price that the Fund would like. Thus, the
Fund may have to sell such securities at a lower price, sell other securities
instead to obtain cash or forego other investment opportunities.

The Fund generally holds a portion of its assets in investment grade short-term
debt securities and investment grade corporate and government bonds in order to
provide for liquidity (collectively "temporary investments"). Investment grade
short-term debt securities include securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, prime commercial paper,
certificates of deposit, bankers' acceptances and other obligations of domestic
banks having total assets of at least $500 million, and repurchase agreements.
Investment grade bonds include bonds rated Baa or better by Moody's Investor
Services, Inc. ("Moody's") or BBB or better by Standard & Poor's ("S&P"). The
market prices of debt securities can be expected to vary inversely with changes
in prevailing interest rates. The market prices of long-term debt securities
tend to fluctuate more in response to changes in interest rates than short-term
debt securities. Securities rated Baa by Moody's or BBB by S&P are considered by
such rating agencies to be medium-grade obligations which possess speculative
characteristics so that changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than in the case of higher-rated securities.

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

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

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may, on a temporary basis, hold cash or invest a
portion or all of its assets in temporary investments. Under normal market
conditions, the potential for capital growth on these securities will tend to be
lower than the potential for capital growth on other securities that may be
owned by the Fund. In taking such a defensive position, the Fund temporarily
would not be pursuing and may not achieve its investment objective.

8
<PAGE> 10

INVESTMENT ADVISORY SERVICES

THE ADVISER. Van Kampen Asset Management Inc. is the Fund's investment adviser
(the "Adviser" or "Asset Management"). The Adviser is a wholly owned subsidiary
of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company, that administers more
than three million retail investor accounts, has extensive capabilities for
managing institutional portfolios, and has more than $100 billion under
management or supervision as of September 30, 2000. Van Kampen Investments has
more than 50 open-end funds, 38 closed-end funds and more than 2,700 unit
investment trusts that are professionally distributed by leading authorized
dealers nationwide. Van Kampen Funds Inc., the distributor of the Fund (the
"Distributor") and the sponsor of the funds mentioned above, is also a wholly
owned subsidiary of Van Kampen Investments. Van Kampen Investments is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The
Adviser's principal office is located at 1 Parkview Plaza, Oakbrook Terrace,
Illinois 60181-5555.

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

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
---------------------------------------------
<S> <C> <C> <C>
First $1 billion 0.50%
.............................................
Next $1 billion 0.45%
.............................................
Next $1 billion 0.40%
.............................................
Over $3 billion 0.35%
.............................................
</TABLE>

Applying this fee schedule, the effective advisory fee rate was 0.43% of the
Fund's average daily net assets for the Fund's fiscal year ended June 30, 2000.
The Fund's average daily net assets are determined by taking the average of all
of the determinations of the net assets during a given calendar month. Such fee
is payable for each calendar month as soon as practicable after the end of that
month.

Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment, and provides administrative services to the Fund. The
Fund pays all charges and expenses of its day-to-day operations, including
service fees, distribution fees, custodian fees, legal and independent
accountant fees, the costs of reports and proxies to shareholders, compensation
of trustees of the Trust (other than those who are affiliated persons of the
Adviser, Distributor or Van Kampen Investments) and all other ordinary business
expenses not specifically assumed by the Adviser.

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

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

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

PORTFOLIO MANAGEMENT. Senior Portfolio Managers Michael Davis and Mary Jayne
Maly are responsible as lead managers for the day-to-day management of the
Fund's investment portfolio.

Mr. Davis has been a Senior Portfolio Manager since April 2000, and a Vice
President and Portfolio Manager of the Adviser since March 1998. Prior to March
1998 he was the owner of Davis Equity Research, a stock research company. Mr.
Davis has been an investment professional since 1983. He has been affiliated
with the Fund since May 2000.

Ms. Maly has been a Senior Portfolio Manager since April 2000, and a Vice
President and Portfolio Manager of the Adviser since July 1998. From July 1997
to June 1998, she was a Vice President at

9
<PAGE> 11

Morgan Stanley Asset Management Inc. and assisted in the management of the
Morgan Stanley Institutional Real Estate Funds and the Van Kampen American
Capital Real Estate Securities Fund. Prior to July 1997, she was a Vice
President and Portfolio Manager of the Adviser. Prior to November 1992, Ms. Maly
was a Vice President and Senior Equity Analyst at Texas Commerce Investment
Management Company. She has been affiliated with the Fund since May 2000.

Thomas Copper is co-manager for the day-to-day management of the Fund's
investment portfolio. Mr. Copper has been a Vice President and Portfolio Manager
of the Adviser and Advisory Corp. since March 1998, Assistant Vice President of
the Adviser and Advisory Corp. since June 1995, and has been employed by the
Adviser since 1986. He has been affiliated with the Fund since May 1999.

Jeff D. New is co-manager for the day-to-day management of the Fund's investment
portfolio. Mr. New has been a Senior Vice President and Senior Portfolio Manager
of the Adviser since December 1997. Prior to December 1997, he was a Vice
President and Portfolio Manager of the Adviser. Prior to December 1994, Mr. New
was an Associate Portfolio Manager of the Adviser. He has been affiliated with
the Fund since May 2000.

PURCHASE OF SHARES

GENERAL

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

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

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

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

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

10
<PAGE> 12

("NASDAQ"), and, if there has been no sale that day, at the mean between the
last reported bid and asked prices, (iii) valuing unlisted securities at the
mean between the last reported bid and asked prices obtained from reputable
brokers and (iv) valuing any securities for which market quotations are not
readily available and any other assets at fair value as determined in good faith
by the Adviser in accordance with procedures established by the Fund's Board of
Trustees. Securities with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.

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

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

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

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

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

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

11
<PAGE> 13

CLASS A SHARES

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

CLASS A SHARES

SALES CHARGE SCHEDULE

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

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

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

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

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

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

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

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

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

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
contingent deferred sales charge

12
<PAGE> 14

of 1.00% of the dollar amount subject to charge if redeemed within one year of
purchase.

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

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

CONVERSION FEATURE

Class B Shares purchased on or after June 1, 1996, including Class B Shares
received from reinvestment of distributions through the dividend reinvestment
plan, automatically convert to Class A Shares eight years after the end of the
calendar month in which the shares were purchased. Class B Shares purchased
before June 1, 1996, including Class B Shares received from reinvestment of
distributions through the dividend reinvestment plan, automatically convert to
Class A Shares six years after the end of the calendar month in which the shares
were purchased. Class C Shares purchased before January 1, 1997, including Class
C Shares received from reinvestment of distributions through the dividend
reinvestment plan, automatically convert to Class A Shares ten years after the
end of the calendar month in which the shares were purchased. Such conversion
will be on the basis of the relative net asset values per share, without the
imposition of any sales load, fee or other charge. The conversion schedule
applicable to a share of the Fund acquired through the exchange privilege from
another Van Kampen fund participating in the exchange program is determined by
reference to the Van Kampen fund from which such share was originally purchased.

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

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

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

QUANTITY DISCOUNTS

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

13
<PAGE> 15

discounts, investors should contact their authorized dealer or the Distributor.

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

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

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

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

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

OTHER PURCHASE PROGRAMS

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

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

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

14
<PAGE> 16

data for each investor participating in the program in a computerized format
fully compatible with Investor Services' processing system.

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

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

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

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

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

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

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

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

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

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

15
<PAGE> 17

under certain uniform criteria established by the Distributor from time to
time. A commission will be paid to authorized dealers who initiate and are
responsible for such purchases within a rolling twelve-month period as
follows: 1.00% on sales to $2 million, plus 0.80% on the next $1 million,
plus 0.50% on the next $47 million, plus 0.25% on the excess over $50
million.

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

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

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

REDEMPTION OF
SHARES

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

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

16
<PAGE> 18

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

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

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

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

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

17
<PAGE> 19

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

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

DISTRIBUTIONS FROM THE FUND

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

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

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

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

SHAREHOLDER SERVICES

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

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

18
<PAGE> 20

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

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

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

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

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

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

19
<PAGE> 21

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

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

FEDERAL INCOME TAXATION

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

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

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

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

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

20
<PAGE> 22

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

21
<PAGE> 23

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information for the fiscal year ended June 30, 2000 has been audited by Ernst &
Young LLP, independent auditors, whose report, along with the Fund's most recent
financial statements, is included in the Statement of Additional Information and
may be obtained by shareholders without charge by calling the telephone number
on the back cover of this prospectus. The information for the fiscal years ended
June 30, 1999, 1998, 1997 and 1996 has been audited by PricewaterhouseCoopers
LLP. This information should be read in conjunction with the financial
statements and notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
Class A Shares
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period.................... $15.471 $14.971 $13.872 $11.92 $11.62
-------- -------- -------- -------- --------
Net Investment Income/Loss................................. .110 .117 .122 .132 .12
Net Realized and Unrealized Gain........................... .464 1.743 3.541 3.191 2.09
-------- -------- -------- -------- --------

Total from Investment Operations............................ .574 1.860 3.663 3.323 2.21
-------- -------- -------- -------- --------

Less:
Distribution from and in Excess of Net Investment Income... .120 .106 .144 .121 .15
Distributions from Net Realized Gain....................... 2.292 1.254 2.420 1.250 1.76
-------- -------- -------- -------- --------
Total Distributions......................................... 2.412 1.360 2.564 1.371 1.91
-------- -------- -------- -------- --------

Net Asset Value, End of the Period.......................... $13.634 $15.471 $14.971 $13.872 $11.92
======== ======== ======== ======== ========

Total Return................................................ 4.01%(b) 13.65%(b) 29.89%(b) 30.06%(b) 20.48%(b)
Net Assets at End of the Period (In millions)............... $3,542.4 $3,905.1 $3,661.4 $2,992.2 $2,534.3
Ratio of Expenses to Average Net Assets(e).................. .82% .83% .88% .97% .94%
Ratio of Net Investment Income to Average Net Assets(e)..... .72% .78% .80% 1.01% 1.02%
Portfolio Turnover.......................................... 71% 94% 67% 144% 213%

--------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of the Period.................... $15.239 $14.766 $13.730 $11.81 $11.53
------- ------- ------- ------- ------
Net Investment Income/Loss................................. (.011) .005 .045 .046 .02
Net Realized and Unrealized Gain........................... .467 1.722 3.466 3.151 2.07
------- ------- ------- ------- ------
Total from Investment Operations............................ .456 1.727 3.511 3.197 2.09
------- ------- ------- ------- ------
Less:
Distribution from and in Excess of Net Investment Income... -0- -0- .055 .027 .05
Distributions from Net Realized Gain....................... 2.292 1.254 2.420 1.250 1.76
------- ------- ------- ------- ------
Total Distributions......................................... 2.292 1.254 2.475 1.277 1.81
------- ------- ------- ------- ------
Net Asset Value, End of the Period.......................... $13.403 $15.239 $14.766 $13.730 $11.81
======= ======= ======= ======= ======
Total Return................................................ 3.20%(c) 12.79%(c) 28.92%(c) 29.08%(c) 19.44%(c)
Net Assets at End of the Period (In millions)............... $137.7 $151.8 $140.3 $95.5 $72.1
Ratio of Expenses to Average Net Assets(e).................. 1.62% 1.61% 1.66% 1.74% 1.75%
Ratio of Net Investment Income to Average Net Assets(e)..... (.06%) 0% .03% .23% .21%
Portfolio Turnover.......................................... 71% 94% 67% 144% 213%

--------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of the Period.................... $15.280 $14.787 $13.752 $11.83 $11.52
------- ------- ------- ------- ------
Net Investment Income/Loss................................. (.028) .002 .028 .036 .02
Net Realized and Unrealized Gain........................... .471 1.745 3.482 3.163 2.10
------- ------- ------- ------- ------
Total from Investment Operations............................ .443 1.747 3.510 3.199 2.12
------- ------- ------- ------- ------
Less:
Distribution from and in Excess of Net Investment Income... -0- -0- .055 .027 .05
Distributions from Net Realized Gain....................... 2.292 1.254 2.420 1.250 1.76
------- ------- ------- ------- ------
Total Distributions......................................... 2.292 1.254 2.475 1.277 1.81
------- ------- ------- ------- ------
Net Asset Value, End of the Period.......................... $13.431 $15.280 $14.787 $13.752 $11.83
======= ======= ======= ======= ======
Total Return................................................ 3.13%(d) 12.91%(d) 28.87%(d) 29.04%(d) 19.74%(d)
Net Assets at End of the Period (In millions)............... $17.7 $13.0 $11.7 $7.0 $4.5
Ratio of Expenses to Average Net Assets(e).................. 1.62% 1.61% 1.66% 1.74% 1.75%
Ratio of Net Investment Income to Average Net Assets(e)..... (.10%) .01% .04% .23% .15%
Portfolio Turnover.......................................... 71% 94% 67% 144% 213%
</TABLE>

(a) Based on average shares outstanding.

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

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

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

(e) For the years ended June 30, 1996 and June 30, 1997, the impact on the
Ratios of Expenses and Net Investment Income to Average Net Assets due to
the Adviser's reimbursement of certain expenses was less than 0.01%.

See Financial Statements and Notes thereto

22
<PAGE> 24

BOARD OF TRUSTEES
AND OFFICERS

BOARD OF TRUSTEES

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

OFFICERS

Richard F. Powers, III*
President

Stephen L. Boyd*

Executive Vice President and Chief Investment Officer

A. Thomas Smith III*
Vice President and Secretary

John H. Zimmermann, III*

Vice President

Michael H. Santo*
Vice President

Richard A. Ciccarone*

Vice President

John R. Reynoldson*

Vice President

John L. Sullivan*

Vice President, Chief Financial Officer and Treasurer

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

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

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

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

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

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

Custodian
STATE STREET BANK AND TRUST COMPANY

225 Franklin Street, PO Box 1713

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

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

Independent Auditors

ERNST & YOUNG LLP

233 South Wacker Drive

Chicago, IL 60606

<PAGE> 25

VAN KAMPEN
PACE FUND

PROSPECTUS

OCTOBER 27, 2000

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

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

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

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

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-1792.
PACE PRO 10/00

<PAGE> 26

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
PACE FUND

Van Kampen Pace Fund (the "Fund") is a mutual fund with the investment
objective to seek capital growth. The Fund's investment adviser seeks to achieve
the Fund's investment objective by investing in a portfolio of securities
consisting primarily of common stocks of companies that the Fund's investment
adviser believes have above-average potential for capital growth.

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

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

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective, Policies and Risks.................... B-3
Options, Futures Contracts and Related Options.............. B-6
Investment Restrictions..................................... B-12
Trustees and Officers....................................... B-16
Investment Advisory Agreement............................... B-25
Other Agreements............................................ B-26
Distribution and Service.................................... B-26
Transfer Agent.............................................. B-30
Portfolio Transactions and Brokerage Allocation............. B-30
Shareholder Services........................................ B-32
Redemption of Shares........................................ B-35
Contingent Deferred Sales Charge-Class A.................... B-35
Waiver of Class B and Class C Contingent Deferred Sales
Charges................................................... B-36
Taxation.................................................... B-38
Fund Performance............................................ B-42
Other Information........................................... B-45
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-13
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED OCTOBER 27, 2000

<PAGE> 27

GENERAL INFORMATION

The Fund was originally incorporated in Delaware on December 2, 1968 under
the name American Capital Pace Fund, Inc. The Fund was reincorporated by merger
into a Maryland corporation on December 30, 1982, under the same name. As of
August 31, 1995, the Fund was reorganized as a series of the Trust under the
name Van Kampen American Capital Pace Fund. The Trust is a business trust
organized under the laws of the State of Delaware. On July 14, 1998, the Fund
and the Trust adopted their present names.

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

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

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

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

The Fund does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of a majority of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the

B-2
<PAGE> 28

extent required by the Investment Company Act of 1940, as amended (the "1940
Act"), or rules or regulations promulgated by the Securities and Exchange
Commission ("SEC").

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

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

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

As of October 6, 2000, no person was known by the Fund to own beneficially
or to hold of record 5% or more of the outstanding Class A Shares, Class B
Shares or Class C Shares of the Fund except as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF
OF RECORD HOLDER CLASS OF SHARES SHARES HELD PERCENT OF CLASS
---------------- --------------- ----------- ----------------
<S> <C> <C> <C>
Van Kampen Trust Company A 125,837,091 49.80%
2800 Post Oak Blvd. B 3,302,674 33.59%
Houston, TX 77056 C 228,144 19.24%
Edward Jones & Co. C 137,226 11.57%
Attn: Mutual Fund
Shareholder Accounting
201 Progress Pkwy
Maryland Heights, MO 63043-3009
</TABLE>

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

INVESTMENT OBJECTIVE, POLICIES AND RISKS

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

B-3
<PAGE> 29

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with broker-dealers, banks and
other financial institutions in order to earn a return on temporarily available
cash. The Fund may invest an amount up to 25% of its total assets in securities
subject to repurchase agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a
security and the seller agrees to repurchase the obligation at a future time and
set price, thereby determining the yield during the holding period. Repurchase
agreements involve certain risks in the event of default by the other party. The
Fund may enter into repurchase agreements with broker-dealers, banks and other
financial institutions deemed to be creditworthy by the Adviser under guidelines
approved by the Fund's Board of Trustees. The Fund will not invest in repurchase
agreements maturing in more than seven days if any such investment, together
with any other illiquid securities held by the Fund, would exceed the Fund's
limitation on illiquid securities described herein. The Fund does not bear the
risk of a decline in the value of the underlying security unless the seller
defaults under its repurchase obligation. In the event of the bankruptcy or
other default of a seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying securities and losses including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible lack of access to
income on the underlying security during this period; and (c) expenses of
enforcing its rights.

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

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

PORTFOLIO TURNOVER

The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Fund's portfolio securities during such fiscal year.

B-4
<PAGE> 30

ILLIQUID SECURITIES

The Fund may invest up to 10% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of longer than seven days, and generally includes
securities that are restricted from sale to the public without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The sale of such
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of liquid
securities trading on national securities exchanges or in the over-the-counter
markets. Restricted securities are often purchased at a discount from the market
price of unrestricted securities of the same issuer reflecting the fact that
such securities may not be readily marketable without some time delay.
Investments in securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Adviser in
accordance with procedures approved by the Fund's Board of Trustees. Ordinarily,
the Fund would invest in restricted securities only when it receives the
issuer's commitment to register the securities without expense to the Fund.
However, registration and underwriting expenses (which typically range from 7%
to 15% of the gross proceeds of the securities sold) may be paid by the Fund.
Restricted securities which can be offered and sold to qualified institutional
buyers under Rule 144A under the 1933 Act ("144A Securities") and are determined
to be liquid under guidelines adopted by and subject to the supervision of the
Fund's Board of Trustees are not subject to the limitation on illiquid
securities. Such 144A Securities are subject to monitoring and may become
illiquid to the extent qualified institutional buyers become, for a time,
uninterested in purchasing such securities. Factors used to determine whether
144A Securities are liquid include, among other things, a security's trading
history, the availability of reliable pricing information, the number of dealers
making quotes or making a market in such security and the number of potential
purchasers in the market for such security. For purposes hereof, investments by
the Fund in securities of other investment companies will not be considered
investments in restricted securities to the extent permitted by (i) the 1940
Act, as amended from time to time, (ii) the rules and regulations promulgated by
the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption
or other relief (such as "no action" letters issued by the staff of the SEC
interpreting or providing guidance on the 1940 Act or regulations thereunder)
from the provisions of the 1940 Act, as amended from time to time.

FOREIGN SECURITIES

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

B-5
<PAGE> 31

available for an unsponsored ADR than about a sponsored ADR and financial
information about a company may not be as reliable for an unsponsored ADR as it
is for a sponsored ADR. The Fund may invest in ADRs through both sponsored and
unsponsored arrangements. EDRs are receipts issued in Europe by banks or
depositaries which evidence similar ownership arrangement.

OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS

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

SELLING CALL AND PUT OPTIONS

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

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

The purchaser of a put option pays a premium to the seller (i.e., the
writer) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would sell put options only on
a secured basis, which means that, at all times during the option period, the
Fund would maintain in a segregated account with its custodian cash or liquid
securities in an amount of not less than the exercise price of the option, or
would hold a put on the same underlying security at an equal or greater exercise
price.

Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously sold by the

B-6
<PAGE> 32

Fund. The Fund would realize a gain (loss) if the premium plus commission paid
in the closing purchase transaction is lesser (greater) than the premium it
received on the sale of the option. The Fund would also realize a gain if an
option it has written lapses unexercised.

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

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

PURCHASING CALL AND PUT OPTIONS

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

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

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

B-7
<PAGE> 33

OPTIONS ON STOCK INDICES

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

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

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

FUTURES CONTRACTS

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

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

Currently, stock index futures contracts can be purchased with respect to
several indices on various exchanges. Differences in the stocks included in the
indices may result in differences in correlation of the futures contracts with
movements in the value of the securities being hedged.

An interest rate futures contract is an agreement pursuant to which a party
agrees to take or make delivery of a specified debt security (such as U.S.
Treasury bonds or notes) at a specified future time and at a specified price.
The Fund also may invest in foreign stock index futures traded outside the
United States which involve additional risks including fluctuations in foreign
exchange rates, foreign currency exchange controls, political and economic
instability, differences in financial reporting and securities regulation and
trading, and foreign taxation issues.

B-8
<PAGE> 34

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

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

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

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

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

There may be an imperfect correlation (or no correlation) between movements
in the price of the futures contracts and of the securities being hedged. The
risk of imperfect correlation increases as the composition of the securities
being hedged diverges from the securities upon which the futures contract is
based. If the price of the futures contract

B-9
<PAGE> 35

moves less than the price of the securities being hedged, the hedge will not be
fully effective. To compensate for the imperfect correlation, the Fund could buy
or sell futures contracts in a greater dollar amount than the dollar amount of
securities being hedged if the historical volatility of the securities being
hedged is greater than the historical volatility of the securities underlying
the futures contract. Conversely, the Fund could buy or sell futures contracts
in a lesser dollar amount than the dollar amount of securities being hedged if
the historical volatility of the securities being hedged is less than the
historical volatility of the securities underlying the futures contracts. It is
also possible that the value of futures contracts held by the Fund could decline
at the same time as portfolio securities being hedged; if this occurred, the
Fund would lose money on the futures contract in addition to suffering a decline
in value in the portfolio securities being hedged.

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

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

Successful use of futures is also subject to the Adviser's ability to
correctly predict the direction of movements in the market. For example, if the
Fund hedges against a decline in the market, and market prices instead advance,
the Fund will lose part or all of the benefit of the increase in value of its
securities holdings because it will have offsetting losses in futures contracts.
In such cases, if the Fund has insufficient cash, it may have to sell portfolio
securities at a time when it is disadvantageous to do so in order to meet the
daily variation margin.

Although the Fund intends to enter into futures contracts only if there is
an active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time. Most U.S. futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that

B-10
<PAGE> 36

day at a price beyond that limit. It is possible that futures contract prices
would move to the daily limit for several consecutive trading days with little
or no trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the value of
the portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. However, as described above, there is no
guarantee that the price of the securities being hedged will, in fact, correlate
with the price movements in a futures contract and thus provide an offset to
losses on the futures contract.

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

OPTIONS ON FUTURES CONTRACTS

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

Risks of Transactions in Options on Futures Contracts. In addition to the
risks described above which apply to all options transactions, there are several
special risks relating to options on futures. The Adviser will not purchase
options on futures on any exchange unless in the Adviser's opinion, a liquid
secondary exchange market for such options exists. Compared to the use of
futures, the purchase of options on futures involves less potential risk to the
Fund because the maximum amount at risk is the premium paid for the options
(plus transaction costs). However, there may be circumstances, such as when
there is no movement in the price of the underlying security or index, when the
use of an option on a future would result in a loss to the Fund when the use of
a future would not.

B-11
<PAGE> 37

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

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

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

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

Many derivative transactions, in addition to other requirements, require
that the Fund segregate cash and liquid securities with its custodian to the
extent the Fund's obligations are not otherwise "covered" as described above. In
general, either the full amount of any obligation by the Fund to pay or deliver
securities or assets must be covered at all times by the securities, instruments
or currency required to be delivered (or securities convertible into the needed
securities without additional consideration), or, subject to applicable
regulatory restrictions, an amount of cash or liquid securities at least equal
to the current amount of the obligation must be segregated 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. In
the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
cash and liquid securities sufficient to meet its obligation to purchase or
provide securities or currencies, or to pay the amount owed at the expiration of
an index-based futures contract. Derivative transactions may be covered by other
means when consistent with applicable regulatory policies. The Fund may also
enter into offsetting transactions so that its combined position, coupled with
any segregated cash and liquid securities, equals its net outstanding
obligation.

INVESTMENT RESTRICTIONS

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

B-12
<PAGE> 38

limitations apply at the time of purchase and on an ongoing basis. These
restrictions provide that the Fund shall not:

1. Make loans, except that the Fund may purchase bonds, debentures or
other debt securities of the type commonly offered privately to, and
purchased by, financial institutions in an amount not exceeding 10% of
its total assets, and except that the Fund may invest in repurchase
agreements in an amount not exceeding 25% of its total assets. The
purchase of publicly distributed bonds and debentures shall not
constitute the making of loans.

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

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

4. Invest in real estate (although the Fund may acquire securities of
issuers that invest in real estate), commodities or commodity contracts
except that the Fund may enter into transactions in futures contracts
or related options.

5. Invest in securities of a company for the purpose of exercising control
of management, although the Fund retains the right to vote securities
held by it; except that the Fund may purchase securities of other
investment companies to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated
by the SEC under the 1940 Act, as amended from time to time or (iii) an
exemption or other relief from the provisions of the 1940 Act, as
amended from time to time.

6. Engage in the underwriting of securities of other issuers, except that
in connection with the disposal of an investment position the Fund may
be deemed to be an "underwriter" as that term is defined under the
Securities Act of 1933 (the "1933 Act").

7. Make any investment which would cause more than 25% of its assets to be
invested in securities issued by companies principally engaged in any
one industry, provided, however, that this limitation excludes shares
of other open-end investment companies owned by the Fund but includes
the Fund's pro rata portion of the securities and other assets owned by
any such company;

8. With respect to 75% of its assets, invest more than 5% of its assets in
the securities of any one issuer (except the United States government)
or purchase more than 10% of the outstanding voting securities of any
one issuer; except that the Fund may purchase securities of other
investment companies without regard to such limitation to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the

B-13
<PAGE> 39

1940 Act, as amended from time to time or (iii) an exemption or other
relief from the provisions of the 1940 Act, as amended from time to
time.

9. Pledge any of its assets, except that the Fund may pledge assets having
a value of not more than 10% of its total assets in order to secure
permitted borrowings from banks. Such borrowings may not exceed 5% of
the value of the Fund's assets and can be made only as a temporary
measure for extraordinary or emergency purposes. Notwithstanding the
foregoing, the Fund may engage in transactions in options, futures
contracts or related options, segregate or deposit assets to cover or
secure options written and make margin deposits and payments for
futures contracts and related options.

10. Invest more than 10% of its net assets (determined at the time of
investment) in illiquid securities, securities for which market
quotations are not readily available, and repurchase agreements which
have a maturity of longer than seven days.

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

The Fund is subject to the following policies, which may be amended by its Board
of Trustees. In addition to such policies set forth in the Fund's Prospectus,
the Fund shall not:

1. Make short sales, unless at the time of the sale it owns an equal
amount of such securities.

2. Invest more than 5% of its net assets in warrants or rights valued at
the lower of cost or market, nor more than 2% of its net assets in
warrants or rights (valued on such basis) which are not listed on the
New York or American Stock Exchanges. Warrants or rights acquired in
units or attached to other securities are not subject to the foregoing
limitation.

3. Purchase securities on margin, but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. Notwithstanding the foregoing, the Fund may engage in
transactions in options, futures and related options, segregate or
deposit assets to cover or secure options written on long futures
positions and make margin deposits and payments for futures contracts
and related options.

4. Invest in interests in oil, gas, mineral exploration or development
programs, although the Fund may acquire securities of companies that
engage in these businesses.

5. Invest more than 5% of its assets in the securities of any one issuer
other than the United States government except that the Fund may invest
in other investment companies without regard to such limitation to the
extent permitted by (i) the 1940 Act as amended from time to time, (ii)
the rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or

B-14
<PAGE> 40

(iii) an exemption or other relief from the provisions of the 1940 Act,
as amended from time to time.

6. Invest in the securities of a foreign issuer if, at the time of
acquisition, more than 25% of the value of the Fund's total assets
would be invested in such securities. Foreign investments may be
subject to special risks, including future political and economic
developments, the possible imposition of additional withholding taxes
on dividend or interest income payable on the securities, or the
seizure or nationalization of companies, or establishment of exchange
controls or adoption of other restrictions which might adversely affect
the investment.

7. Invest more than 5% of the market value of its total assets in
companies having a record, together with predecessors, of less than
three years continuous operation and in securities not having readily
available market quotations provided except that the Fund may invest in
other investment companies without regard to such limitation to the
extent permitted by (i) the 1940 Act as amended from time to time, (ii)
the rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act, as amended from time to time.

8. Make any investment which would cause 25% or more of its assets to be
invested in securities issued by companies principally engaged in any
one industry, provided, however, that this limitation excludes shares
of other open-end investment companies owned by the Fund but includes
the Fund's pro rata portion of the securities and other assets owned by
any such company.

B-15
<PAGE> 41

TRUSTEES AND OFFICERS

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

TRUSTEES

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of
1632 Morning Mountain Road the funds in the Fund Complex. Co-founder, and
Raleigh, NC 27614 prior to August 1996, Chairman, Chief Executive
Date of Birth: 07/14/32 Officer and President, MDT Corporation (now
Age: 68 known as Getinge/Castle, Inc., a subsidiary of
Getinge Industrier AB), a company which
develops, manufactures, markets and services
medical and scientific equipment.
Jerry D. Choate........................... Director of Amgen Inc., a biotechnological
53 Monarch Bay Drive company, and Values Energy Corporation, an
Dana Point, CA 92629 independent refining company. Trustee/Director
Date of Birth: 09/16/38 of each of the funds in the Fund Complex. Prior
Age: 62 to January 1999, Chairman and Chief Executive
Officer of The Allstate Corporation
("Allstate") and Allstate Insurance Company.
Prior to January 1995, President and Chief
Executive Officer of Allstate. Prior to August
1994, various management positions at Allstate.
Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an
Sears Tower executive search firm. Trustee/Director of each
233 South Wacker Drive of the funds in the Fund Complex. Prior to
Suite 7000 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management consulting
Date of Birth: 06/03/48 firm. Formerly, Executive Vice President of ABN
Age: 52 AMRO, N.A., a Dutch bank holding company. Prior
to 1992, Executive Vice President of La Salle
National Bank. Trustee on the University of
Chicago Hospitals Board, Vice Chair of the
Board of The YMCA of Metropolitan Chicago and a
member of the Women's Board of the University
of Chicago. Prior to 1996, Trustee of The
International House Board, a fellowship and
housing organization for international graduate
students.
</TABLE>

B-16
<PAGE> 42

<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
11 DuPont Circle, N.W. the United States, an independent U.S.
Washington, D.C. 20016 foundation created to deepen understanding,
Date of Birth: 02/29/52 promote collaboration and stimulate exchanges
Age: 48 of practical experience between Americans and
Europeans. Trustee/Director of each of the
funds in the Fund Complex. Formerly, advisor to
the Dennis Trading Group Inc., a managed
futures and option company that invests money
for individuals and institutions. Prior to
1992, President and Chief Executive Officer,
Director and Member of the Investment Committee
of the Joyce Foundation, a private foundation.
Mitchell M. Merin*........................ President and Chief Operating Officer of Asset
Two World Trade Center Management of Morgan Stanley Dean Witter since
66th Floor December 1998. President and Director since
New York, NY 10048 April 1997 and Chief Executive Officer since
Date of Birth: 08/13/53 June 1998 of Morgan Stanley Dean Witter
Age: 47 Advisors Inc. and Morgan Stanley Dean Witter
Services Company Inc. Chairman, Chief Executive
Officer and Director of Morgan Stanley Dean
Witter Distributors Inc. since June 1998.
Chairman and Chief Executive Officer since June
1998, and Director since January 1998, of
Morgan Stanley Dean Witter Trust FSB. Director
of various Morgan Stanley Dean Witter
subsidiaries. President of the Morgan Stanley
Dean Witter Funds since May 1999.
Trustee/Director of each of the funds in the
Fund Complex. Previously Chief Strategic
Officer of Morgan Stanley Dean Witter Advisors
Inc. and Morgan Stanley Dean Witter Services
Company Inc. and Executive Vice President of
Morgan Stanley Dean Witter Distributors Inc.
April 1997-June 1998, Vice President of the
Morgan Stanley Dean Witter Funds May 1997-April
1999, and Executive Vice President of Dean
Witter, Discover & Co.
Jack E. Nelson............................ President and owner, Nelson Investment Planning
423 Country Club Drive Services, Inc., a financial planning company
Winter Park, FL 32789 and registered investment adviser in the State
Date of Birth: 02/13/36 of Florida. President and owner, Nelson Ivest
Age: 64 Brokerage Services Inc., a member of the
National Association of Securities Dealers,
Inc. and Securities Investors Protection Corp.
Trustee/Director of each of the funds in the
Fund Complex.
</TABLE>

B-17
<PAGE> 43

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Richard F. Powers, III*................... Chairman, President and Chief Executive Officer
1 Parkview Plaza of Van Kampen Investments. Chairman, Director
P.O. Box 5555 and Chief Executive Officer of the Advisers,
Oakbrook Terrace, IL 60181-5555 the Distributor, Van Kampen Advisors Inc. and
Date of Birth: 02/02/46 Van Kampen Management Inc. Director and officer
Age: 54 of certain other subsidiaries of Van Kampen
Investments. Chief Sales and Marketing Officer
of Morgan Stanley Dean Witter Asset Management
Inc. Trustee/Director and President of each of
the funds in the Fund Complex. Trustee,
President and Chairman of the Board of other
investment companies advised by the Advisers
and their affiliates, and Chief Executive
Officer of Van Kampen Exchange Fund. Prior to
May 1998, Executive Vice President and Director
of Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and Dean
Witter Realty. Prior to 1996, Director of Dean
Witter Reynolds Inc.
Phillip B. Rooney......................... Vice Chairman (since April 1997) and Director
One ServiceMaster Way (since 1994) of The ServiceMaster Company, a
Downers Grove, IL 60515 business and consumer services company.
Date of Birth: 07/08/44 Director of Illinois Tool Works, Inc., a
Age: 56 manufacturing company and the Urban Shopping
Centers Inc., a retail mall management company.
Trustee, University of Notre Dame.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of Stone
Smurfit Container Corp., a paper manufacturing
company. From May 1996 through February 1997 he
was President, Chief Executive Officer and
Chief Operating Officer of Waste Management,
Inc., an environmental services company, and
from November 1984 through May 1996 he was
President and Chief Operating Officer of Waste
Management, Inc.

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

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

B-18
<PAGE> 44

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Suzanne H. Woolsey........................ Chief Operating Officer of the National Academy
2101 Constitution Ave., N.W. of Sciences/National Research Council, an
Room 206 independent, federally chartered policy
Washington, D.C. 20418 institution, since 1993. Director of Neurogen
Date of Birth: 12/27/41 Corporation, a pharmaceutical company, since
Age: 58 January 1998. Director of the German Marshall
Fund of the United States, Trustee of Colorado
College, and Vice Chair of the Board of the
Council for Excellence in Government. Trustee/
Director of each of the funds in the Fund
Complex. Prior to 1993, Executive Director of
the Commission on Behavioral and Social
Sciences and Education at the National Academy
of Sciences/National Research Council. From
1980 through 1989, Partner of Coopers &
Lybrand.
</TABLE>

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

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

B-19
<PAGE> 45

OFFICERS

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

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

A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Investments,
Age: 43 the Advisers, Van Kampen Advisors Inc., Van Kampen
Vice President and Secretary Management Inc., the Distributor, American Capital
Contractual Services, Inc., Van Kampen Exchange
Corp., Van Kampen Recordkeeping Services Inc.,
Investor Services, Van Kampen Insurance Agency of
Illinois Inc. and Van Kampen System Inc. Vice
President and Secretary of each of the funds in the
Fund Complex and Vice President and Secretary/Vice
President, Principal Legal Officer and Secretary of
other investment companies advised by the Advisers
or their affiliates. Prior to January 1999, Vice
President and Associate General Counsel to New York
Life Insurance Company ("New York Life"), and prior
to March 1997, Associate General Counsel of New
York Life. Prior to December 1993, Assistant
General Counsel of The Dreyfus Corporation. Prior
to August 1991, Senior Associate, Willkie Farr &
Gallagher. Prior to January 1989, Staff Attorney at
the Securities and Exchange Commission, Division of
Investment Management, Office of Chief Counsel.

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

B-20
<PAGE> 46

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Stephen L. Boyd...................... Executive Vice President and Chief Investment
Date of Birth: 11/16/40 Officer of Van Kampen Investments, and President
Age: 59 and Chief Operating Officer of the Advisers.
Executive Vice President and Chief Executive Vice President and Chief Investment
Investment Officer Officer of each of the funds in the Fund Complex
and certain other investment companies advised by
the Advisers or their affiliates. Prior to April
2000, Executive Vice President and Chief Investment
Officer for Equity Investments of the Advisers.
Prior to October 1998, Vice President and Senior
Portfolio Manager with AIM Capital Management, Inc.
Prior to February 1998, Senior Vice President and
Portfolio Manager of Van Kampen American Capital
Asset Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American
Capital Management, Inc.

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

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

John L. Sullivan..................... Senior Vice President of Van Kampen Investments and
Date of Birth: 08/20/55 the Advisers. Vice President, Chief Financial
Age: 45 Officer and Treasurer of each of the funds in the
Vice President, Chief Financial Fund Complex and certain other investment companies
Officer and Treasurer advised by the Advisers or their affiliates.
</TABLE>

B-21
<PAGE> 47

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
John H. Zimmermann, III.............. Senior Vice President and Director of Van Kampen
Date of Birth: 11/25/57 Investments, President and Director of the
Vice President Distributor, and President of Van Kampen Insurance
Age: 42 Agency of Illinois Inc. Vice President of each of
the funds in the Fund Complex. From November 1992
to December 1997, Mr. Zimmermann was Senior Vice
President of the Distributor.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 60 operating funds in the Fund Complex. Each trustee/director who is not an
affiliated person of the Van Kampen Investments, the Advisers or the Distributor
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees/directors to defer receipt of their compensation
and earn a return on such deferred amounts. Deferring compensation has the
economic effect as if the Non-Affiliated Trustee reinvested his or her
compensation into the funds. Each fund in the Fund Complex provides a retirement
plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.

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

Under the deferred compensation plan, each Non-Affiliated Trustee generally
can elect to defer receipt of all or a portion of the compensation earned by
such Non-Affiliated Trustee until retirement. Amounts deferred are retained by
the Fund and earn a rate of return determined by reference to the return on the
common shares of such Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund Complex. To
the extent permitted by the 1940 Act, the Fund may invest in securities of those
funds selected by the Non-Affiliated Trustees in order to match the deferred
compensation obligation. The deferred compensation plan is not funded and
obligations thereunder represent general unsecured claims against the general
assets of the Fund.

Under the retirement plan, a Non-Affiliated Trustee who is receiving
compensation from such Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such retirement from such Fund.

B-22
<PAGE> 48

Non-Affiliated Trustees retiring prior to the age of 60 or with fewer than 10
years but more than 5 years of service may receive reduced retirement benefits
from such Fund. Each trustee/director has served as a member of the Board of
Trustees of the Fund since he or she was first appointed or elected in the year
set forth below. The retirement plan contains a Fund Complex retirement benefit
cap of $60,000 per year.

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

COMPENSATION TABLE

<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Aggregate Estimated
Pension or Maximum Total
Aggregate Retirement Annual Compensation
Year First Compensation Benefits Benefits from before
Appointed or before Accrued as the Fund Deferral from
Elected to Deferral from Part of Upon Fund
Name(1) the Board the Trust(2) Expenses(3) Retirement(4) Complex(5)
------- ------------ ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan 1991 $5,845 $40,303 $60,000 $126,200
Jerry D. Choate(1) 1999 5,845 0 60,000 88,700
Linda Hutton Heagy 1995 5,845 5,045 60,000 126,000
R. Craig Kennedy 1995 5,845 3,571 60,000 125,600
Jack E. Nelson 1995 5,845 21,664 60,000 126,000
Phillip B. Rooney 1997 5,845 7,787 60,000 113,400
Fernando Sisto 1991 5,845 72,060 60,000 126,000
Wayne W. Whalen 1995 5,845 15,189 60,000 126,000
Suzanne H. Woolsey(1) 1999 5,645 0 60,000 88,700
</TABLE>

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

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

(2) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Fund's fiscal year ended June 30, 2000. The
following trustees deferred compensation from the Fund during the fiscal
year ended June 30, 2000: Mr. Branagan, $5,845; Mr. Choate, $5,845; Ms.
Heagy, $5,845; Mr. Kennedy, $3,293; Mr. Nelson, $5,845; Mr. Rooney, $5,845;
Mr. Sisto, $2,922 and Mr. Whalen, $5,845. Amounts deferred are retained by
the Fund and earn a rate of return determined by reference to either the
return on the common shares of the Fund or other funds in the Fund Complex
as selected by the respective Non-Affiliated Trustee, with the same economic
effect as if such Non-Affiliated Trustee had invested in one or more funds
in the Fund Complex. To the extent permitted by the 1940 Act, each fund may
invest in securities of those funds selected by the Non-Affiliated Trustees
in order to match the deferred compensation obligation. The cumulative
deferred compensation (including interest) accrued with respect to each
trustee, including former trustees, from the Fund as of the Fund's fiscal
year ended June 30, 2000 is as follows: Mr. Branagan, $33,069; Mr. Choate,
$7,418; Mr. Gaughan, $894;

B-23
<PAGE> 49

Ms. Heagy, $30,305; Mr. Kennedy, $27,182; Mr. Miller, $8,253; Mr. Nelson,
$63,033; Mr. Rees, $59,296; Mr. Robinson, $21,862; Mr. Rooney, $34,048; Mr.
Sisto, $116,968 and Mr. Whalen, $43,544. The deferred compensation plan is
described above the Compensation Table.

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

(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
retirement plan is described above the Compensation Table.

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

The Fund, the Adviser and the Distributor have adopted Codes of Ethics
(collectively, the "Code of Ethics") that set forth general and specific
standards relating to the securities trading activities of their employees. The
Code of Ethics does not prohibit employees from acquiring securities that may be
purchased or held by the Fund, but is intended to ensure that all employees
conduct their personal transactions in a manner that does not interfere with the
portfolio transactions of the Fund or other Van Kampen funds, or that such
employees take unfair advantage of their relationship with the Fund. Among other
things, the Code of Ethics prohibits certain types of transactions absent prior
approval, imposes various trading restrictions (such as time periods during
which personal transactions may or may not be made) and requires quarterly
reporting of securities transactions and other matters. All reportable
securities transactions and other required reports are to be reviewed by
appropriate personnel for compliance with the Code of Ethics. Additional
restrictions apply to portfolio managers, traders, research analysts and others
who may have access to nonpublic information about the trading activities of the
Fund or other Van Kampen funds or who otherwise are involved in the investment

B-24
<PAGE> 50

advisory process. Exceptions to these and other provisions of the Code of Ethics
may be granted in particular circumstances after review by appropriate
personnel.

As of October 6, 2000, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

INVESTMENT ADVISORY AGREEMENT

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

The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Fund for any fiscal year exceed 1.5% of the first $30
million of the Fund's average daily net assets plus 1% of any excess over $30
million, the compensation due the Adviser will be reduced by the amount of such
excess and that, if a reduction in and refund of the advisory fee is
insufficient, the Adviser will pay the Fund monthly an amount sufficient to make
up the deficiency, subject to readjustment during the year. Ordinary business
expenses include the investment advisory fee and other operating costs paid by
the Fund except (1) interest and taxes, (2) brokerage commissions, (3) certain
litigation and indemnification expenses as described in the Advisory Agreement,
and (4) payments made by the Fund pursuant to the distribution plans.

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

During the fiscal years ended June 30, 2000, 1999 and 1998, the Adviser
received approximately $16,375,000, $16,204,200 and $15,236,400, respectively,
in advisory fees from the Fund.

B-25
<PAGE> 51

OTHER AGREEMENTS

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

During the fiscal years ended June 30, 2000, 1999 and 1998, Advisory Corp.
received approximately $428,400, $806,300 and $424,800, respectively, in
accounting services fees from the Fund.

DISTRIBUTION AND SERVICE

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

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal year ended June 30, 2000........................ $2,105,044 $312,348
Fiscal year ended June 30, 1999........................ $2,951,169 $347,428
Fiscal year ended June 30, 1998........................ $2,388,642 $373,660
</TABLE>

B-26
<PAGE> 52

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

CLASS A SHARES SALES CHARGE TABLE

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

* No sales charge is payable at the time of purchase on investments of $1
million or more, although the Fund may impose a contingent deferred sales
charge of 1.00% on certain redemptions made within one year of the purchase. A
commission or transaction fee will be paid by the Distributor at the time of
purchase directly out of the Distributor's assets (and not out of the Fund's
assets) to authorized dealers who initiate and are responsible for purchases
of $1 million or more computed on a percentage of the dollar value of such
shares sold as follows: 1.00% on sales to $2 million, plus 0.80% on the next
$1 million and 0.50% on the excess over $3 million. For single purchases of
$20 million or more by an individual retail investor the Distributor will pay,
at the time of purchase and directly out of the Distributor's assets (and not
out of the Fund's assets), a commission or transaction fee of 1.00% to
authorized dealers who initiate and are responsible for such purchases. The
commission or transaction fee of 1.00% will be computed on a percentage of the
dollar value of such shares sold.

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

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

In addition to reallowances or commissions described above, the Distributor
may from time to time implement programs under which an authorized dealer's
sales force may be eligible to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any authorized dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor, or participates in sales programs

B-27
<PAGE> 53

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

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

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

The Distributor must submit quarterly reports to the Board of Trustees of
the Trust, of which the Fund is a series, setting forth separately by class of
shares all amounts paid

B-28
<PAGE> 54

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

For Class A Shares in any given year in which the Plans are in effect, the
Plans generally provide for the Fund to pay the Distributor the lesser of (i)
the amount of the Distributor's actual expenses incurred during such year less
any deferred sales charges (if any) it received during such year (the "actual
net expenses") or (ii) the distribution and service fees at the rates specified
in the Prospectus (the "plan fees"). Therefore, to the extent the Distributor's
actual net expenses in a given year are less than the plan fees for such year,
the Fund only pays the actual net expenses. Alternatively, to the extent the
Distributor's actual net expenses in a given year exceed the plan fees for such
year, the Fund only pays the plan fees for such year. For Class A Shares, there
is no carryover of any unreimbursed actual net expenses to succeeding years.

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

Because of fluctuation in net asset value, the plan fees with respect to a
particular Class B Share or Class C Share may be greater or less than the amount
of the initial commission (including carrying cost) paid by the Distributor with
respect to such share. In such circumstances, a shareholder of a share may be
deemed to incur expenses attributable to other shareholders of such class. As of
June 30, 2000, there were $4,680,358 and $121,740 of unreimbursed
distribution-related expenses with respect to Class B Shares and Class C Shares,
respectively, representing 3.40% and 0.69% of the Fund's net assets attributable
to Class B Shares and Class C Shares, respectively. If the Plans are terminated
or not continued, the Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund or recovered
through contingent deferred sales charges.

B-29
<PAGE> 55

For the fiscal year ended June 30, 2000, the Fund's aggregate expenses paid
under the Plans for Class A Shares were $8,763,054 or 0.23% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Class A
shareholders and for administering the Class A Share Plans. For the fiscal year
ended June 30, 2000, the Fund's aggregate expenses paid under the Plans for
Class B Shares were $1,383,191 or 1.00% of the Class B Shares' average daily net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $1,027,208 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B Shares of the Fund and $355,983
for fees paid to financial intermediaries for servicing Class B shareholders and
administering the Class B Share Plans. For the fiscal year ended June 30, 2000,
the Fund's aggregate expenses paid under the Plans for Class C Shares were
$142,804 or 1.00% of the Class C Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments: $57,424 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C Shares of the Fund and $85,380 for fees paid to financial
intermediaries for servicing Class C shareholders and administering the Class C
Share Plans.

The Distributor has entered into agreements with the following firms: (i)
Merrill Lynch, Pierce, Fenner & Smith Inc., (ii) Salomon Smith Barney, Inc.,
(iii) The Prudential Insurance Company of America, (iv) Buck Consultants Inc.
and (v) The Vanguard Group, Inc. Shares of the Fund will be offered pursuant to
such firm's retirement plan alliance program(s). Trustees and other fiduciaries
of retirement plans seeking to invest in multiple fund families through a
broker-dealer retirement plan alliance program should contact the firms
mentioned above for further information concerning the program(s) including, but
not limited to, minimum size and operational requirements.

TRANSFER AGENT

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

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

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

The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more

B-30
<PAGE> 56

than one firm can offer comparable execution services. In selecting among such
firms, consideration may be given to those firms which supply research and other
services in addition to execution services. The Adviser is authorized to pay
higher commissions to brokerage firms that provide it with investment and
research information than to firms which do not provide such services if the
Adviser determines that such commissions are reasonable in relation to the
overall services provided. No specific value can be assigned to such research
services which are furnished without cost to the Adviser. Since statistical and
other research information is only supplementary to the research efforts of the
Adviser to the Fund and still must be analyzed and reviewed by its staff, the
receipt of research information is not expected to reduce its expenses
materially. The investment advisory fee is not reduced as a result of the
Adviser's receipt of such research services. Services provided may include (a)
furnishing advice as to the value of securities, the advisability of investing
in, purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; (b) furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody). Research services furnished by firms through
which the Fund effects its securities transactions may be used by the Adviser in
servicing all of its advisory accounts; not all of such services may be used by
the Adviser in connection with the Fund. The Adviser also may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Fund, the Adviser or the Distributor and with brokerage firms
participating in the distribution of the Fund's shares if it reasonably believes
that the quality of execution and the commission are comparable to that
available from other qualified firms. Similarly, to the extent permitted by law
and subject to the same considerations on quality of execution and comparable
commission rates, the Adviser may direct an executing broker to pay a portion or
all of any commissions, concessions or discounts to a firm supplying research or
other services.

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

Effective October 31, 1996, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") became an affiliate of the Adviser. Effective May 31, 1997, Dean
Witter Reynolds, Inc. ("Dean Witter") became an affiliate of the Adviser. The
Fund's Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the SEC under the 1940 Act which require that
the commissions paid to affiliates of the Fund must be reasonable and fair
compared to the commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time. The rule and procedures
also contain review requirements and require the Adviser to furnish reports to
the Trustees and to

B-31
<PAGE> 57

maintain records in connection with such reviews. After consideration of all
factors deemed relevant, the Trustees will consider from time to time whether
the advisory fee for the Fund will be reduced by all or a portion of the
brokerage commission given to affiliated brokers.

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated Brokers
------------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal year ended June 30, 2000........................... $5,667,305 $388,670 $ 0
Fiscal year ended June 30, 1999........................... $7,540,105 $164,100 $ 0
Fiscal year ended June 30, 1998........................... $5,141,222 $ 1,001 N/A
Fiscal year 2000 Percentages:
Commissions with affiliate to total commissions......... 6.86% 0%
Value of brokerage transactions with affiliate to total
transactions.......................................... 0% 0%
</TABLE>

During the fiscal year ended June 30, 2000, the Fund paid $4,196,165 in
brokerage commissions on transactions totaling $3,441,848,457 to brokers
selected primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

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

INVESTMENT ACCOUNT

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

SHARE CERTIFICATES

Generally, the Fund will not issue share certificates. However, upon
written or telephone request to the Fund, a share certificate will be issued
representing shares (with

B-32
<PAGE> 58

the exception of fractional shares) of the Fund. A shareholder will be required
to surrender such certificates upon an exchange or redemption of the shares
represented by the certificate. In addition, if such certificates are lost the
shareholder must write to Van Kampen Funds, Inc., c/o Investor Services, PO Box
218256, Kansas City, MO 64121-8256, requesting an "Affidavit of Loss" and obtain
a Surety Bond in a form acceptable to Investor Services. On the date the letter
is received, Investor Services will calculate the fee for replacing the lost
certificate equal to no more than 1.50% of the net asset value of the issued
shares, and bill the party to whom the replacement certificate was mailed.

RETIREMENT PLANS

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

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

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

DIVIDEND DIVERSIFICATION

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

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SYSTEMATIC WITHDRAWAL PLAN

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

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

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

EXCHANGE PRIVILEGE

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

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

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

REINSTATEMENT PRIVILEGE

A Class A Shareholder or Class B Shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption in
Class A Shares of the Fund. A Class C Shareholder who has redeemed shares of the
Fund may reinstate
B-34
<PAGE> 60

any portion or all of the net proceeds of such redemption in Class C Shares of
the Fund with credit given for any contingent deferred sales charge paid upon
such redemption. Such reinstatement is made at the net asset value per share
(without sales charge) next determined after the order is received, which must
be made within 180 days after the date of the redemption. Reinstatement at net
asset value per share is also offered to participants in those eligible
retirement plans held or administered by Van Kampen Trust Company for repayment
of principal (and interest) on their borrowings on such plans.

REDEMPTION OF SHARES

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

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

CONTINGENT DEFERRED SALES CHARGE-CLASS A

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

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<PAGE> 61

WAIVER OF CLASS B AND CLASS C

CONTINGENT DEFERRED SALES CHARGES

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

REDEMPTION UPON DEATH OR DISABILITY

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

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

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

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

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<PAGE> 62

REDEMPTION PURSUANT TO THE FUND'S SYSTEMATIC WITHDRAWAL PLAN

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

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

NO INITIAL COMMISSION OR TRANSACTION FEE

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

REINVESTMENT OF REDEMPTION PROCEEDS

A shareholder who has redeemed Class C Shares of the Fund may reinvest at
net asset value, with credit for any CDSC-Class C paid on the redeemed shares,
any portion or all of his or her redemption proceeds (plus that amount necessary
to acquire a fractional share to round off his or her purchase to the nearest
full share) in Class C Shares of the Fund, provided that the reinvestment is
effected within 180 days after such redemption and the shareholder has not
previously exercised this reinvestment privilege with respect to Class C Shares
of the Fund. Shares acquired in this manner will be deemed to have the original
cost and purchase date of the redeemed shares for purposes of applying the
CDSC-Class C to subsequent redemptions.

INVOLUNTARY REDEMPTIONS OF SHARES

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

REDEMPTION BY ADVISER

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

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<PAGE> 63

TAXATION

FEDERAL INCOME TAXATION OF THE FUND

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

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

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

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

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

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

B-38
<PAGE> 64

deferred and/or to recognize ordinary income that would otherwise have been
treated as capital gain.

DISTRIBUTIONS TO SHAREHOLDERS

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

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

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

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

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

Certain foreign currency gains or losses attributable to currency exchange
rate fluctuations are treated as ordinary income or loss. Such income or loss
may increase or decrease (or possibly eliminate) the Fund's income available for
distribution. If, under the rules governing the tax treatment of foreign
currency gains and losses, the Fund's income available for distribution is
decreased or eliminated, all or a portion of the dividends declared by the Fund
may be treated for federal income tax purposes as a return of capital

B-39
<PAGE> 65

or, in some circumstances, as capital gains. Generally, a shareholder's tax
basis in Fund shares will be reduced to the extent that an amount distributed to
such shareholder is treated as a return of capital.

SALE OF SHARES

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

CAPITAL GAINS RATES

The maximum tax rate applicable to net capital gains recognized by
individuals and other non-corporate taxpayers investing in the Fund is (i) the
same as the maximum ordinary income tax rate for capital assets held for one
year or less or (ii) 20% for capital assets held for more than one year. The
maximum long-term capital gains rate for corporations is 35%.

NON-U.S. SHAREHOLDERS

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

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

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<PAGE> 66

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

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

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

BACKUP WITHHOLDING

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

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

INFORMATION REPORTING

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

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<PAGE> 67

GENERAL

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

FUND PERFORMANCE

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

The total return of the Fund for a particular period represents the
increase (or decrease) in the value of a hypothetical investment in the Fund
from the beginning to the end of the period. Total return is calculated by
subtracting the value of the initial investment from the ending value and
showing the difference as a percentage of the initial investment; the
calculation assumes the initial investment is made at the current maximum public
offering price (which includes the maximum sales charge for Class A Shares);
that all income dividends or capital gain dividends during the period are
reinvested in Fund shares at net asset value; and that any applicable contingent
deferred sales charge has been paid. The Fund's total return will vary depending
on market conditions, the securities comprising the Fund's portfolio, the Fund's
operating expenses and unrealized net capital gains or losses during the period.
Since Class A Shares of the Fund were offered at a maximum sales charge of 8.50%
prior to June 12, 1989, actual Fund total return would have been somewhat less
than that computed on the basis of the current maximum sales charge. Total
return is based on historical earnings and asset value fluctuations and is not
intended to indicate future performance. No adjustments are made to reflect any
income taxes payable by shareholders on dividends or capital gain dividends paid
by the Fund or to reflect the fact that no 12b-1 fees were incurred prior to
October 1, 1989.

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

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

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

B-42
<PAGE> 68

the initial investment and expressing the result as a percentage.
Non-standardized total return will be calculated separately for each class of
shares.

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

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

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

In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds with the Consumer Price Index, the Dow
Jones Industrial Average, Standard & Poor's indices, NASDAQ Composite Index,
other appropriate indices of investment securities, or with investment or
savings vehicles. The performance information may also include evaluations of
the Fund published by nationally recognized ranking or rating services and by
nationally recognized financial publications. Such comparative performance
information will be stated in the same terms in which the comparative data or
indices are stated. Such advertisements and sales material may also include a
yield quotation as of a current period. In each case, such total return and
yield information, if any, will be calculated pursuant to rules established by
the SEC and will be computed separately for

B-43
<PAGE> 69

each class of the Fund's shares. For these purposes, the performance of the
Fund, as well as the performance of other mutual funds or indices, do not
reflect sales charges, the inclusion of which would reduce the Fund's
performance. The Fund will include performance data for each class of shares of
the Fund in any advertisement or information including performance data of the
Fund.

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

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

CLASS A SHARES

The Fund's average annual total return assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
June 30, 2000 was -1.95%, (ii) the five-year period ended June 30, 2000 was
17.79% and (iii) the ten-year period ended June 30, 2000 was 13.70%.

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 June 30, 2000 was 4,529.76%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to June 30, 2000 was 4,815.96%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended June 30, 2000 was -1.19%, (ii) the five-year period ended June 30,
2000 was 18.11% and (iii) the approximately eight-year, five-month period since
January 10, 1992, the commencement of distribution for Class B Shares of the
Fund, through June 30, 2000 was 13.87%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class B Shares from
January 12, 1992 (commencement of distribution for Class B Shares) to June 30,
2000 was 194.91%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
January 12, 1992 (commencement of distribution for Class B Shares) to June 30,
2000 was 194.91%.

B-44
<PAGE> 70

CLASS C SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended June 30, 2000 was 2.25%, (ii) the five-year period ended June 30,
2000 was 18.32% and (iii) the approximately six-year, ten-month period since
August 27, 1993, the commencement of distribution for Class C Shares of the
Fund, through June 30, 2000 was 15.39%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class C Shares from
August 27, 1993 (commencement of distribution for Class C Shares) to June 30,
2000 was 166.33%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
August 27, 1993 (commencement of distribution for Class C Shares) to June 30,
2000 was 166.33%.

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

OTHER INFORMATION

CUSTODY OF ASSETS

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

SHAREHOLDER REPORTS

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

INDEPENDENT AUDITORS

Independent auditors perform an annual audit of the financial statements of
the Fund. The Fund's Board of Trustees has engaged Ernst & Young LLP, located at
233 South Wacker Drive, Chicago, Illinois 60606, to be the independent auditors.
The change in independent auditors was approved by the Fund's audit committee
and the Fund's Board of Trustees, including Trustees who are not "interested
persons" of the Fund (as defined in the 1940 Act).

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

LEGAL COUNSEL

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

B-45
<PAGE> 71

REPORT OF INDEPENDENT AUDITORS

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

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Van Kampen Pace Fund (the "Fund"), as of June
30, 2000, and the related statement of operations, changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The statement of changes in net assets of the Fund for the year ended
June 30, 1999, and the financial highlights for each of the four years in the
period then ended were audited by other auditors whose report dated July 28,
1999, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosure in
the financial statements. Our procedures included confirmation of securities
owned as of June 30, 2000, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the 2000 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of June 30, 2000, the results of its operations, changes
in net assets and financial highlights for the year then ended, in conformity
with accounting principles generally accepted in the United States.

SIG

Chicago, Illinois
August 3, 2000

F-1
<PAGE> 72

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

June 30, 2000
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS 97.5%
CONSUMER DISTRIBUTION 4.5%
Best Buy Co., Inc. (a)..................................... 278,200 $ 17,596,150
Federated Department Stores, Inc. (a)...................... 225,800 7,620,750
Home Depot, Inc. .......................................... 580,800 29,003,700
Kohl's Corp. (a) .......................................... 276,000 15,352,500
Kroger Co. (a)............................................. 356,000 7,854,250
Limited, Inc. ............................................. 590,000 12,758,750
Safeway, Inc. (a).......................................... 605,000 27,300,625
Target Corp. .............................................. 106,200 6,159,600
Wal-Mart Stores, Inc. ..................................... 750,900 43,270,612
--------------
166,916,937
--------------
CONSUMER DURABLES 0.7%
Ford Motor Co. ............................................ 333,200 14,327,600
Harley-Davidson, Inc. ..................................... 285,000 10,972,500
Visteon Corp. ............................................. 1 11
--------------
25,300,111
--------------
CONSUMER NON-DURABLES 6.0%
Anheuser-Busch Cos., Inc. ................................. 331,500 24,758,906
Avon Products, Inc. ....................................... 424,000 18,868,000
Coca-Cola Co. ............................................. 739,000 42,446,313
Colgate-Palmolive Co. ..................................... 300,000 17,962,500
General Mills, Inc. ....................................... 521,100 19,932,075
Kimberly-Clark Corp. ...................................... 500,800 28,733,400
Nike, Inc., Class B........................................ 400,000 15,925,000
Pepsi Bottling Group, Inc. ................................ 460,000 13,426,250
PepsiCo, Inc. ............................................. 872,300 38,762,831
--------------
220,815,275
--------------
CONSUMER SERVICES 3.0%
Brinker International, Inc. (a)............................ 554,400 16,216,200
Harrah's Entertainment, Inc. (a)........................... 362,300 7,585,656
Park Place Entertainment Corp. (a)......................... 467,000 5,691,563
Starwood Hotels & Resorts Worldwide, Inc., Class B......... 714,000 23,249,625
Time Warner, Inc. ......................................... 412,900 31,380,400
Viacom, Inc., Class B (a).................................. 404,004 27,548,023
--------------
111,671,467
--------------
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 73

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
ENERGY 9.4%
Anadarko Petroleum Corp. .................................. 440,000 $ 21,697,500
Apache Corp. .............................................. 426,000 25,054,125
Baker Hughes, Inc. ........................................ 175,000 5,600,000
BJ Services Co. (a)........................................ 233,600 14,600,000
Chevron Corp. ............................................. 193,700 16,428,181
Coastal Corp. ............................................. 589,500 35,885,812
El Paso Energy Corp. ...................................... 262,600 13,376,188
Enron Corp. ............................................... 191,000 12,319,500
Exxon Mobil Corp. ......................................... 1,258,181 98,767,208
Phillips Petroleum Co. .................................... 233,700 11,845,669
Royal Dutch Petroleum Co.--ADR (Netherlands)............... 336,100 20,691,156
Schlumberger, Ltd. ........................................ 155,000 11,566,875
Smith International, Inc. (a).............................. 223,000 16,237,188
Texaco, Inc. .............................................. 139,200 7,412,400
Ultramar Diamond Shamrock Corp. ........................... 643,000 15,954,438
USX - Marathon Group....................................... 800,100 20,052,506
--------------
347,488,746
--------------
FINANCE 12.8%
Allstate Corp. ............................................ 671,000 14,929,750
American Express Co. ...................................... 439,300 22,898,512
American General Corp. .................................... 182,600 11,138,600
American International Group, Inc. ........................ 422,290 49,619,075
Associates First Capital Corp., Class A.................... 253,000 5,645,063
Bank of America Corp. ..................................... 611,179 26,280,697
Bank of New York Co., Inc. ................................ 470,000 21,855,000
Chase Manhattan Corp. ..................................... 606,450 27,934,603
CIGNA Corp. ............................................... 141,000 13,183,500
Citigroup, Inc. ........................................... 1,131,387 68,166,067
Federal Home Loan Mortgage Corp. .......................... 364,900 14,778,450
Federal National Mortgage Association...................... 357,900 18,677,906
Fleet Financial Corp. ..................................... 761,200 25,880,800
Franklin Resources, Inc. .................................. 288,900 8,775,338
JP Morgan & Co., Inc. ..................................... 96,000 10,572,000
Marsh & McLennan Cos., Inc. ............................... 106,000 11,070,375
MBNA Corp. ................................................ 481,900 13,071,538
Mellon Financial Corp. .................................... 461,500 16,815,906
Merrill Lynch & Co., Inc. ................................. 219,900 25,288,500
PNC Financial Services Group .............................. 345,000 16,171,875
Providian Financial Corp. ................................. 132,500 11,925,000
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 74

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
FINANCE (CONTINUED)
Schwab Charles Corp. ...................................... 456,900 $ 15,363,262
Wells Fargo Co. ........................................... 611,500 23,695,625
--------------
473,737,442
--------------
HEALTHCARE 11.7%
American Home Products Corp. .............................. 634,000 37,247,500
Amgen, Inc. (a)............................................ 403,000 28,310,750
Bristol-Myers Squibb Co. .................................. 346,700 20,195,275
Eli Lilly & Co. ........................................... 632,000 63,121,000
Johnson & Johnson.......................................... 387,000 39,425,625
MedImmune, Inc. (a)........................................ 247,000 18,278,000
Merck & Co., Inc. ......................................... 525,700 40,281,762
Pfizer, Inc. .............................................. 2,369,725 113,746,800
Pharmacia Corp. ........................................... 341,000 17,625,437
Schering-Plough Corp. ..................................... 425,700 21,497,850
UnitedHealth Group, Inc. .................................. 235,700 20,211,275
Wellpoint Health Networks, Inc., Class A (a)............... 151,400 10,967,038
--------------
430,908,312
--------------
PRODUCER MANUFACTURING 6.8%
Corning, Inc. ............................................. 148,000 39,941,500
General Electric Co. ...................................... 3,070,300 162,725,900
Johnson Controls, Inc. .................................... 225,900 11,591,494
Minnesota Mining & Manufacturing Co. ...................... 149,000 12,292,500
Tyco International Ltd. ................................... 505,000 23,924,375
--------------
250,475,769
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 0.6%
Sealed Air Corp. .......................................... 283,000 14,822,125
Westvaco Corp. ............................................ 290,000 7,195,625
--------------
22,017,750
--------------
TECHNOLOGY 35.0%
ADC Telecommunications, Inc. (a)........................... 314,000 26,336,750
Adobe Systems, Inc. ....................................... 104,000 13,520,000
Advanced Micro Devices, Inc. (a)........................... 168,000 12,978,000
Agilent Technologies, Inc. (a)............................. 103,511 7,633,936
Alcatel -- ADR (France).................................... 146,000 9,709,000
Altera Corp. (a)........................................... 292,000 29,765,750
America Online, Inc. (a)................................... 650,220 34,299,105
Analog Devices, Inc. (a)................................... 183,000 13,908,000
Apple Computer, Inc. (a)................................... 170,600 8,935,175
Applied Materials, Inc. (a)................................ 437,000 39,603,125
Atmel Corp. (a)............................................ 203,000 7,485,625
Cisco Systems, Inc. (a).................................... 2,356,800 149,804,100
Comverse Technology, Inc. (a).............................. 79,000 7,347,000
</TABLE>

See Notes to Financial Statements

F-4
<PAGE> 75

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Dell Computer Corp. (a).................................... 922,100 $ 45,471,056
EMC Corp. (a).............................................. 951,600 73,213,725
First Data Corp. .......................................... 305,000 15,135,625
Hewlett-Packard Co. ....................................... 271,400 33,891,075
Intel Corp. ............................................... 1,258,300 168,218,981
JDS Uniphase Corp. (a)..................................... 157,000 18,820,375
Linear Technology Corp. ................................... 226,000 14,449,875
LSI Logic Corp. (a)........................................ 333,600 18,056,100
Lucent Technologies, Inc. ................................. 368,200 21,815,850
Micron Technology, Inc. (a)................................ 702,000 61,819,875
Microsoft Corp. (a)........................................ 619,400 49,552,000
National Semiconductor Corp. (a)........................... 185,000 10,498,750
Network Appliance, Inc. (a)................................ 179,200 14,425,600
Nokia Corp.--ADR (Finland)................................. 816,800 40,788,950
Nortel Networks Corp. ..................................... 966,000 65,929,500
Oracle Corp. (a)........................................... 1,273,100 107,019,969
QUALCOMM, Inc. (a)......................................... 47,300 2,838,000
Sanmina Corp. (a).......................................... 218,600 18,690,300
STMicroelectronics NV--ADR (Netherlands)................... 425,000 27,279,688
Sun Microsystems, Inc. (a)................................. 444,000 40,376,250
Texas Instruments, Inc. ................................... 567,000 38,945,812
VERITAS Software Corp. (a)................................. 54,000 6,102,844
Xilinx, Inc. (a)........................................... 328,000 27,080,500
Yahoo!, Inc. (a)........................................... 90,000 11,148,750
--------------
1,292,895,016
--------------
TRANSPORTATION 0.6%
Delta Air Lines, Inc. ..................................... 262,800 13,287,825
Kansas City Southern Industries, Inc. ..................... 105,900 9,392,006
--------------
22,679,831
--------------
UTILITIES 6.4%
GTE Corp. ................................................. 628,200 39,105,450
McLeodUSA, Inc. (a)........................................ 417,000 8,626,688
Nextel Communications, Inc. (a)............................ 179,300 10,970,919
PECO Energy Co. ........................................... 407,000 16,407,188
Qwest Communications International, Inc. (a)............... 578,400 28,739,250
SBC Communications, Inc. .................................. 1,220,920 52,804,790
Sprint Corp. .............................................. 503,900 25,698,900
Time Warner Telecom, Inc., Class A (a)..................... 158,600 10,209,875
U.S. West, Inc. ........................................... 113,900 9,766,925
WorldCom, Inc. (a)......................................... 795,700 36,502,737
--------------
238,832,722
--------------
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 76

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION VALUE
<S> <C> <C>
TOTAL LONG-TERM INVESTMENTS 97.5%
(Cost $2,671,621,006)................................................. $3,603,739,378
--------------

SHORT-TERM INVESTMENTS 1.6%

COMMERCIAL PAPER 1.3%
General Electric Capital Corp. ($50,000,000 par, yielding 6.93%,
07/03/00 maturity).................................................. 49,980,972

REPURCHASE AGREEMENT 0.3%
Bank of America Securities ($10,900,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 06/30/00, to
be sold on 07/03/00 at $10,906,222)................................. 10,900,000
--------------

TOTAL SHORT-TERM INVESTMENTS
(Cost $60,880,972).................................................. 60,880,972
--------------

TOTAL INVESTMENTS 99.1%
(Cost $2,732,501,978)............................................... 3,664,620,350

OTHER ASSETS IN EXCESS OF LIABILITIES 0.9%........................... 33,196,199
--------------

NET ASSETS 100.0%.................................................... $3,697,816,549
==============
</TABLE>

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

ADR--American Depositary Receipt.

See Notes to Financial Statements

F-6
<PAGE> 77

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $2,732,501,978)..................... $3,664,620,350
Receivables:
Investments Sold.......................................... 57,762,821
Fund Shares Sold.......................................... 30,308,329
Dividends................................................. 1,986,313
Other....................................................... 200,531
--------------
Total Assets............................................ 3,754,878,344
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 47,749,747
Fund Shares Repurchased................................... 6,004,460
Investment Advisory Fee................................... 1,306,666
Distributor and Affiliates................................ 1,198,695
Custodian Bank............................................ 20,344
Trustees' Deferred Compensation and Retirement Plans........ 453,669
Accrued Expenses............................................ 328,214
--------------
Total Liabilities....................................... 57,061,795
--------------
NET ASSETS.................................................. $3,697,816,549
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $2,632,507,185
Net Unrealized Appreciation................................. 932,118,372
Accumulated Net Realized Gain............................... 116,388,105
Accumulated Undistributed Net Investment Income............. 16,802,887
--------------
NET ASSETS.................................................. $3,697,816,549
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $3,542,419,136 and 259,814,649 shares of
beneficial interest issued and outstanding)............. $ 13.63
Maximum sales charge (5.75%* of offering price)......... .83
--------------
Maximum offering price to public........................ $ 14.46
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $137,649,531 and 10,269,759 shares of
beneficial interest issued and outstanding)............. $ 13.40
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $17,747,882 and 1,321,457 shares of
beneficial interest issued and outstanding)............. $ 13.43
==============
</TABLE>

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

See Notes to Financial Statements

F-7
<PAGE> 78

Statement of Operations
For the Year Ended June 30, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $83,548)..... $ 43,754,786
Interest.................................................... 15,249,818
--------------
Total Income............................................ 59,004,604
--------------
EXPENSES:
Investment Advisory Fee..................................... 16,374,993
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $8,245,442, $1,366,711 and $145,585,
respectively)............................................. 9,757,738
Shareholder Services........................................ 4,325,349
Legal....................................................... 254,914
Custody..................................................... 223,827
Trustees' Fees and Related Expenses......................... 140,908
Other....................................................... 1,589,695
--------------
Total Expenses.......................................... 32,667,424
Less Credits Earned on Cash Balances.................... 7,536
--------------
Net Expenses............................................ 32,659,888
--------------
NET INVESTMENT INCOME....................................... $ 26,344,716
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 212,649,559
Futures................................................... 10,970,746
--------------
Net Realized Gain......................................... 223,620,305
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 1,038,531,718
End of the Period:
Investments............................................. 932,118,372
--------------
Net Unrealized Depreciation During the Period............... (106,413,346)
--------------
NET REALIZED AND UNREALIZED GAIN............................ $ 117,206,959
==============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 143,551,675
==============
</TABLE>

See Notes to Financial Statements

F-8
<PAGE> 79

Statement of Changes in Net Assets
For the Years Ended June 30, 2000, and 1999

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
----------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 26,344,716 $ 28,270,551
Net Realized Gain.................................. 223,620,305 499,496,614
Net Unrealized Depreciation During
the Period....................................... (106,413,346) (12,965,129)
--------------- ---------------
Change in Net Assets from Operations............... 143,551,675 514,802,036
--------------- ---------------

Distributions from Net Investment Income:
Class A Shares................................... (28,395,288) (24,874,829)
Class B Shares................................... -0- -0-
Class C Shares................................... -0- -0-
--------------- ---------------
(28,395,288) (24,874,829)
--------------- ---------------

Distributions from Net Realized Gain:
Class A Shares................................... (544,879,338) (295,682,808)
Class B Shares................................... (20,187,425) (11,170,764)
Class C Shares................................... (2,173,374) (972,178)
--------------- ---------------
(567,240,137) (307,825,750)
--------------- ---------------
Total Distributions................................ (595,635,425) (332,700,579)
--------------- ---------------

NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES............................ (452,083,750) 182,101,457
--------------- ---------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................... 3,737,396,139 7,524,592,594
Net Asset Value of Shares Issued Through
Dividend Reinvestment............................ 553,360,846 309,004,514
Cost of Shares Repurchased......................... (4,210,789,871) (7,759,211,083)
--------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 79,967,114 74,386,025
--------------- ---------------
TOTAL INCREASE/DECREASE IN NET ASSETS.............. (372,116,636) 256,487,482
NET ASSETS:
Beginning of the Period............................ 4,069,933,185 3,813,445,703
--------------- ---------------
End of the Period (Including accumulated
undistributed net investment income of
$16,802,887 and $18,853,459, respectively)....... $ 3,697,816,549 $ 4,069,933,185
=============== ===============
</TABLE>

See Notes to Financial Statements

F-9
<PAGE> 80

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

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
CLASS A SHARES --------------------------------------------------------
2000 1999 1998 1997 1996(A)
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $ 15.471 $ 14.971 $ 13.872 $ 11.92 $ 11.62
-------- -------- -------- -------- --------
Net Investment Income......... .110 .117 .122 .132 .12
Net Realized and Unrealized
Gain........................ .464 1.743 3.541 3.191 2.09
-------- -------- -------- -------- --------
Total from Investment
Operations.................... .574 1.860 3.663 3.323 2.21
-------- -------- -------- -------- --------
Less:
Distributions from Net
Investment Income........... .120 .106 .144 .121 .15
Distributions from Net
Realized Gain............... 2.292 1.254 2.420 1.250 1.76
-------- -------- -------- -------- --------
Total Distributions............. 2.412 1.360 2.564 1.371 1.91
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD........................ $ 13.634 $ 15.471 $ 14.971 $ 13.872 $ 11.92
======== ======== ======== ======== ========

Total Return (b)................ 4.01% 13.65% 29.89% 30.06% 20.48%
Net Assets at End of the Period
(In millions)................. $3,542.4 $3,905.1 $3,661.4 $2,992.2 $2,534.3
Ratio of Expenses to Average Net
Assets (c).................... .82% .83% .88% .97% .94%
Ratio of Net Investment Income
to Average Net Assets (c)..... .72% .78% .80% 1.01% 1.02%
Portfolio Turnover.............. 71% 94% 67% 144% 213%
</TABLE>

(a) Based on average shares outstanding.

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

(c) For the years ended June 30, 1996 and June 30, 1997, the impact on the
Ratios of Expenses and Net Investment Income to Average Net Assets due to
Van Kampen's reimbursement of certain expenses was less than 0.01%.

See Notes to Financial Statements

F-10
<PAGE> 81

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

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
CLASS B SHARES ---------------------------------------------------
2000 1999 1998 1997 1996(A)
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $15.239 $14.766 $13.730 $ 11.81 $11.53
------- ------- ------- ------- ------
Net Investment Income/Loss....... (.011) .005 .045 .046 .02
Net Realized and Unrealized
Gain........................... .467 1.722 3.466 3.151 2.07
------- ------- ------- ------- ------
Total from Investment Operations... .456 1.727 3.511 3.197 2.09
------- ------- ------- ------- ------
Less:
Distributions from Net Investment
Income......................... -0- -0- .055 .027 .05
Distributions from Net Realized
Gain........................... 2.292 1.254 2.420 1.250 1.76
------- ------- ------- ------- ------
Total Distributions................ 2.292 1.254 2.475 1.277 1.81
------- ------- ------- ------- ------
NET ASSET VALUE, END OF THE
PERIOD........................... $13.403 $15.239 $14.766 $13.730 $11.81
======= ======= ======= ======= ======

Total Return (b)................... 3.20% 12.79% 28.92% 29.08% 19.44%
Net Assets at End of the Period (In
millions)........................ $ 137.7 $ 151.8 $ 140.3 $ 95.5 $ 72.1
Ratio of Expenses to Average Net
Assets (c)....................... 1.62% 1.61% 1.66% 1.74% 1.75%
Ratio of Net Investment Income/Loss
to Average Net Assets (c)........ (.06%) 0% .03% .23% .21%
Portfolio Turnover................. 71% 94% 67% 144% 213%
</TABLE>

(a) Based on average shares outstanding.

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

See Notes to Financial Statements

F-11
<PAGE> 82

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

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
CLASS C SHARES ---------------------------------------------------
2000 1999 1998 1997 1996(A)
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $15.280 $14.787 $13.752 $ 11.83 $11.52
------- ------- ------- ------- ------
Net Investment Income/Loss....... (.028) .002 .028 .036 .02
Net Realized and Unrealized
Gain........................... .471 1.745 3.482 3.163 2.10
------- ------- ------- ------- ------
Total from Investment Operations... .443 1.747 3.510 3.199 2.12
------- ------- ------- ------- ------
Less:
Distributions from Net Investment
Income......................... -0- -0- .055 .027 .05
Distributions from Net Realized
Gain........................... 2.292 1.254 2.420 1.250 1.76
------- ------- ------- ------- ------
Total Distributions................ 2.292 1.254 2.475 1.277 1.81
------- ------- ------- ------- ------
NET ASSET VALUE, END OF THE
PERIOD........................... $13.431 $15.280 $14.787 $13.752 $11.83
======= ======= ======= ======= ======

Total Return (b)................... 3.13% 12.91% 28.87% 29.04% 19.74%
Net Assets at End of the Period (In
millions)........................ $ 17.7 $ 13.0 $ 11.7 $ 7.0 $ 4.5
Ratio of Expenses to Average Net
Assets (c)....................... 1.62% 1.61% 1.66% 1.74% 1.75%
Ratio of Net Investment Income/Loss
to Average Net Assets (c)........ (.10%) .01% .04% .23% .15%
Portfolio Turnover................. 71% 94% 67% 144% 213%
</TABLE>

(a) Based on average shares outstanding.

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

See Notes to Financial Statements

F-12
<PAGE> 83

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Pace Fund (the "Fund") is organized as a Delaware business trust, and
is registered as a diversified open-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek capital growth by investing principally in common stock. The Fund
commenced investment operations on July 22, 1969. The distribution of the Fund's
Class B and Class C Shares commenced on January 10, 1992 and August 27, 1993,
respectively.

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

A. SECURITY VALUATION Investments in securities listed on a securities exchange
are valued at the last sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sale price is not
available are valued at the mean of the bid and asked prices. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the Board
of Trustees. Short-term securities with remaining maturities of 60 days or less
are valued at amortized cost, which approximates market value.

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

The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.

F-13
<PAGE> 84

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

C. INCOME AND EXPENSES Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts on debt securities
purchased are accreted over the expected life of each applicable security.
Premiums on debt securities are not amortized. Income and expenses of the Fund
are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and transfer agency costs which are unique to each
class of shares.

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

Net realized gain differs for financial reporting and tax purposes as a
result of the deferral for tax purposes of losses relating to wash sale
transactions.

At June 30, 2000, for federal income tax purposes, cost of long- and
short-term investments is $2,738,611,338, the aggregate gross unrealized
appreciation is $1,015,073,309 and the aggregate gross unrealized depreciation
is $89,064,297, resulting in net unrealized appreciation on long- and short-term
investments of $926,009,012.

E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
annually from net investment income and from net realized gains on securities.
Distributions from net realized gains for book purposes may include short-term
capital gains and gains on futures transactions. All short-term capital gains
are included in ordinary income for tax purposes.

F. EXPENSE REDUCTIONS During the year ended June 30, 2000, the Fund's custody
fee was reduced by $7,536 as a result of credits earned on cash balances.

2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES

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

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS % PER ANNUM
<S> <C>
First $1 billion............................................ .50 of 1%
Next $1 billion............................................. .45 of 1%
Next $1 billion............................................. .40 of 1%
Over $3 billion............................................. .35 of 1%
</TABLE>

F-14
<PAGE> 85

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

For the year ended June 30, 2000, the Fund recognized expenses of
approximately $254,900 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended June 30, 2000, the Fund recognized expenses of
approximately $428,400 representing Van Kampen Funds Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended June 30, 2000,
the Fund recognized expenses of approximately $3,378,800. Transfer agency fees
are determined through negotiations with the Fund's Board of Trustees and are
based on competitive market benchmarks.

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

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

F-15
<PAGE> 86

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

3. CAPITAL TRANSACTIONS

At June 30, 2000, capital aggregated $2,492,104,934, $123,674,831 and
$16,727,420 for Classes A, B, and C, respectively. For the year ended June 30,
2000, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................ 239,982,150 $ 3,545,961,373
Class B............................................ 12,119,947 170,558,418
Class C............................................ 1,481,813 20,876,348
------------ ---------------
Total Sales.......................................... 253,583,910 $ 3,737,396,139
============ ===============
Dividend Reinvestment:
Class A............................................ 39,858,482 $ 532,509,323
Class B............................................ 1,426,470 18,815,135
Class C............................................ 154,038 2,036,388
------------ ---------------
Total Dividend Reinvestment.......................... 41,438,990 $ 553,360,846
============ ===============
Repurchases:
Class A............................................ (272,439,480) $(4,007,458,044)
Class B............................................ (13,239,713) (186,768,922)
Class C............................................ (1,165,292) (16,562,905)
------------ ---------------
Total Repurchases.................................... (286,844,485) $(4,210,789,871)
============ ===============
</TABLE>

F-16
<PAGE> 87

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

At June 30, 1999, capital aggregated $2,421,092,282, $121,070,200 and
$10,377,589 for Classes A, B and C, respectively. For the year ended June 30,
1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................ 501,845,270 $ 7,187,575,737
Class B............................................ 20,290,932 285,120,945
Class C............................................ 3,680,466 51,895,912
------------ ---------------
Total Sales.......................................... 525,816,668 $ 7,524,592,594
============ ===============
Dividend Reinvestment:
Class A............................................ 21,854,091 $ 297,652,697
Class B............................................ 776,995 10,466,117
Class C............................................ 65,607 885,700
------------ ---------------
Total Dividend Reinvestment.......................... 22,696,693 $ 309,004,514
============ ===============
Repurchases:
Class A............................................ (515,854,980) $(7,416,888,916)
Class B............................................ (20,603,743) (290,215,746)
Class C............................................ (3,688,547) (52,106,421)
------------ ---------------
Total Repurchases.................................... (540,147,270) $(7,759,211,083)
============ ===============
</TABLE>

Class B and C Shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B Shares purchased
on or after June 1, 1996, and any dividend reinvestment Class B Shares received
thereon will automatically convert to Class A Shares after the eighth year
following purchase. Class B Shares purchased before June 1, 1996, and any
dividend reinvestment Class B Shares received thereon automatically convert to
Class A Shares after the sixth year following purchase. For the years ended June
30, 2000 and 1999, 1,616,635 and 0, respectively, Class B Shares automatically
converted to Class A Shares and are shown in the above tables as sales of Class
A Shares and repurchases of Class B Shares. Class C Shares purchased before
January 1, 1997, and any dividend reinvestment plan C Shares received thereon,
automatically convert to Class A Shares ten years after the end of the calendar
month in which the shares are purchased. Class C Shares purchased on or after
January 1, 1997 do not possess a conversion feature. For the years ended June
30, 2000 and 1999, no Class C Shares converted to Class A Shares. The CDSC for
Class B and C Shares will be imposed on most redemptions made within five years
of the purchase for

F-17
<PAGE> 88

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

Class B Shares and one year of the purchase for Class C Shares as detailed in
the following schedule.

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

For the year ended June 30, 2000, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A Shares of approximately
$311,300 and CDSC on redeemed shares of approximately $320,600. Sales charges do
not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $2,528,050,879 and $2,896,607,495,
respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS

A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.

The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.

The Fund may invest in futures contracts, a type of derivative. A futures
contract is an agreement involving the delivery of a particular asset on a
specified future date at an agreed upon price. The fund generally invests in
stock index futures. These contracts are generally used to provide the return of
an index without purchasing all of the securities underlying the index or to
manage the Fund's overall exposure to the equity markets.

F-18
<PAGE> 89

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin).

Transactions in futures contracts for the year ended June 30, 2000, were as
follows:

<TABLE>
<CAPTION>
CONTRACTS
<S> <C>
Outstanding at June 30, 1999................................ 300
Futures Opened.............................................. 1,425
Futures Closed.............................................. (1,725)
------
Outstanding at June 30, 2000................................ -0-
======
</TABLE>

6. DISTRIBUTION AND SERVICE PLANS

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

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended June 30, 2000, are payments retained by Van Kampen of
approximately $1,428,800.

7. BORROWINGS

In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, has entered in to a $650,000,000 committed line of credit
facility with a group of banks which expires on November 28, 2000, but is
renewable with the consent of the participating banks. Each Fund is permitted to
utilize the facility in accordance with the restrictions of its prospectus. In
the event the demand for the credit facility meets or exceeds $650 million on a
complex-wide basis, each Fund will be limited to its pro-rata percentage based
on the net assets of each participating fund. Interest on borrowings is charged
under the agreement at a rate of 0.50% above the federal funds rate per annum.
An annual commitment fee of 0.09% per annum is charged on the unused portion of
the credit facility, which each fund incurs based on its pro-rate percentage of
quarterly net assets. The Fund has not borrowed against the credit facility
during the period.

F-19
<PAGE> 90

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS.

<TABLE>
<S> <C>
(a)(1) First Amended and Restated Agreement and Declaration of
Trust(1)
(2) Second Certificate of Amendment(3)
(3) Second Amended and Restated Certificate of Designation(3)
(b) Amended and Restated Bylaws(1)
(c)(1) Specimen Class A Shares Certificate(3)
(2) Specimen Class B Shares Certificate(3)
(3) Specimen Class C Shares Certificate(3)
(d) Investment Advisory Agreement(2)
(e)(1) Distribution and Service Agreement(2)
(2) Form of Dealer Agreement(2)
(3) Form of Broker Fully Disclosed Clearing Agreement(1)
(4) Form of Bank Fully Disclosed Clearing Agreement(1)
(f)(1) Form of Trustee Deferred Compensation Plan(4)
(2) Form of Trustee Retirement Plan(4)
(g)(1) Custodian Contract(2)
(2) Transfer Agency and Service Agreement(2)
(h) Fund Accounting Agreement(2)
(i)(1) Opinion of Skadden, Arps, Slate, Meagher & Flom
(Illinois)(1)
(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)+
(j)(1) Consent of Ernst & Young LLP+
(2) Consent of PricewaterhouseCoopers LLP+
(k) Not applicable
(l) Not applicable
(m)(1) Plan of Distribution pursuant to Rule 12b-1(1)
(2) Form of Shareholder Assistance Agreement(1)
(3) Form of Administrative Services Agreement(1)
(4) Service Plan(1)
(n) Amended Multi-Class Plan(2)
(p) Code of Ethics of the Funds, Investment Adviser and
Distributor+
(q) Power of Attorney+
(z)(1) List of certain investment companies in response to Item
27(a)+
(2) List of officers and directors of Van Kampen Funds Inc. in
response to Item 27(b)+
</TABLE>

---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 46 to
Registrant's Registration Statement on Form N-1A, File No. 2-31417, filed
October 25, 1996.

(2) Incorporated herein by reference to Post-Effective Amendment No. 47 to
Registrant's Registration Statement on Form N-1A, File No. 2-31417, filed
October 27, 1997.

(3) Incorporated herein by reference to Post-Effective Amendment No. 48 to
Registrant's Registration Statement on Form N-1A, File No. 2-31417, filed
September 29, 1998.

(4) Incorporated herein by reference to Post-Effective Amendment No. 81 to Van
Kampen Harbor Fund's Registration Statement on Form N-1A, File Nos. 2-12685
and 811-734, filed April 29, 1999.

(5) Incorporated herein by reference to Post-Effective Amendment No. 50 to
Registrant's Registration Statement on Form N-1A, File 2-31417, filed
October 28, 1999.

+ Filed herewith.

C-1
<PAGE> 91

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

See the Statement of Additional Information.

ITEM 25. INDEMNIFICATION.

Pursuant to Del. Code Ann. Title 12 Section 3817, a Delaware business trust
may provide in its governing instrument for the indemnification of its officers
and trustees from and against any and all claims and demands whatsoever.

Reference is made to Article 8, Section 8.4 of the Registrant's First
Amended and Restated Agreement and Declaration of Trust. Article 8; Section 8.4
of the First Amended and Restated Agreement and Declaration of Trust provides
that each officer and trustee of the Registrant shall be indemnified by the
Registrant against all liabilities incurred in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which the officer or trustee may be or may have been involved by reason of
being or having been an officer or trustee, except that such indemnity shall not
protect any such person against a liability to the Registrant or any shareholder
thereof to which such person would otherwise be subject by reason of (i) not
acting in good faith in the reasonable belief that such person's actions were
not in the best interests of the Trust, (ii) willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office or (iii) for a criminal proceeding, not having a reasonable
cause to believe that such conduct was unlawful (collectively, "Disabling
Conduct"). Absent a court determination that an officer or trustee seeking
indemnification was not liable on the merits or guilty of Disabling Conduct in
the conduct of his or her office, the decision by the Registrant to indemnify
such person must be based upon the reasonable determination of independent
counsel or non-party independent trustees, after review of the facts, that such
officer or trustee is not guilty of Disabling Conduct in the conduct of his or
her office.

The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officer or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.

Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides a security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.

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

Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds Inc. (the
"Distributor") and each of its trustees and officers and each person if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss,

C-2
<PAGE> 92

liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees) arising by reason of any person acquiring
any shares, based upon the ground that the Registration Statement, prospectus,
shareholder reports or other information filed or made public by the Registrant
(as from time to time amended) included an untrue statement of a material fact
or omitted to state a material fact required to be stated or necessary in order
to make the statements not misleading under the 1933 Act, or any other statute
or the common law. The Registrant does not agree to indemnify the Distributor or
hold it harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Registrant
by or on behalf of the Distributor. In no case is the indemnity of the
Registrant in favor of the Distributor or any person indemnified to be deemed to
protect the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the agreement.

Pursuant to the agreement by which Van Kampen Investor Services Inc.
("Investor Services") is appointed transfer agent of the Fund, the Registrant
agrees to indemnify and hold Investor Services harmless against any losses,
damages, costs, charges, payments, liabilities and expenses (including
reasonable counsel fees) arising out of or attributable to:

(1) the performance of Investor Services under the agreement provided that
Investor Services acted in good faith with due diligence and without negligence
or willful misconduct.

(2) reliance by Investor Services on, or reasonable use by, Investor
Services of information, records and documents which have been prepared on
behalf of, or have been furnished by, the Fund, or the carrying out by Investor
Services of any instructions or requests of the Fund.

(3) the offer or sale of the Fund's shares in violation of any federal or
state law or regulation or ruling by any federal agency unless such violation
results from any failure by Investor Services to comply with written
instructions from the Fund that such offers or sales were not permitted under
such law, rule or regulation.

(4) the refusal of the Fund to comply with terms of the agreement, or the
Fund's lack of good faith, negligence or willful misconduct or breach of any
representation or warranty made by the Fund under the agreement provided that if
the reason for such failure is attributable to any action of the Fund's
investment adviser or distributor or any person providing accounting or legal
services to the Fund, Investor Services only will be entitled to indemnification
if such entity is otherwise entitled to the indemnification from the Fund.

See also "Investment Advisory Agreement" in the Statement of Additional
Information.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

See "Investment Advisory Services" in the Prospectus and "Investment
Advisory Agreement," "Other Agreements" and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Asset Management Inc. (the "Adviser"). For information as to the
business, profession, vocation and employment of a substantial nature the
officers and directors of the Adviser, reference is made to the Adviser's
current Form ADV (File No. 801-1669) filed under the Investment Advisers Act of
1940, as amended, incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) The sole principal underwriter is Van Kampen Funds Inc., (the
"Distributor") which acts as principal underwriter for certain investment
companies and unit investment trusts. See Exhibit(z)(1).

(b) Van Kampen Funds Inc., which is an affiliated person of the Registrant
is the only principal underwriter for the Registrant. The name, principal
business address and positions and offices with Van Kampen Funds Inc. of each of
the trustees and officers of the Registrant are disclosed in Exhibit (z)(2).
Except as disclosed under the heading, "Trustees and Officers" in Part B of this
Registration Statement, none of such persons has any position or office with the
Registrant.

C-3
<PAGE> 93

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents of the Registrant required by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder to be maintained (i) by the Registrant, will be
maintained at its offices located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555, Van Kampen Investor Services Inc., 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and
Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171; (ii) by
the Adviser, will be maintained at its offices located at 1 Parkview Plaza, PO
Box 5555, Oakbrook Terrace, Illinois 60181-5555; and (iii) by Van Kampen Funds
Inc., the principal underwriter, will be maintained at its offices located at 1
Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555.

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-4
<PAGE> 94

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN PACE FUND, certifies that it meets all the requirements for
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the 1933 Act has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakbrook Terrace, and State of Illinois, on the 25th
day of October, 2000.

VAN KAMPEN PACE FUND

By: /s/ A. THOMAS SMITH III
---------------------------------------
A. Thomas Smith III, Secretary

Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed on October 25, 2000 by the following
persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
Principal Executive Officer:
/s/ RICHARD F. POWERS, III* Trustee and President
-----------------------------------------------------
Richard F. Powers, III

Principal Financial Officer:

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

Trustees:

/s/ J. MILES BRANAGAN* Trustee
-----------------------------------------------------
J. Miles Branagan

/s/ JERRY D. CHOATE* Trustee
-----------------------------------------------------
Jerry D. Choate

/s/ LINDA HUTTON HEAGY* Trustee
-----------------------------------------------------
Linda Hutton Heagy

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

/s/ MITCHELL M. MERIN* Trustee
-----------------------------------------------------
Mitchell M. Merin

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

/s/ PHILLIP B. ROONEY* Trustee
-----------------------------------------------------
Phillip B. Rooney

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

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

/s/ SUZANNE H. WOOLSEY* Trustee
-----------------------------------------------------
Suzanne H. Woolsey
------------
* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.

/s/ A. THOMAS SMITH III October 25, 2000
-----------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact
</TABLE>

<PAGE> 95

SCHEDULE OF EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 51 TO FORM N-1A

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
(i)(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(j)(1) Consent of Ernst & Young
(j)(2) Consent of PricewaterhouseCoopers LLP
(p) Code of Ethics of the Funds, Investment Adviser and
Distributor
(q) Power of Attorney
(z)(1) List of certain investment companies in response to Item
27(a)
(2) List of officers and directors of Van Kampen Funds Inc. in
response to Item 27(b)
</TABLE>