VAN KAMPEN TRUST, 497, 1998-10-30

VAN KAMPEN TRUST
497, 1998-10-30

Previous: VAN KAMPEN TRUST, 497, 1998-10-30

Next: CHRYSLER CORP /DE, S-3/A, 1998-10-30

<PAGE> 1

- --------------------------------------------------------------------------------
VAN KAMPEN HIGH YIELD FUND
- --------------------------------------------------------------------------------

Van Kampen High Yield Fund (the "Fund") is a diversified, open-end
management investment company, commonly known as a mutual fund. The Fund's
primary investment objective is to provide a high level of current income. As a
secondary objective, the Fund seeks capital appreciation. The Fund seeks to
achieve its investment objectives primarily through investment in a diversified
portfolio of medium and lower grade domestic corporate debt securities. The Fund
also may invest up to 35% of its assets in foreign government and foreign
corporate debt securities of similar quality. The Fund may invest in debt
securities rated between BB and D (inclusive) by Standard & Poor's Ratings
Group, Ba and C (inclusive) by Moody's Investors Service, Inc., comparably rated
short-term debt obligations and unrated debt securities determined by the Fund's
investment adviser to be of comparable quality, which securities are commonly
referred to as "junk bonds."

The Fund's investment adviser is Van Kampen Investment Advisory Corp. (the
"Adviser"). The Fund is a series of Van Kampen Trust (the "Trust"). This
Prospectus sets forth the information about the Fund that a prospective investor
should know before investing. Please read and retain this Prospectus for future
reference. The address of the Fund is One Parkview Plaza, Oakbrook Terrace,
Illinois 60181, and its telephone number is (800) 341-2911.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATORS NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

A Statement of Additional Information, dated October 28, 1998, containing
additional information about the Fund is hereby incorporated by reference in its
entirety into this Prospectus. A copy of the Fund's Statement of Additional
Information may be obtained without charge, by calling (800) 341-2911 or for
Telecommunication Device for the Deaf at (800) 421-2833. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is available along with other related materials at the
SEC's internet web site (http://www.sec.gov).

[VAN KAMPEN FUNDS LOGO]

THIS PROSPECTUS IS DATED OCTOBER 28, 1998.
<PAGE> 2

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 5
Annual Fund Operating Expenses and Example.................. 6
Financial Highlights........................................ 7
The Fund.................................................... 9
Investment Objectives and Policies.......................... 9
Investment Practices........................................ 13
Investment Advisory Services................................ 15
Alternative Sales Arrangements.............................. 16
Purchase of Shares.......................................... 18
Shareholder Services........................................ 24
Redemption of Shares........................................ 27
Distribution and Service Plans.............................. 28
Distributions from the Fund................................. 30
Tax Status.................................................. 30
Fund Performance............................................ 32
Description of Shares of the Fund........................... 33
Additional Information...................................... 33
Appendix A: Ratings of Corporate Obligations................ A-1
</TABLE>

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR
BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL FOR THE FUND TO MAKE SUCH AN OFFER IN SUCH JURISDICTION.

2
<PAGE> 3

- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------

THE FUND. Van Kampen High Yield Fund (the "Fund") is a separate, diversified
series of Van Kampen Trust (the "Trust"). The Trust is an open-end management
investment company organized as a Delaware business trust.

MINIMUM PURCHASE. $500 minimum initial investment for each class of shares and
$25 minimum for each subsequent investment for each class of shares (or less as
described under "Purchase of Shares").

INVESTMENT OBJECTIVE. The Fund's primary investment objective is to provide a
high level of current income. As a secondary objective, the Fund seeks capital
appreciation. There is no assurance the Fund will achieve its investment
objectives. See "Investment Objective and Policies."

INVESTMENT POLICIES. The Fund seeks to achieve its investment objectives by
investing in a diversified portfolio of medium and lower grade domestic
corporate debt securities. The Fund also may invest up to 35% of its assets in
foreign government and foreign corporate debt securities of similar quality as
determined by the Fund's investment adviser, Van Kampen Investment Advisory
Corp. (the "Adviser").

Medium grade debt securities are those rated BBB by Standard & Poor's Ratings
Group ("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's"), comparably
rated short-term debt obligations and unrated debt securities determined by the
Adviser to be of comparable quality. Debt securities rated BBB by S&P generally
are regarded by S&P as having an adequate capacity to pay interest and repay
principal; adverse economic conditions or changing circumstances are, however,
more likely in S&P's view to lead to a weakened capacity to pay interest and
repay principal as compared with higher rated debt securities. Debt securities
rated Baa by Moody's generally are considered by Moody's as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured. In
Moody's view, interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. In Moody's view,
such securities lack outstanding investment characteristics and have speculative
characteristics as well.

Lower grade debt securities are those rated between BB and D (inclusive) by
S&P, Ba and C (inclusive) by Moody's, comparably rated short-term debt
obligations and unrated debt securities determined by the Adviser to be of
comparable quality, which securities sometimes are referred to as "junk bonds."
Debt securities rated BB, B, CCC, CC and C by S&P generally are regarded by S&P,
on balance, as significantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, in S&P's view these are outweighed by large uncertainties or
major risk exposures to adverse conditions. Debt securities rated C by S&P may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued. Debt securities rated D by S&P are in
payment default, and payment of interest or repayment of principal is in
arrears. Debt securities rated Ba by Moody's are judged to have speculative
elements, their future cannot be as well-assured. In Moody's view, often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Debt
securities rated B by Moody's are viewed by Moody's as generally lacking
characteristics of the desirable investment. In Moody's view, assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. Debt securities which are rated Caa
by Moody's are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest. Bonds which
are rated Ca by Moody's represent obligations which are speculative in a high
degree. Such issues are often in default or have other market shortcomings.
Bonds which are rated C by Moody's are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing. A complete description of the various
S&P and Moody's rating categories is included as Appendix A to this Prospectus.

3
<PAGE> 4

Fund may not be an appropriate investment for all investors. The net asset value
per share of the Fund can be expected to increase or decrease depending on real
or perceived changes in the credit risks associated with its portfolio
investments, changes in interest rates and other factors affecting the credit
markets generally. See "Investment Objectives and Policies" and "Appendix A."

INVESTMENT PRACTICES. Subject to certain limitations, the Fund may enter into
strategic transactions, write covered call options, lend its portfolio
securities, enter into when issued or delayed delivery transactions, and enter
into repurchase and reverse repurchase agreements. These investment practices
entail certain risks. See "Investment Practices."

INVESTMENT RESULTS. The investment results of the Fund are shown in the table
of "Financial Highlights."

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

REDEMPTION. Class A Shares generally may be redeemed at net asset value,
without charge, subject to conditions set forth herein. Shares sold subject to a
contingent deferred sales charge ("CDSC Shares") may be redeemed at net asset
value per share less a deferred sales charge which will vary among each class of
CDSC Shares and with the length of time a redeeming shareholder has owned such
shares. CDSC Shares redeemed after the expiration of the CDSC period applicable
to the respective class of CDSC Shares will not be subject to a deferred sales
charge. The Fund may require the redemption of shares if the value of an account
is $500 or less. See "Redemption of Shares".

INVESTMENT ADVISER. Van Kampen Investment Advisory Corp. (the "Adviser") is the
Fund's investment adviser.

DISTRIBUTOR. Van Kampen Funds Inc. (the "Distributor") distributes the Fund's
shares.

DISTRIBUTIONS FROM THE FUND. The Fund will declare distributions on a daily
basis and will pay such distributions from net investment income, net recognized
short-term capital gains and principal on a monthly basis. Long-term capital
gains, if any, are distributed annually. Distributions with respect to each
class of shares will be calculated in the same manner on the same day and will
be in the same amount except that different distribution and service fees and
administrative expenses relating to each class of shares will be borne
exclusively by the respective class of shares. See "Distributions from the
Fund."

The foregoing is qualified in its entirety by reference to the more detailed
information appearing elsewhere in this Prospectus.

4
<PAGE> 5

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases (as percentage of
the offering price)....................................... 4.75%(1) None None
Maximum sales charge imposed on reinvested dividends (as a
percentage of the offering price)......................... None None(3) None(3)
Deferred sales charge (as a percentage of the lesser of the
original purchase price or redemption proceeds)........... None(2) Year 1--4.00% Year 1--1.00%
Year 2--3.75% After--None
Year 3--3.50%
Year 4--2.50%
Year 5--1.50%
Year 6--1.00%
After--None
Redemption fees (as a percentage of amount redeemed)........ None None None
Exchange fees............................................... None None None
</TABLE>

- --------------------------------------------------------------------------------
(1) Reduced on investments of $100,000 or more. See "Purchase of Shares -- Class
A Shares."
(2) Investments of $1 million or more are not subject to a sales charge at the
time of purchase, but a CDSC of 1.00% may be imposed on certain redemptions
made within one year of the purchase. See "Purchase of Shares -- Deferred
Sales Charge Alternatives -- Class A Share Purchases of $1 Million or More."
(3) CDSC Shares received as reinvested dividends are subject to a 12b-1 fee, a
portion of which may indirectly pay for the initial sales commission
incurred on behalf of the investor. See "Distribution and Service Plans."

<PAGE> 6

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average daily net
assets; after fee waiver)(1).............................. 0.65% 0.65% 0.65%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.24%(3) 1.00%(4) 1.00%(4)
Other Expenses (as a percentage of average daily
net assets)............................................... 0.25% 0.26% 0.26%(4)
Total Expenses (as a percentage of average daily
net assets; after fee waiver)............................. 1.14% 1.91% 1.91%
</TABLE>

- --------------------------------------------------------------------------------
(1) In the absence of fee waiver, "Management Fees" would have been 0.75%, 0.75%
and 0.75% for Class A, B and C Shares, respectively and "Total Expenses"
would have been 1.24%, 2.01% and 2.01% for Class A, B and C Shares,
respectively.

(2) Includes a service fee of up to 0.25% (as a percentage of net asset value)
paid by the Fund as compensation for ongoing services rendered to investors.
With respect to each class of shares, amounts in excess of 0.25%, if any,
represent an asset based sales charge for distribution-related expenses. The
asset based sales charge with respect to Class C Shares includes an amount
of 0.75% (as a percentage of net asset value) paid to investors'
broker-dealers as sales compensation. See "Distribution and Service Plans."

(3) The Fund's distribution and service plans with respect to Class A Shares
provide that 12b-1 and service fees are charged only with respect to Class A
Shares of the Fund sold after the implementation date of such plans. Due to
the incremental "phase-in" of the Fund's 12b-1 and service plans with
respect to Class A Shares, it is anticipated that 12b-1 and service fees
attributable to Class A Shares will increase in accordance with such plans
to a maximum aggregate amount of 0.25% of the net assets attributable to the
Fund's Class A Shares. Accordingly, it is unlikely that future expenses will
remain consistent with those disclosed in the fee table. See "Distribution
and Service Plans."

(4) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by NASD Rules.

EXAMPLE:

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (i) an operating expense ratio of 1.14% for Class A
Shares, 1.91% for Class B Shares, and 1.91% for Class C
Shares, (ii) a 5.00% annual return and (iii) redemption at
the end of each period:
Class A Shares........................................ $59 $ 82 $107 $180
Class B Shares........................................ $59 $ 95 $118 $203*
Class C Shares........................................ $29 $ 60 $103 $223
You would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each period:
Class A Shares........................................ $59 $ 82 $107 $180
Class B Shares........................................ $19 $ 60 $103 $203*
Class C Shares........................................ $19 $ 60 $103 $223
</TABLE>

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

The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The "Example" reflects expenses based on the "Annual Fund
Operating Expenses" table as shown above carried out to future years and is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods. To facilitate
such comparison, all funds are required by the SEC to utilize a 5.00% annual
return assumption. The ten year amount with respect to Class B Shares of the
Fund reflects the lower aggregate 12b-1 and service fees applicable to such
shares after conversion to Class A Shares. Fees currently waived or expenses
reimbursed by the Adviser may not continue; accordingly, future expenses as
projected may increase. Class B Shares acquired through the exchange privilege
are subject to the CDSC schedule relating to the Class B Shares of the fund from
which the purchase of Class B Shares was originally made. Accordingly, future
expenses as projected could be higher than those determined in the above table
if the investor's Class B Shares were exchanged from a fund with a higher CDSC.
THE INFORMATION CONTAINED IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESSER THAN THOSE SHOWN. For a more complete description of such costs and
expenses, see "Purchase of Shares," "Redemption of Shares," "Investment Advisory
Services" and "Distribution and Service Plans."

6
<PAGE> 7

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for one share outstanding throughout the periods
indicated)
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
CLASS A SHARES
-------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $ 9.854 $ 9.493 $ 9.398 $ 9.643 $10.380 $ 9.896 $ 9.202 $ 9.960 $12.980 $13.650
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income........ 0.857 0.857 0.878 0.844 0.908 1.118 1.169 1.256 1.608 1.650
Net Realized and Unrealized
Gain/Loss.................. 0.037 0.384 0.147 (0.099) (0.595) 0.566 0.813 (0.604) (2.970) (0.610)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 0.894 1.241 1.025 0.745 0.313 1.684 1.982 0.652 (1.362) 1.040
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income..................... 0.855 0.865 0.880 0.815 0.950 1.129 1.189 1.297 1.608 1.650
Distributions from Net
Realized Gain on
Investments................ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Return of Capital
Distributions.............. 0.000 0.015 0.050 0.175 0.100 0.071 0.099 0.113 0.050 0.060
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions........... 0.855 0.880 0.930 0.990 1.050 1.200 1.288 1.410 1.658 1.710
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $ 9.893 $ 9.854 $ 9.493 $ 9.398 $ 9.643 $10.380 $ 9.896 $ 9.202 $ 9.960 $12.980
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return* (a)............. 9.36% 13.60% 11.26% 8.50% 2.92% 18.08% 22.85% 8.22% (10.88%) 7.96%
Net Assets at End of the
Period (In millions)......... $ 280.6 $ 288.0 $ 271.1 $ 253.3 $ 260.7 $ 251.5 $ 221.4 $ 199.5 $ 220.5 $ 353.8
Ratio of Expenses to Average
Net Assets*.................. 1.14% 1.17% 1.31% 1.31% 1.32% 1.20% 1.42% 1.41% 1.28% 1.27%
Ratio of Net Investment Income
to Average Net Assets*....... 8.61% 8.83% 9.16% 9.13% 8.85% 11.13% 12.12% 14.00% 13.68% 12.47%
Portfolio Turnover............ 154% 125% 102% 152% 203% 198% 174% 158% 67% 120%
* If certain expenses had not been waived or reimbursed by the Adviser, total return would have been lower and the ratios would
have been as follows:
Ratio of Expenses to
Average Net Assets....... 1.24% 1.26% 1.31% N/A N/A N/A N/A N/A N/A N/A
Ratio of Net Investment
Income to Average Net
Assets................... 8.51% 8.73% 9.15% N/A N/A N/A N/A N/A N/A N/A
</TABLE>

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

N/A = Not Applicable

See Financial Statements and Notes thereto

7
<PAGE> 8

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- continued (for one share outstanding throughout the
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
----------------------------------------------------------------------
YEAR ENDED MAY 17, 1993
JUNE 30, (COMMENCEMENT
------------------------------------------------ OF DISTRIBUTION)
1998 1997 1996 1995 1994 TO JUNE 30, 1993(A)
---- ---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 9.855 $ 9.497 $ 9.398 $ 9.638 $ 10.382 $10.190
------- ------- ------- ------- -------- -------
Net Investment Income............. 0.782 0.777 0.797 0.788 0.889 0.117
Net Realized and Unrealized
Gain/Loss....................... 0.036 0.388 0.160 (0.115) (0.665) 0.217
------- ------- ------- ------- -------- -------
Total from Investment Operations... 0.818 1.166 0.957 0.673 0.224 0.334
------- ------- ------- ------- -------- -------
Less:
Distributions from and in Excess
of Net Investment Income........ 0.783 0.794 0.812 0.751 0.877 0.128
Return of Capital Distributions... 0.000 0.014 0.046 0.162 0.091 0.014
------- ------- ------- ------- -------- -------
Total Distributions................ 0.783 0.808 0.858 0.913 0.968 0.142
------- ------- ------- ------- -------- -------
Net Asset Value, End of the
Period............................ $ 9.890 $ 9.855 $ 9.497 $ 9.398 $ 9.638 $10.382
======= ======= ======= ======= ======== =======
Total Return*(b)................... 9.28% 12.64% 10.55% 7.61% 2.11% 3.27%**
Net Assets at End of the Period (In
millions)......................... $ 145.0 $ 128.7 $ 97.1 $ 55.9 $ 33.2 $ 2.7
Ratio of Expenses to Average Net
Assets*........................... 1.91% 1.93% 2.07% 2.04% 2.13% 2.06%
Ratio of Net Investment Income to
Average Net Assets*............... 7.84% 8.03% 8.39% 8.35% 7.94% 7.17%
Portfolio Turnover................. 154% 125% 102% 152% 203% 198%**
* If certain expenses had not been waived or reimbursed by the Adviser, total return would have been lower
and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets........................ 2.01% 2.02% 2.07% N/A N/A N/A
Ratio of Net Investment Income
to Average
Net Assets.................... 7.74% 7.94% 8.38% N/A N/A N/A

<CAPTION>
CLASS C SHARES
-----------------------------------------------------------
AUGUST 13, 1993
YEAR ENDED JUNE 30, (COMMENCEMENT
------------------------------------- OF DISTRIBUTION)
1998 1997 1996 1995 TO JUNE 30, 1994(A)
---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 9.851 $ 9.495 $ 9.396 $ 9.643 $ 10.340
------- ------- ------- ------- --------
Net Investment Income............. 0.780 0.780 0.828 0.745 0.761
Net Realized and Unrealized
Gain/Loss....................... 0.036 0.384 0.129 (0.079) (0.605)
------- ------- ------- ------- --------
Total from Investment Operations... 0.816 1.164 0.957 0.666 0.156
------- ------- ------- ------- --------
Less:
Distributions from and in Excess
of Net Investment Income........ 0.783 0.794 0.812 0.751 0.763
Return of Capital Distributions... 0.000 0.014 0.046 0.162 0.090
------- ------- ------- ------- --------
Total Distributions................ 0.783 0.808 0.858 0.913 0.853
------- ------- ------- ------- --------
Net Asset Value, End of the
Period............................ $ 9.884 $ 9.851 $ 9.495 $ 9.396 $ 9.643
======= ======= ======= ======= ========
Total Return*(b)................... 8.47% 12.65% 10.55% 7.61% 1.37%**
Net Assets at End of the Period (In
millions)......................... $ 11.5 $ 8.1 $ 7.0 $ 2.0 $ 2.2
Ratio of Expenses to Average Net
Assets*........................... 1.91% 1.93% 2.06% 2.12% 2.14%
Ratio of Net Investment Income to
Average Net Assets*............... 7.83% 8.08% 8.38% 8.13% 7.91%
Portfolio Turnover................. 154% 125% 102% 152% 203%**
* If certain expenses had not been waived or reimbursed by the Adviser, total return would have been lower
and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets........................ 2.01% 2.03% 2.07% N/A N/A
Ratio of Net Investment Income
to Average
Net Assets.................... 7.73% 7.99% 8.38% N/A N/A
</TABLE>

** Non-Annualized.

(a) Based on average shares outstanding.

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

N/A = Not Applicable.

See Financial Statements and Notes thereto

8
<PAGE> 9

- --------------------------------------------------------------------------------
THE FUND
- --------------------------------------------------------------------------------

Van Kampen High Yield Fund (the "Fund") is a separate, diversified series of
Van Kampen Trust (the "Trust"). The Trust is an open-end management investment
company organized as a Delaware business trust.

Van Kampen Investment Advisory Corp. (the "Adviser") provides investment
advisory and administrative services to the Fund. The Adviser and its affiliates
also act as investment adviser to other mutual funds distributed by Van Kampen
Funds Inc. (the "Distributor"). To obtain prospectuses and other information on
any of these other funds, please call the telephone number on the cover page of
this Prospectus.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Fund's primary investment objective is to provide a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. These
investment objectives are fundamental and cannot be changed without shareholder
approval. The Fund seeks to achieve its investment objectives primarily through
investment in a diversified portfolio of medium and lower grade domestic
corporate debt securities. The Fund also may invest up to 35% of its assets in
foreign government and foreign corporate debt securities of similar quality as
determined by the Adviser. The Fund will invest in a broad range of issues
representing various companies and industries and traded on various markets.

Medium grade debt securities are those rated BBB by Standard & Poor's Ratings
Group ("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's"), comparably
rated short-term debt obligations and unrated debt securities determined by the
Adviser to be of comparable quality. Debt securities rated BBB by S&P generally
are regarded by S&P as having an adequate capacity to pay interest and repay
principal; adverse economic conditions or changing circumstances are, however,
more likely in S&P's view to lead to a weakened capacity to pay interest and
repay principal as compared with higher rated debt securities. Debt securities
rated Baa by Moody's generally are considered by Moody's as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured. In
Moody's view, interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. In Moody's view,
such securities lack outstanding investment characteristics and have speculative
characteristics as well.

Lower grade debt securities are those rated between BB and D (inclusive) by
S&P, Ba and C (inclusive) by Moody's, comparably rated short-term debt
obligations and unrated debt securities determined by the Adviser to be of
comparable quality, which securities sometimes are referred to as "junk bonds".
Debt securities rated BB, B, CCC, CC and C by S&P generally are regarded by S&P,
on balance, as significantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
Debt securities rated BB indicates the lowest degree of speculation and C the
highest degree of speculation with respect to such securities. While such debt
will likely have some quality and protective characteristics, in S&P's view
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt securities rated C by S&P may be used to cover a situation
where a bankruptcy petition has been filed, but debt service payments are
continued. Debt securities rated D by S&P are in default, and payment of
interest or repayment of principal is in arrears. The D rating is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. Debt securities rated Ba by Moody's are
judged to have speculative elements, their future cannot be as well-assured. In
Moody's view, often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future. Debt securities rated B by Moody's are viewed by Moody's as
generally lacking characteristics of the desirable investment. In Moody's view,
assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small. Debt securities which
are rated Caa by Moody's are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca by Moody's represent obligations which are speculative
in a high degree. Such issues are often in default or have other market
shortcomings. Bonds which are rated C by Moody's are the lowest rated class of
bonds and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing. A complete description of the
various S&P and Moody's rating categories is included as Appendix A to this
Prospectus.

9
<PAGE> 10

Investment in medium and lower grade securities involves special risks as
compared with investment in higher grade securities, including potentially
greater sensitivity to a general economic downturn or a significant increase in
interest rates, greater market price volatility and less liquid secondary market
trading, among others. Investment in securities that are in default, or with
respect to which payment of interest or repayment of principal is in arrears,
presents special risk considerations. The Fund may incur additional expenses to
the extent that it is required to seek recovery of interest or principal, and
the Fund may be unable to obtain full recovery thereof. See "Special Risk
Considerations Regarding Medium and Lower Grade Debt Securities." Investment in
foreign government and foreign corporate debt securities entails risks in
addition to those associated with the domestic securities in which the Fund may
invest. See "Foreign Securities." There can be no assurance that the Fund will
achieve its investment objective. An investment in the Fund may not be
appropriate for all investors. The Fund is not intended to be a complete
investment program, and investors should consider their long-term investment
goals and financial needs when making an investment decision with respect to the
Fund. An investment in the Fund is intended to be a long-term investment and
should not be used as a trading vehicle. The net asset value per share of the
Fund can be expected to increase or decrease depending on real or perceived
changes in the credit risks associated with its portfolio investments, changes
in interest rates and other factors affecting the credit markets generally.

The table below sets forth the percentages of the Fund's assets invested as of
June 30, 1998 in the various Moody's and S&P rating categories and in unrated
securities determined by the Adviser to be of comparable quality. The
percentages are based on the dollar-weighted average of credit ratings of all
debt securities held by the Fund during the 1998 fiscal year computed on a
monthly basis.

<TABLE>
<CAPTION>
UNRATED SECURITIES OF
RATED SECURITIES COMPARABLE QUALITY
RATING (AS A PERCENTAGE OF (AS A PERCENTAGE OF
CATEGORY PORTFOLIO VALUE) PORTFOLIO VALUE)
-------- ------------------- ---------------------
<S> <C> <C>
AAA/Aaa..................................................... 9.3% 0.0%
AA/Aa....................................................... 0.0% 0.0%
A/A......................................................... 0.4% 0.0%
BBB/Baa..................................................... 2.9% 0.0%
BB/Ba....................................................... 24.8% 2.0%
B/B......................................................... 55.9% 3.3%
CCC/Caa..................................................... 0.1% 0.3%
CC/Ca....................................................... 0.2% 0.8%
C/C......................................................... 0.0% 0.0%
D........................................................... 0.0% 0.0%
----- ----
Percentage of Rated and Unrated
Debt Securities........................................... 93.6% 6.4%
===== ====
</TABLE>

There is no limitation with respect to the maturities of the securities in
which the Fund may invest.

SPECIAL RISK CONSIDERATIONS REGARDING MEDIUM AND LOWER GRADE DEBT SECURITIES.
The Fund invests in medium and lower grade debt securities. Debt securities
which are in the medium and lower grade categories generally offer a higher
current yield than is offered by higher grade debt securities, but they also
generally involve greater price volatility and greater credit and market risk.
Credit risk relates to the issuer's ability to make timely payment of interest
and principal when due. Market risk relates to the changes in market value that
occur as a result of variation in the level of prevailing interest rates and
yield relationships in the debt securities market and as a result of real or
perceived changes in credit risk. Debt securities rated BB or below by S&P and
Ba or below by Moody's commonly are referred to as "junk bonds." Although the
Fund primarily will invest in medium and lower grade debt securities, the Fund
may invest all or a portion of its assets in higher grade debt securities for
temporary defensive purposes. Such investments may result in a lower current
income than if the Fund were fully invested in medium and lower grade debt
securities.

The value of the Fund's portfolio securities can be expected to fluctuate over
time. When interest rates decline, the value of a portfolio invested in fixed
income securities generally can be expected to rise. Conversely, when interest
rates rise, the value of a portfolio invested in fixed income securities
generally can be expected to decline. However, the secondary market prices of
medium and lower grade debt securities are less sensitive to changes in interest
rates and are more

10
<PAGE> 11

sensitive to adverse economic changes or individual developments than are the
secondary market prices of higher grade debt securities. A significant increase
in interest rates or a general economic downturn could severely disrupt the
market for lower grade debt securities and adversely affect the market value of
such securities. Such events also could lead to a higher incidence of default by
issuers of lower grade debt securities as compared with historical default
rates. In addition, changes in interest rates and periods of economic
uncertainty can be expected to result in increased volatility in the market
price of the debt securities in the Fund's portfolio and thus in the net asset
value of the Fund. Also, adverse publicity and investor perceptions, whether or
not based on rational analysis, may affect significantly the value and liquidity
of medium and lower grade debt securities. The secondary market value of debt
securities structured as zero coupon securities and payment-in-kind securities
may be more volatile in response to changes in interest rates than debt
securities which pay interest periodically in cash.

Increases in interest rates and changes in the economy may adversely affect
the ability of issuers of medium and lower grade debt securities to pay interest
and to repay principal, to meet projected financial goals and to obtain
additional financing. In the event that an issuer of securities held by the Fund
experiences difficulties in the timely payment of principal or interest and such
issuer seeks to restructure the terms of its borrowings, the Fund may incur
additional expenses and may determine to invest additional assets with respect
to such issuer or the project or projects to which the Fund's portfolio
securities relate. Further, the Fund may incur additional expenses to the extent
that it is required to seek recovery upon a default in the payment of interest
or the repayment of principal on its portfolio holdings, and the Fund may be
unable to obtain full recovery thereof.

To the extent that there is no established retail market for some of the
medium or lower grade debt securities in which the Fund may invest, trading in
such securities may be relatively inactive. The Adviser is responsible for
determining the net asset value of the Fund, subject to the supervision of the
Board of Trustees of the Trust. During periods of reduced market liquidity and
in the absence of readily available market quotations for medium and lower grade
debt securities held in the Fund's portfolio, the ability of the Adviser to
value the Fund's securities becomes more difficult and the Adviser's use of
judgment may play a greater role in the valuation of the Fund's securities due
to the reduced availability of reliable objective data. The effects of adverse
publicity and investor perceptions may be more pronounced for securities for
which no established retail market exists as compared with the effects on
securities for which such a market does exist. Further, the Fund may have more
difficulty selling such securities in a timely manner and at their stated value
than would be the case for securities for which an established retail market
does exist. To the extent that the Fund purchases illiquid debt securities or
securities which are restricted as to resale, the Fund may be required to incur
costs in connection with the registration of restricted securities in order to
dispose of such securities.

Legislation has been and may be adopted which may have an adverse impact on
the market for medium and lower grade debt securities. For example, the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 required
savings and loan associations to dispose of their high yield bonds no later than
July 1, 1994 which adversely affected the marketplace for medium and lower grade
debt. Participation by banks in highly leveraged transactions may subject banks
to increased regulatory scrutiny. Other legislation may be proposed which, if
enacted, could have an adverse impact on the market for medium and lower grade
debt securities.

The Fund may invest in zero coupon and payment-in-kind debt securities. Zero
coupon securities are debt obligations that do not entitle the holder to any
periodic payment of interest prior to maturity or a specified date when the
securities begin paying current interest. They are issued and traded at a
discount from their face amounts or par value, which discount varies depending
on the time remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer. The
Internal Revenue Code of 1986, as amended (the "Code"), requires that regulated
investment companies distribute at least 90% of their net investment income each
year, including tax-exempt and non-cash income. Although the Fund will receive
no coupon payments on zero coupon securities prior to their maturity, the Fund
is required to include in its income for distribution to shareholders in each
year any income attributable to zero coupon securities. The Fund may be required
to borrow or to liquidate portfolio securities to generate cash for
distributions at a time that it otherwise would not have done so in order to
make distributions that satisfy applicable tax law. As of June 30, 1998,
approximately 2.02% of the Fund's net assets were invested in zero coupon
securities.

Payment-in-kind securities are securities that pay interest through the
issuance of additional securities. They are issued by companies that have
significant amounts of debt outstanding and are seeking to raise additional
funds without incurring

11
<PAGE> 12

additional periodic cash interest payment obligations. Although payment-in-kind
securities generally offer the opportunity for higher returns than securities
that pay interest periodically in cash, they also generally are more volatile in
response to changes in interest rates and are more speculative investments than
such securities. The Fund is required to include in its income for distribution
to shareholders in each year any income attributable to securities received as
interest on payment-in-kind securities. The Fund may be required to borrow or to
liquidate portfolio securities in order to generate cash for distributions at a
time that it otherwise would not have done so in order to make distributions
that satisfy applicable tax law. As of June 30, 1998, approximately 1.78% of the
Fund's net assets were invested in payment-in-kind securities.

The Adviser seeks to minimize the risks involved in investing in medium and
lower grade debt securities through portfolio diversification, careful
investment analysis, and attention to current developments and trends in the
economy and financial and credit markets. The Fund will rely on the Adviser's
judgment, analysis and experience in evaluating the creditworthiness of an
issue. In its analysis, the Adviser will take into consideration, among other
things, the issuer's financial resources, its sensitivity to economic conditions
and trends, its operating history, the quality of the issuer's management and
regulatory matters. The Adviser may consider the credit ratings of Moody's and
S&P in evaluating debt securities although it does not rely primarily on these
ratings. Such ratings evaluate only the safety of principal and interest
payments, not market value risk. Additionally, because the creditworthiness of
an issuer may change more rapidly than is able to be timely reflected in changes
in credit ratings, the Adviser continuously monitors the issuers of debt
securities held in the Fund's portfolio.

Many medium and lower grade debt securities are not listed for trading on any
national securities exchange, and many issuers of medium and lower grade debt
securities choose not to have a rating assigned to their obligations by any
nationally recognized statistical rating organization. As a result, the Fund's
portfolio may consist of a relatively high proportion of unlisted or unrated
securities as compared with an investment company that invests primarily in
higher grade securities. The amount of information available about the financial
condition of an issuer of unrated or unlisted securities generally is not as
extensive as that which is available with respect to issuers of listed or rated
securities. Because of the nature of medium and lower rated debt securities,
achievement by the Fund of its investment objective may be more dependent on the
credit analysis of the Adviser than is the case for an investment company which
invests primarily in higher grade securities.

FOREIGN SECURITIES. The Fund may invest up to 35% of its assets in foreign
government and foreign corporate debt securities of similar quality as the
securities described above as determined by the Adviser. These investments
generally will be limited to securities issued by foreign companies with at
least three years of operations in developed countries or by foreign
governments. Investments in foreign securities present certain risks not
ordinarily found in investments in securities of United States issuers. These
risks include fluctuations in foreign exchange rates, political and economic
developments (including war or other instability, expropriation of assets,
nationalization and confiscatory taxation), the imposition of foreign exchange
limitations, withholding taxes on income or capital transactions or other
restrictions, higher transaction costs and difficulty in taking judicial action.
Generally, a significant factor affecting the performance of the Fund's
investments in foreign securities is the fluctuation in the relative values of
the currencies in which such securities are denominated. In addition, there
generally is less publicly available information about many foreign issuers, and
auditing, accounting and financial reporting requirements are less stringent and
less uniform in many foreign countries and accordingly, their securities markets
may be less liquid than those in the United States. Because there is usually
less supervision and governmental regulation of exchanges and brokers and
dealers in many foreign countries than there is in the United States, the Fund
may experience settlement difficulties or delays not usually encountered in the
United States.

YEAR 2000 RISKS. Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Fund's Adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem". The Adviser
is taking steps that it believes are reasonably designed to address the Year
2000 Problem with respect to computer systems that it uses and to obtain
reasonable assurances that comparable steps are being taken by the Fund's other
major service providers. At this time, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Fund. In addition,
the Year 2000 Problem may adversely affect the issuers of securities in which
the Fund may invest which, in turn, may adversely affect the net asset value of
the Fund.

12
<PAGE> 13

- --------------------------------------------------------------------------------
INVESTMENT PRACTICES
- --------------------------------------------------------------------------------

In connection with the investment objectives and policies described above, the
Fund may, but is not required to, utilize various other investment strategies as
described below to earn income, facilitate portfolio management and mitigate
risk. Such strategies are generally accepted by modern portfolio managers and
are regularly utilized by many mutual funds and other institutional investors.
Although the Adviser believes that these investment practices may further the
Fund's investment objectives, no assurance can be given that these investment
practices will achieve this result.

STRATEGIC TRANSACTIONS. The Fund may purchase and sell derivative instruments
such as exchange-listed and over-the-counter put and call options on securities,
financial futures, fixed-income indices and other financial instruments,
purchase and sell financial futures contracts, enter into various interest rate
transactions such as swaps, caps, floors or collars, and enter into various
currency transactions such as currency forward contracts, currency futures
contracts, currency swaps or options on currency or currency futures.
Collectively, all the above are referred to as "Strategic Transactions."
Strategic Transactions may be used to attempt to protect against possible
changes in the market value of securities held in or to be purchased for the
Fund's portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities. The Fund may sell options on
securities the Fund owns or has the right to purchase without additional
payments, up to a maximum of 25% of the Fund's assets, for non-hedging purposes.
Any or all of these investment techniques may be used at any time and there is
no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of the Fund to utilize these Strategic
Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. The Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions involving financial futures
and options thereon will be purchased, sold or entered into only for bona fide
hedging, risk management or portfolio management purposes and not for
speculative purposes.

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

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
banks and broker-dealers under which the Fund purchases securities and agrees to
resell the securities at an agreed upon time and at an agreed upon price. Under
the Investment Company Act of 1940, as amended (the "1940 Act"), repurchase
agreements may be considered collateralized loans by the Fund, and the
difference between the amount the Fund pays for the securities and the amount it
receives upon resale is accrued as interest and reflected in the Fund's net
income. When the Fund enters into repurchase agreements, it relies on the seller
to repurchase the securities. Failure to do so may result in a loss for the Fund
if the

13
<PAGE> 14

market value of the securities is less than the repurchase price. At the time
the Fund enters into a repurchase agreement, the value of the underlying
security including accrued interest will be equal to or exceed the value of the
repurchase agreement and, for repurchase agreements that mature in more than one
day, the seller will agree that the value of the underlying security including
accrued interest will continue to be at least equal to the value of the
repurchase agreement. In determining whether to enter into a repurchase
agreement with a bank or broker-dealer, the Fund will take into account the
creditworthiness of such party. In the event of default by such party, the Fund
may not have a right to the underlying security and there may be possible delays
and expenses in liquidating the security purchased, resulting in a decline in
its value and loss of interest. The Fund will use repurchase agreements as a
means of making short-term investments. Repurchase agreements that mature in
more than seven days are treated as illiquid securities and are subject to
Fund's limitation on "illiquid" securities.

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 SEC exemptive order authorizing this practice, which
conditions are designed to ensure the fair administration of the joint account
and to protect the amounts in that account.

SECURITIES LENDING. The Fund may lend its portfolio securities to brokers or
dealers, banks or other recognized institutional borrowers of securities to a
maximum of 25% of the net assets of the Fund, provided that the borrower at all
times maintains cash or liquid securities or secures a letter of credit in favor
of the Fund in an amount equal to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the
borrower will pay the Fund an amount equivalent to any dividend or interest paid
on such securities and the Fund may invest the cash collateral and earn
additional income, or it may receive an agreed-upon amount of interest income
from the borrower who has delivered equivalent collateral or secured a letter of
credit. Loans are subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administration and custodial fees in
connection with a loan.

ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities, which generally includes securities the disposition of
which is subject to substantial legal or contractual restrictions on resale. The
sale of illiquid securities often requires more time and results in higher
brokerage charges or dealer discounts and other selling expenses. The Fund may
find it difficult to sell such illiquid securities when the Adviser believes it
is advisable to do so or may be able to sell such securities only at prices
lower than if such securities were more liquid. The lack of a liquid secondary
market also may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's portfolio and calculating net
asset value. Restricted securities may sell at a price lower than similar
securities that are not subject to restrictions on resale. Restricted securities
salable among qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 that are determined to be liquid by the Adviser under
guidelines adopted by the Board of Trustees of the Trust (under which guidelines
the Adviser will consider factors such as trading activities and the
availability of price quotations) will not be treated illiquid securities for
purposes of the Fund's limitations on illiquid securities.

"WHEN ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The Fund may purchase and
sell portfolio securities on a "when issued" and "delayed delivery" basis. No
income accrues to the Fund on securities in connection with such purchase
transactions prior to the date the Fund actually takes delivery of such
securities. These transactions are subject to market fluctuation; the value of
the securities at delivery may be more or less than their purchase price, and
yields generally available on comparable securities when delivery occurs may be
higher or lower than yields on the securities obtained pursuant to such
transactions. Because the Fund relies on the buyer or seller, as the case may
be, to consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. When the Fund is the buyer in such a
transaction, however, it will maintain, in a segregated account with its
custodian, cash or liquid securities having an aggregate value equal to the
amount of such purchase commitments until payment is made. The Fund will make
commitments to purchase securities on such basis only with the intention of
actually acquiring these securities, but the Fund may sell such securities prior
to the settlement date if such sale is considered to be advisable. No specific
limitation exists as to the percentage of the Fund's assets which may be used to
acquire securities on a "when issued" or "delayed delivery" basis. To the extent
the Fund
14
<PAGE> 15

engages in "when issued" and "delayed delivery" transactions, it will do so for
the purpose of acquiring securities for the Fund's portfolio consistent with the
Fund's investment objective and policies and not for the purpose of investment
leverage.

PORTFOLIO TURNOVER. Portfolio turnover is calculated by dividing the lesser of
purchases or sales of portfolio securities by the monthly average value of the
securities in the portfolio during the year. Securities, including options,
whose maturity or expiration date at the time of acquisition were one year or
less are excluded from such calculation. The Fund anticipates that the annual
portfolio turnover rate for the Fund's portfolio will generally be less than
200%, and may be significantly less in a period of stable or rising interest
rates. If the turnover rate for the Fund reaches or exceeds this percentage, the
Fund may have higher brokerage costs and may have higher short-term capital
gains that if the Fund had lower portfolio turnover. The turnover rate will not
be a limiting factor, however, if the Adviser deems portfolio changes are
appropriate. The Fund's annual portfolio turnover rate is shown in the table of
"Financial Highlights."

TEMPORARY DEFENSIVE POSITIONS. When the Adviser determines that market
conditions warrant and deems it to be in the best interest of the Fund, the Fund
may, for temporary defensive purposes, invest up to 100% of its total assets in
(i) cash, (ii) U.S. Government securities and (iii) money market instruments.
When maintaining such a temporary defensive position, the Fund's yield may be
lower and, therefore, it may be more difficult to achieve the Fund's primary
investment objective of high current income.

INVESTMENT RESTRICTIONS. The Fund is subject to certain investment
restrictions which constitute fundamental policies. Fundamental policies cannot
be changed without the approval of the holders of a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act. See "Investment
Policies and Restrictions" in the Statement of Additional Information.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION. The Adviser is responsible
for decisions to buy and sell securities for the Fund, the selection of brokers
and dealers to effect the transactions and the negotiation of prices and any
brokerage commissions. The securities in which the Fund invests are traded
principally in the over-the-counter market. In the over-the-counter market,
securities are generally traded on a net basis with dealers acting as principal
for their own accounts without a stated commission, although the price of the
security usually includes a mark-up to the dealer. Securities purchased in
underwritten offerings generally include, in the price, a fixed amount of
compensation for the managers, underwriters and dealers. The Fund may also
purchase certain money market instruments directly from an issuer, in which case
no commissions or discounts are paid. Purchases and sales of bonds on a stock
exchange are effected through brokers who charge a commission for their
services.

The Adviser is responsible for effecting securities transactions of the Fund
and will do so in a manner deemed fair and reasonable to shareholders of the
Fund and not according to any formula. The Adviser's primary considerations in
selecting the manner of executing securities transactions for the Fund will be
prompt execution of orders, the size and breadth of the market for the security,
the reliability, integrity and financial condition and execution capability of
the firm, the size of and difficulty in executing the order, and the best net
price. There are many instances when, in the judgment of the Adviser, more than
one firm can offer comparable execution services. In selecting among such firms,
consideration may be given to those firms which supply research and other
services in addition to execution services. However, it is not the policy of the
Adviser, absent special circumstances, to pay higher commissions to a firm
because it has supplied such services. The Adviser may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Fund, the Adviser or the Distributor or with brokerage firms
participating in the distribution of the Fund's shares if it reasonably believes
that the quality of execution and the commissions are comparable to that
available from other qualified firms. Similarly, to the extent permitted by law
and subject to the same considerations on quality of execution and comparable
commission rates, the Adviser may direct an executing broker to pay a portion or
all of any commissions, concessions or discounts to a firm supplying research or
other services or to a firm participating in the distribution of the Fund's
shares. See "Portfolio Transactions and Brokerage Allocation" in the Statement
of Additional Information for more information.

- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

THE ADVISER. Van Kampen Investment Advisory Corp. (the "Adviser") is the
investment adviser for the Fund. The Adviser is a wholly owned subsidiary of Van
Kampen Investments Inc. ("Van Kampen"). Van Kampen is a diversified asset
management company with more than two million retail investor accounts,
extensive capabilities for managing institutional portfolios, and more than $50
billion under management or supervision. Van Kampen's more than 50

15
<PAGE> 16

open-end and 39 closed-end funds and more than 2,500 unit investment trusts are
professionally distributed by leading financial advisers nationwide. Van Kampen
Funds Inc., the distributor of the Fund and the sponsor of the funds mentioned
above, is also a wholly owned subsidiary of Van Kampen. Van Kampen is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The address
of the Adviser is One Parkview Plaza, Oakbrook Terrace, Illinois 60181.

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

ADVISORY AGREEMENT. The business and affairs of the Fund are managed under the
direction of the Board of Trustees of the Trust of which the Fund is a separate
series. Subject to the Trustees' authority, the Adviser and the officers of the
Fund supervise and implement the Fund's investment activities and are
responsible for overall management of the Fund's business affairs. The Fund pays
the Adviser a fee computed based on an annual rate applied to the average daily
net assets of the Fund as indicated below. This fee is higher than that paid by
most mutual funds.

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS PERCENTAGE PER ANNUM
------------------------ --------------------
<S> <C>
First $500 million.......................................... 0.75 of 1.00%
Over $500 million........................................... 0.65 of 1.00%
</TABLE>

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

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

PERSONAL INVESTMENT POLICIES. The Fund and the Adviser have adopted Codes of
Ethics designed to recognize the fiduciary relationship between the Fund and the
Adviser and its employees. The Codes permit trustees, directors, 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 preclearance and other procedures designed to prevent conflicts of
interest.

PORTFOLIO MANAGEMENT. Robert J. Hickey, a Vice President of the Adviser, has
been primarily responsible for the day-to-day management of the Fund's portfolio
since March 1998. Mr. Hickey joined the Adviser in 1989 and became Assistant
Vice President of the Adviser in January 1993. Mr. Hickey has been a Vice
President of the Adviser and Van Kampen Asset Management Inc. since June 1995.
- --------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- --------------------------------------------------------------------------------

The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares of the Fund that is most beneficial to the investor, taking
into account the amount of the purchase, the length of time the investor expects
to hold the shares, whether the investor wishes to receive dividends in cash or
to reinvest them in additional shares of the Fund, and other circumstances.
Investors should consider such factors together with the amount of sales charges
and

16
<PAGE> 17

aggregate distribution and service fees with respect to each class of shares
that may be incurred over the anticipated duration of their investment in the
Fund.

The Fund currently offers three classes of shares, designated Class A Shares,
Class B Shares and Class C Shares. Shares of each class are offered at a price
equal to their net asset value per share plus a sales charge which, at the
election of the purchaser, may be imposed (a) at the time of purchase (Class A
Share accounts under $1 million) or (b) on a contingent deferred basis (Class A
Share accounts over $1 million, Class B Shares and Class C Shares). Shares
purchased subject to a contingent deferred sales charge (a "CDSC") sometimes are
referred to herein collectively as "Contingent Deferred Sales Charge Shares" or
"CDSC Shares."

The minimum initial investment with respect to each class of shares is $500.
The minimum subsequent investment with respect to each class of shares is $25.
It is presently the policy of the Distributor not to accept any order for Class
B Shares in an amount of $500,000 or more and 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.

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

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

The administrative expenses that may be allocated to a specific class of
shares may consist of (i) transfer agency expenses attributable to a specific
class of shares, which expenses typically will be higher with respect to classes
of shares subject to the conversion feature; (ii) printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxy statements to current shareholders of a specific class;
(iii) securities registration fees incurred by a class of shares; (iv) the
expense of administrative personnel and services as required to support the
shareholders of a specific class; (v) Trustees' fees or expense incurred as a
result of issues relating to one class of shares; (vi) accounting expenses
relating solely to one class of shares; and (vii) any other incremental expenses
subsequently identified that should be properly allocated to one or more classes
of shares. All such expenses incurred by a class will be borne on a pro rata
basis by the outstanding shares of such class. All allocations of administrative
expenses to a particular class of shares will be limited to the extent necessary
to preserve the Fund's qualification as a regulated investment company under the
Code.

17
<PAGE> 18

- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------

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

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

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

CLASS A SHARES

The public offering price of Class A Shares is equal to the net asset value
per share plus an initial sales charge which is a variable percentage of the
offering price depending upon the amount of the sale. The table below shows
total sales charges and dealer concessions reallowed to dealers and agency
commissions paid to brokers with respect to sales of Class A Shares. The sales
charge is allocated between the investor's broker, dealer or financial
intermediary and the Distributor. The staff of the SEC has taken the position
that brokers, dealers or financial intermediaries who receive 90% or more of the
sales charge may be deemed to be "underwriters" as that term is defined in the
Securities Act of 1933, as amended.

18
<PAGE> 19

SALES CHARGE TABLE

<TABLE>
<CAPTION>
DEALER
CONCESSION
OR AGENCY
TOTAL SALES CHARGE COMMISSION
-------------------------- -----------
PERCENTAGE PERCENTAGE PERCENTAGE
SIZE OF TRANSACTION OF OFFERING OF NET OF OFFERING
AT OFFERING PRICE PRICE ASSET VALUE PRICE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000.......................................... 4.75% 4.99% 4.25%
$100,000 but less than $250,000............................. 3.75 3.90 3.25
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
- ---------------------------------------------------------------------------------------------------------
</TABLE>

* No sales charge is payable at the time of purchase on investments of $1
million or more, although for such investments the Fund imposes a CDSC of
1.00% on redemptions made within one year of the purchase. A commission
will be paid by the Distributor to brokers, dealers and financial
intermediaries who initiate and are responsible for purchases of $1 million
or more. See "Purchase of Shares -- Deferred Sales Charge Alternatives."

QUANTITY DISCOUNTS

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

Investors, or their brokers, dealers or financial intermediaries, must notify
the Fund at the time of the purchase order whenever a quantity discount is
applicable to purchases. Upon such notification, an investor will receive the
lowest applicable sales charge. Quantity discounts may be modified or terminated
at any time. For more information about quantity discounts, investors should
contact their broker, dealer or financial intermediary or the Distributor.

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
estate or 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 the Adviser or Van Kampen Asset Management Inc. 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 preceding sales charge
table applies to the total dollar amount being invested by any person at any one
time in Class A 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 preceding
sales charge table may also be determined by combining the amount being invested
in Class A Shares of the Fund with other shares of the Fund and shares of
Participating Funds plus the current offering price of all shares of the Fund
and other Participating Funds which have been previously purchased and are still
owned.

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

19
<PAGE> 20

satisfied by the investor and any additional sales charges are not paid,
sufficient restricted shares will be redeemed by the Fund to pay such charges.
Additional information is contained in the application accompanying this
Prospectus.

OTHER PURCHASE PROGRAMS

Purchasers of Class A Shares may be entitled to reduced initial sales charges
in connection with unit investment trust reinvestment programs and purchases by
registered representatives of selling firms or purchases by persons affiliated
with the Fund or the Distributor. The Fund reserves the right to modify or
terminate these arrangements at any time.

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

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

As further requirements for obtaining these special benefits, the Fund also
requires that all dividends and other distributions by the Fund be reinvested in
additional shares without any systematic withdrawal program. There will be no
minimum for reinvestments from unit investment trusts. The Fund will send
account activity statements to such participants on a monthly basis only, even
if their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.

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

(1) Current or retired trustees or directors of funds advised by the Adviser
or Van Kampen Asset Management Inc. and such persons' families and their
beneficial accounts.

(2) Current or retired directors, officers and employees of Morgan Stanley
Dean Witter & Co. or 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 brokers, dealers or
financial intermediaries through which purchases are made an amount up to
0.50% of the amount invested over a 12-month period following such
transaction.

(5) Trustees and other fiduciaries purchasing shares for retirement plans
which invest in multiple fund complexes 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 detail with respect to such alliance
programs.

20
<PAGE> 21

(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 plan or retirement
account other than distributions taken to correct an excess contribution.

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

(8) Trusts created under pension, profit sharing or other employee benefit
plans qualified under Section 401(a) of the Code, or custodial accounts
held by a bank created pursuant to Section 403(b) of the Code and
sponsored by non-profit organizations defined under Section 501(c)(3) of
the Code and assets held by an employer or trustee in connection with an
eligible deferred compensation plan under Section 457 of the Code. Such
plans will qualify for purchases at net asset value provided, for plans
initially establishing accounts with the Distributor in the Participating
Funds after February 1, 1997, that (1) the initial amount invested in the
Participating Funds is at least $500,000 or (2) such shares are purchased
by an employer sponsored plan with more than 100 eligible employees. Such
plans that have been established with a Participating Fund or have
received proposals from the Distributor prior to February 1, 1997 based on
net asset value purchase privileges previously in effect will be qualified
to purchase shares of the Participating Funds at net asset value for
accounts established on or before May 1, 1997. Section 403(b) and similar
accounts for which Van Kampen Trust Company served as custodian will not
be eligible for net asset value purchases based on the aggregate
investment made by the plan or the number of eligible employees, except
under certain uniform criteria established by the Distributor from time to
time. Prior to February 1, 1997, 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 $5 million, plus
0.50% on the next $5 million and 0.25% on the excess over $10 million. For
purchases on February 1, 1997 and thereafter, a commission will be paid as
follows: 1.00% on sales to $2 million, plus 0.80% on the next $1 million,
plus 0.50% on the next $47 million and 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 CDSC of 1.00% in the event of
redemption within one year of purchase, and a commission will be paid to
authorized dealers who initiate and are responsible for such sales to each
individual as follows: 1.00% on sales to $2 million, plus 0.80% on the
next $1 million and 0.50% on the excess over $3 million.

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

Purchase orders made pursuant to clause (4) may be placed either through
authorized brokers, dealers or financial intermediaries as described above or
directly with Investor Services, 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 broker, dealer or financial intermediary may charge
a transaction fee for placing an order to purchase shares pursuant to this
provision or for placing a redemption order with respect to such shares. The
broker, dealers or financial intermediaries will be paid a service fee as
described herein under "Distribution and Service Plans" on purchases made as
described in (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.

DEFERRED SALES CHARGE ALTERNATIVES

Investors choosing the deferred sales charge alternative may purchase Class A
Shares in an amount of $1 million or more, Class B Shares or Class C Shares. The
public offering price of a CDSC Share is equal to the net asset value per

21
<PAGE> 22

share without the imposition of a sales charge at the time of purchase. CDSC
Shares are sold without an initial sales charge so that the Fund may invest the
full amount of the investor's purchase payment.

CDSC Shares redeemed within a specified period of time generally will be
subject to a CDSC at the rates set forth below charged as a percentage of the
dollar amount subject thereto. The amount of the CDSC will vary depending on (i)
the class of CDSC Shares to which such shares belong and (ii) the number of
years from the time of payment for the purchase of the CDSC Shares until the
time of their redemption. The charge will be assessed on an amount equal to the
lesser of the then current market value or the original purchase price of the
CDSC Shares being redeemed. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
CDSC will be assessed on CDSC Shares derived from reinvestment of dividends or
capital gains distributions. Solely for purposes of determining the number of
years from the time of any payment for the purchase of CDSC Shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month. The CDSC schedule and holding period applicable to a CDSC Share
acquired through the exchange privilege is determined by reference to the
Participating Fund from which such share originally was purchased.

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

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

Proceeds from the CDSC and the distribution fee applicable to a class of CDSC
Shares are paid to the Distributor and are used by the Distributor to defray its
expenses related to providing distribution-related services to the Fund in
connection with the sale of shares of such class of CDSC Shares, such as the
payment of compensation to selected dealers and agents for selling such shares.
The combination of the CDSC and the distribution fee facilitates the ability of
the Fund to sell such CDSC Shares without a sales charge being deducted at the
time of purchase. A commission or transaction fee will generally be paid by the
Distributor at the time of purchase out of the Distributor's own assets (and not
out of the Fund's assets) to brokers, dealers and financial intermediaries
participating in the continuous public offering of the CDSC Shares at a
percentage rate of the dollar value of the CDSC Shares purchased from the Fund
by such brokers, dealers and financial intermediaries, which percentage rate is
equal to (i) with respect to Class A Shares, 1.00% on sales to $2 million, plus
0.80% on the next $1 million and 0.50% on the excess over $3 million; (ii) 4.00%
with respect to Class B Shares and (iii) 1.00% with respect to Class C Shares.
Such compensation does not change the price an investor pays for CDSC Shares or
the amount that the Fund receives from such sale. Brokers, dealers and financial
intermediaries also will be paid ongoing commissions and transaction fees of up
to 0.75% of the average daily net assets of the Fund's Class C Shares generally
annually commencing in the second year after purchase.

CLASS A SHARE PURCHASES OF $1 MILLION OR MORE. No sales charge is payable at
the time of purchase on investments of $1 million or more, although for such
investments the Fund imposes a CDSC of 1.00% on redemptions made within one year
of the purchase. Class A Shares redeemed thereafter will not be subject to a
CDSC.

22
<PAGE> 23

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

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

The CDSC generally is waived on redemptions of Class B Shares made pursuant to
the Systematic Withdrawal Plan. See "Shareholder Services -- Systematic
Withdrawal Plan."

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

CONVERSION FEATURE. Class B shares purchased on or after June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares eight years after the end of the calendar month in which the
shares were purchased. Class B shares purchased before June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares six years after the end of the calendar month in which the shares
were purchased. Class C shares purchased before January 1, 1997, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares ten years after the end of the calendar month in which such
shares were purchased. Such conversion will be on the basis of the relative net
asset values per share, without the imposition of any sales load, fee or other
charge. The conversion schedule applicable to any share acquired through the
exchange privilege is determined by reference to the Participating Fund from
which such share originally was 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 fees and transfer agency costs with respect to such
shares does not result in the Fund's dividends or distributions constituting
"preferential dividends" under the Code, and (ii) the conversion of such 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 CDSC is waived on redemptions
of Class B Shares and Class C Shares (i) following the death or disability (as
defined in the Code) of a shareholder; (ii) in connection with required minimum
distributions from an IRA or other retirement plan; (iii) pursuant to the Fund's
systematic withdrawal plan but limited to 12% annually of the initial value of
the account; (iv) in circumstances under which no commission or transaction fee
is paid to authorized dealers at the time of purchase of such shares; or (v)
effected pursuant to the right of the Fund to liquidate a shareholder's account
as described herein under "Redemption of Shares." The CDSC is also waived on
redemptions of Class C Shares as it relates to the reinvestment of redemption
proceeds in shares of the same class of the Fund within 180 days after
redemption. See "Shareholder Services" and "Redemption of Shares" for further
discussion of the waiver provisions.

NET ASSET VALUE

The net asset value per share of the Fund will be determined separately for
each class of shares. The net asset value per share of a given class of shares
of the Fund is determined by calculating the total value of the Fund's assets
attributable to such class of shares, deducting its total liabilities
attributable to such class of shares, and dividing the result by the number of
shares of such class of the Fund outstanding. The net asset value for the Fund
is computed once daily as of 5:00 p.m. Eastern time, Monday through Friday,
except on customary business holidays, or except on any day on which no purchase
or redemption orders are received, or when there is not sufficient trading in
the Fund's portfolio securities such that the Fund's net asset value per share
might be materially affected. The Fund reserves the right to calculate the net
asset value

23
<PAGE> 24

and to adjust the public offering price based thereon more frequently than once
a day if deemed desirable. The net asset value per share of the different
classes of shares are expected to be substantially the same; from time to time,
however, the per share net asset value of the different classes of shares may
differ.

Fixed income securities are valued by using market quotations, prices provided
by market makers, or estimates of market values obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Trustees of the Trust, of which
the Fund is a series. Short-term securities with remaining maturities of less
than 60 days are valued at amortized cost when amortized cost is determined in
good faith by or under the direction of the Board of Trustees of the Trust to be
representative of the fair value at which it is expected such securities may be
resold. Other assets are valued at fair value as determined in good faith by or
under the direction of the Trustees.

- --------------------------------------------------------------------------------
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. The
following is a description of such services. Unless otherwise described below,
each of these services may be modified or terminated by the Fund at any time.

INVESTMENT ACCOUNT. Van Kampen Investor Services Inc. ("Investor Services"),
transfer agent for the Fund and a wholly-owned subsidiary of Van Kampen,
performs bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. Each shareholder has an investment account
under which the investor's shares of the Fund are held by Investor Services.
Except as described in this Prospectus, after each share transaction in an
account, the shareholder receives a statement showing the activity in the
account. Each shareholder who has an account in any of the Participating Funds
will receive statements at least quarterly from Investor Services showing any
reinvestments of dividends and capital gains distributions and any other
activity in the account since the preceding statement. Such shareholders also
will receive separate confirmations for each purchase or sale transaction other
than reinvestment of dividends and capital gains distributions and systematic
purchases or redemptions. Additions to an investment account may be made at any
time by purchasing shares through authorized brokers, dealers or financial
intermediaries or by mailing a check directly to Investor Services.

SHARE CERTIFICATES. Generally, the Fund will not issue share certificates.
However, upon written or telephone request to the Fund, a share certificate will
be issued, representing shares (with the exception of fractional shares) of the
Fund. A shareholder will be required to surrender such certificates upon
redemption thereof. In addition, if such certificates are lost the shareholder
must write to Van Kampen Funds, c/o Van Kampen Investor Services Inc., P.O. Box
418256, Kansas City, MO 64141-9256, requesting an "affidavit of loss" and to
obtain a Surety Bond in a form acceptable to Investor Services. On the date the
letter is received Investor Services will calculate a fee for replacing the lost
certificate equal to no more than 2.00% of the net asset value of the issued
shares and bill the party to whom the replacement certificate was mailed.

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gains distributions in shares of
the Fund. Such shares are acquired at net asset value per share (without sales
charge) on the record date of such dividend or distribution. Unless the
shareholder instructs otherwise, the reinvestment plan is automatic. This
instruction may be made by telephone by calling (800) 341-2911 ((800) 421-2833
for the hearing impaired) or in writing to Investor Services. The investor may,
on the initial application or prior to any declaration, instruct that dividends
be paid in cash and capital gains distributions be reinvested at net asset
value, or that both dividends and capital gains distributions be paid in cash.
For further information, see "Distributions from the Fund."

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

RETIREMENT PLANS. Eligible investors may establish individual retirement
accounts ("IRAs"); SEP; 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 Keogh plans.

24
<PAGE> 25

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

DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanying this
Prospectus or by calling (800) 341-2911 ((800) 421-2833 for the hearing
impaired), elect to have all dividends and other distributions paid on a class
of shares of the Fund invested into shares of the same class of a 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 type of retirement plan (e.g. IRA, 403(b)(7), 401(k) or Keogh) and for
the benefit of the same individual. If the qualified pre-existing account does
not exist, the shareholder must establish a new account subject to minimum
investment and other requirements of the fund into which distributions would be
invested. Distributions are invested into the selected fund at its net asset
value per share as of the payable date of the distribution.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next computed net asset value per
share of each fund after requesting the exchange without any sales charge,
subject to certain limitations. Shares of the Fund may be exchanged for shares
of any Participating Fund only if shares of the 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
the Participating Fund. Shareholders seeking an exchange with a Participating
Fund should obtain and read the current prospectus for such fund.

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

When Class B Shares and Class C Shares are exchanged among Participating
Funds, the holding period for purposes of computing the CDSC is based upon the
date of the initial purchase of such shares from a Participating Fund. If such
Class B or Class C Shares are redeemed and not exchanged for shares of another
Participating Fund, such Class B Shares and Class C Shares are subject to the
CDSC schedule imposed by the Participating Fund from which such shares were
originally purchased.

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

A shareholder wishing to make an exchange may do so by sending a written
request to Investor Services or by contacting the telephone transaction line at
(800) 421-5684 ((800) 421-2833 for the hearing impaired). A shareholder
automatically has telephone exchange privileges unless otherwise designated in
the application form accompanying this Prospectus. Van Kampen and its
subsidiaries, including Investor Services (collectively, "VK"), 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, neither VK nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. VK and the
Fund may be liable for any losses due to unauthorized or fraudulent instructions
if reasonable procedures are not followed. If the exchanging shareholder does
not have an account in the fund whose shares are being acquired, a new account
will be established with the same registration, dividend and capital gains
options (except dividend diversification options) and broker, dealer or
financial intermediary of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, an exchanging shareholder must file a specific
written request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, 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.

A prospectus of any of the Participating Funds may be obtained from any
broker, dealer or financial intermediary or the Distributor. An investor
considering an exchange to one of such funds should refer to the prospectus for
additional information regarding such fund prior to investing.

25
<PAGE> 26

SYSTEMATIC WITHDRAWAL PLAN. Any investor whose shares in a single account
total $10,000 or more at the offering price next computed after receipt of
instructions may establish a monthly, quarterly, semi-annual or annual
withdrawal plan. Any investor whose shares in a single account total $5,000 or
more at the offering price next computed after receipt of instructions may
establish a quarterly, semi-annual or annual withdrawal plan. This plan provides
for the orderly use of the entire account, not only the income but also the
capital, if necessary. Each withdrawal constitutes a redemption of shares on
which taxable gain or loss will be recognized. The plan holder may arrange for
monthly, quarterly, semi-annual, or annual checks in any amount not less than
$25. Such a systematic withdrawal plan may also be maintained by an investor
purchasing shares for a retirement plan established on a form made available by
the Fund. See "Shareholder Services -- Retirement Plans."

Class B shareholders and Class C shareholders who establish a withdrawal plan
may redeem up to 12% annually of the shareholder's initial account balance
without incurring a CDSC. 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 gains
distributions on shares held under the plan are reinvested in additional shares
at the next determined net asset value per share. If periodic withdrawals
continuously exceed reinvested dividends and capital gains distributions, the
shareholder's original investment will be correspondingly reduced and ultimately
exhausted. Withdrawals made concurrently with purchases of additional shares
ordinarily will be disadvantageous to the shareholder because of the duplication
of sales charges. The Fund reserves the right to amend or terminate the
systematic withdrawal program on 30 days' notice to its shareholders. Any gain
or loss realized by the shareholder upon redemption is a taxable event.

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

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

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

AUTOMATED CLEARING HOUSE ("ACH") DEPOSITS. Holders of Class A Shares can use
ACH to have redemption proceeds deposited electronically into their bank
accounts. Redemptions transferred to a bank account via the ACH plan are
available to be credited to the account on the second business day following
normal payment. In order to utilize this option, the shareholder's bank must be
a member of ACH. In addition, the shareholder must fill out the appropriate
section of the account application. The shareholder must also include a voided
check or deposit slip from the bank account into which redemptions 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.

INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instruction. VK 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

26
<PAGE> 27

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 neither VK nor the Fund will be
liable for following instructions 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.

- --------------------------------------------------------------------------------
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

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

WRITTEN REDEMPTION REQUESTS. In the case of redemption requests sent directly
to Investor Services, the redemption request should indicate the number of
shares to be redeemed, the class designation of such shares, the account number
and be signed exactly as the shares are registered. Signatures must conform
exactly to the account registration. If the proceeds of the redemption would
exceed $50,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the record address has changed within the previous 30
days, signature(s) must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national securities exchange,
registered securities association or clearing agency; a savings and loan
association; or a federal savings bank. If certificates are held for the shares
being redeemed, such certificates must be endorsed for transfer or accompanied
by an endorsed stock power and sent with the redemption request. In the event
the redemption is requested by a corporation, partnership, trust, fiduciary,
executor or administrator, and the name and title of the individual(s)
authorizing such redemption is not shown in the account registration, a copy of
the corporate resolution or other legal documentation appointing the authorized
signer and certified within the prior 120 days must accompany the redemption
request. The redemption price is the net asset value per share next determined
after the request is received by Investor Services in proper form. Payment for
shares redeemed (less any sales charge, if applicable) will ordinarily be made
by check mailed within three business days after acceptance by Investor Services
of the request and any other necessary documents in proper order.

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

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. To establish
such privilege, a shareholder must complete the appropriate section of the
application accompanying this Prospectus or call the Fund at (800) 341-2911
((800) 421-2833 for the hearing impaired) to request that a copy of the
Telephone Redemption Authorization form be sent to them for completion. To
redeem shares, contact the telephone transaction line at (800) 421-5684. VK 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, neither VK nor the Fund will be liable for following
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
procedures previously described. Requests received by Investor Services prior to
4:00 p.m., New York time, on a regular business day will be processed at the net
asset value per share determined that day. These privileges are available for
all accounts other than retirement

27
<PAGE> 28

accounts or accounts with shares represented by certificates. If an account has
multiple owners, Investor Services may rely on the instructions of any one
owner.

For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check and amounts of at least
$1,000 and up to $1 million may be redeemed daily if the proceeds are to be paid
by wire. The proceeds must be payable to the shareholder(s) of record and sent
to the address of record for the account or wired directly to their
predesignated bank account. This privilege is not available if the address of
record has been changed within 30 days prior to a telephone redemption request.
Proceeds from redemptions to be paid by check will ordinarily be mailed within
three business days to the shareholder's address of record. Proceeds from
redemptions to be paid by wire will ordinarily be wired on the next business day
to the shareholder's bank account of record. The Fund reserves the right at any
time to terminate, limit or otherwise modify this telephone redemption
privilege.

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

In cases of death or disability, the CDSC on Class B Shares and Class C Shares
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 the initial determination of
disability. This waiver of the CDSC on Class B Shares and Class C Shares applies
to a total or partial redemption, but only to redemptions of shares held at the
time of the death or the initial determination of disability.

GENERAL REDEMPTION INFORMATION. Redemption payments may be postponed or the
right of redemption suspended as provided by the rules of the SEC. If the shares
to be redeemed have been recently purchased by check, Investor Services may
delay mailing a redemption check until it confirms that the purchase check has
cleared, which may take up to 15 days. Any gain or loss realized on the
redemption of shares is a taxable event. The Fund may redeem any shareholder
account with 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 given and the
shareholder will be given an opportunity to purchase the required value of
additional shares at the next determined net asset value per share without sales
charge. Any involuntary redemption may only occur if the shareholder account is
less than the minimum initial investment due to shareholder redemptions.

REINSTATEMENT PRIVILEGE. Holders of Class A Shares or Class B Shares who have
redeemed shares of the Fund may reinstate any portion or all of the net proceeds
of such redemption in Class A Shares of the Fund. Holders of Class C Shares who
have redeemed shares of the Fund may reinstate any portion or all of the net
proceeds of such redemption in Class C Shares of the Fund with credit given for
any CDSC paid upon such redemption. Such reinstatement is made at the net asset
value per share (without sales charge except as described under "Shareholder
Services -- Exchange Privilege") next determined after the order is received,
which must be 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.

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

28
<PAGE> 29

brokers, dealers or financial intermediaries (collectively, "Selling
Agreements") that may provide for their customers or clients certain services or
assistance.

CLASS A SHARES. The Fund may spend an aggregate amount of up to 0.25% per year
of the average daily net assets attributable to the Class A Shares of the Fund
pursuant to the Distribution Plan and the Service Plan. From such amount, the
Fund may spend up to 0.25% per year of the Fund's average daily net assets
attributable to the Class A Shares pursuant to the Service Plan in connection
with the ongoing provision of services to holders of such shares by the
Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts. The Fund pays
the Distributor the lesser of the balance of the 0.25% not paid to such brokers,
dealers or financial intermediaries as a service fee or the amount of the
Distributor's actual distribution-related expense.

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

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

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

The Distributor's actual distribution-related expenses with respect to a class
of CDSC Shares (for purposes of this section, excluding any Class A Shares that
may be subject to a CDSC) for any given year may exceed the amounts payable to
the Distributor with respect to such class of CDSC Shares under the Distribution
Plan, the Service Plan and payments received pursuant to the CDSC. In such
event, with respect to any such class of CDSC Shares, any unreimbursed
distribution-related expenses will be carried forward and paid by the Fund (up
to the amount of the actual expenses incurred) in future years so long as such
Distribution Plan is in effect. Except as mandated by applicable law, the Fund
does not impose any limit with respect to the number of years into the future
that such unreimbursed expenses may be carried forward (on a Fund level basis).
Because such expenses are accounted on a Fund level basis, in periods of extreme
net asset value fluctuation such amounts with respect to a particular CDSC Share
may be greater or less than the amount of the initial commission (including
carrying cost) paid by the Distributor with respect to such CDSC Share. In such
circumstances, a shareholder of such CDSC Share may be deemed to incur expenses
attributable to other shareholders of such class. As of June 30, 1998, there
were $2,567,535 and $22,643 of unreimbursed distribution-related expenses with
respect to Class B Shares and Class C Shares, respectively, representing 1.77%
and 0.19% of the Fund's net assets attributable to Class B Shares and Class C
Shares, respectively. If the Distribution Plan was terminated or not continued,
the Fund would not be contractually obligated to pay the Distributor for any
expenses not previously reimbursed by the Fund or recovered through CDSC.

Because the Fund is a series of the Trust, amounts paid to the Distributor as
reimbursement for expenses of one series of the Trust may indirectly benefit the
other funds which are series of the Trust. The Distributor will endeavor to
allocate such expenses among such funds in an equitable manner. The Distributor
will not use the proceeds from the CDSC applicable to a particular class of
shares to defray distribution-related expenses attributable to any other class
of shares. Various federal and state laws prohibit national banks and some
state-chartered commercial banks from underwriting or dealing in the Fund's
shares. In addition, state securities laws on this issue may differ from the
interpretations of federal law, and banks and financial institutions may be
required to register as dealers pursuant to state law. In the unlikely event
29
<PAGE> 30

that a court were to find that these laws prevent such banks from providing such
services described above, the Fund would seek alternate providers and expects
that shareholders would not experience any disadvantage.

- --------------------------------------------------------------------------------
DISTRIBUTIONS FROM THE FUND
- --------------------------------------------------------------------------------

The Fund's present policy, which may be changed at any time by the Board of
Trustees, is to declare distributions on a daily basis and to pay such
distributions from net investment income, net recognized short-term capital
gains and principal attributable to the respective classes on a monthly basis.
The Fund also presently intends to make distributions of net long-term capital
gains, if any, annually. The monthly distribution is composed of all or a
portion of investment income earned by the Fund, all or a portion of net
short-term capital gains recognized by the Fund on transactions in securities
and in futures and options, in each case, less the expenses attributable to the
respective class, and principal. A distribution from principal made by the Fund
will result in a decrease in the Fund's net assets equal to the amount of such
principal distribution. Long-term capital gains distributions consist of the
Fund's recognized long-term gain on transactions in securities and futures and
options, net of any realized capital losses, less any carryover capital losses
from previous years.

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

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

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

PURCHASE OF ADDITIONAL SHARES WITH DISTRIBUTIONS. The Fund automatically will
credit monthly distributions and any annual net long-term capital gain
distributions to a shareholder's account in additional shares of the Fund valued
at net asset value per share, without a sales charge. Unless a shareholder
instructs otherwise, the reinvestment plan is automatic. This instruction may be
made by telephone by calling (800) 421-5666 ((800) 421-2833 for the hearing
impaired) or in writing to Investor Services. See "Shareholder Services --
Reinvestment Plan."
- --------------------------------------------------------------------------------
TAX STATUS
- --------------------------------------------------------------------------------

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

Distributions of the Fund's net investment income are taxable to shareholders
as ordinary income to the extent of the Fund's earnings and profits, whether
received in shares or cash. Shareholders who receive distributions in the form
of additional shares will have a basis for federal income tax purposes in each
share equal to the value thereof on the

30
<PAGE> 31

distribution date. Distributions of the Fund's net capital gains ("capital gain
dividends"), if any, are taxable to shareholders as long-term capital gains
regardless of the length of time the Fund shares have been held by such
shareholders. Distributions in excess of the Fund's earnings and profits, such
as distributions of principal, first will reduce the adjusted tax basis of the
shares held by the shareholders and, after such adjusted tax basis is reduced to
zero, will constitute capital gains to such shareholder (assuming such shares
are held as a capital asset). See the discussion below for a summary of the tax
rates applicable to capital gains (including capital gain dividends). The Fund
will inform shareholders of the source and tax status of such distributions
promptly after the close of each calendar year. Distributions by the Fund
generally will not be eligible for the dividends received deduction for
corporations.

The sale of shares (including transfers in connection with a redemption or
repurchase of shares) will be a taxable transaction for federal income tax
purposes. Selling shareholders will generally recognize gain or loss in an
amount equal to the difference between their adjusted tax basis in the shares
and the amount received. If such shares are held as a capital asset, the gain or
loss will be a capital gain or loss. See the discussion below for a summary of
the tax rates applicable to capital gains. Any loss recognized upon a taxable
disposition of shares held for six months or less will be treated as 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.

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

Some of the Fund's investment practices are subject to special provisions of
the Code that may, among other things, defer the use of losses of the Fund and
affect the holding period of the securities held by the Fund and the nature of
the income realized by the Fund. These provisions may also require the Fund to
recognize income or gain without receiving the cash with which to make
distributions in the amounts necessary to satisfy the distribution requirements
for avoiding federal income and, as described below, excise taxes. The Fund will
monitor its transactions and may make certain tax elections in order to mitigate
the effect of these rules and prevent disqualification of the Fund as a
regulated investment company.

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

Income from certain foreign securities may be subject to foreign income,
withholding or other withholding taxes. Shareholders of the Fund will not be
able to claim any deduction or foreign tax credit with respect to such foreign
taxes. Tax conventions between certain countries and the United States may
reduce or eliminate such foreign taxes.

In order to avoid a 4% excise tax the Fund will be required to distribute by
December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income for such year and (ii) 98% of its capital gain net income
(computed on the basis of the one-year period ending on October 31st of such
year), together with 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.

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

31
<PAGE> 32

The Fund is required in certain circumstances to withhold 31% of dividends and
certain other payments, including redemptions, paid to shareholders who do not
furnish to the Fund their correct taxpayer identification number (in the case of
individuals, their social security number) or who are otherwise subject to
backup withholding. Foreign shareholders, including shareholders who are
nonresident aliens, may be subject to U.S. withholding tax on certain
distributions (whether received in cash or in shares) at a rate of 30% or such
lower rate as prescribed by an applicable income tax treaty.

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

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information may include the average total return of the Fund calculated on a
compounded basis for specified periods of time. Such advertisements and sales
material may also include a yield quotation as of a current period. In each
case, such total return and yield information, if any, will be calculated
pursuant to rules established by the SEC and will be computed separately for
each class of shares. In lieu of or in addition to total return and yield
calculations, such information may include performance rankings and similar
information from independent organizations such as Lipper Analytical Services,
Inc., or nationally recognized financial publications. In addition, from time to
time the Fund may compare its performance to certain securities and unmanaged
indices which may have different risk or reward characteristics than the Fund.
Such characteristics may include, but are not limited to, tax features,
guarantees, insurance and the fluctuation of principal or return. In addition,
from time to time sales materials and advertisements for the Fund may include
hypothetical information.

The Fund's yield quotation is determined on a monthly basis with respect to
the immediately preceding 30-day period. Yield is computed by first dividing the
Fund's net investment income per share earned during such a 30-day period by the
Fund's maximum offering price per share on the last day of such period. The
Fund's net investment income per share is determined by taking the interest
earned by the Fund during the period, subtracting the expenses accrued for the
period (net of any reimbursements), and dividing the result by the product of
(a) the average daily number of Fund shares outstanding during the period that
were entitled to receive dividends and (b) the Fund's maximum offering price per
share on the last day of the period. The yield calculation formula assumes net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six month period.

The Fund calculates average compounded total return by determining the
redemption value at the end of specified periods (after adding back all
dividends and other distributions made during the period) of a $1,000 investment
in the Fund (less the maximum sales charge) at the beginning of the period,
annualizing the increase or decrease over the specified period with respect to
such initial investment and expressing the result as a percentage.

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

From time to time, the Fund may include in its supplemental sales literature
and shareholder reports a quotation of the current "distribution rate" for 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 is determined by annualizing the distributions per share for a stated
period and dividing the result by the ending maximum public offering price for
the same period. It 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 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, 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 options and futures transactions engaged in by the Fund. In addition, the
Fund may, in supplemental sales literature, advertise non-standardized total
return figures representing the cumulative, non-annualized total return 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 the Fund at a
given date, deducting the maximum front-end sales charge of 4.75% for Class A
Shares,

32
<PAGE> 33

determining the value of all subsequent reinvested dividends, and dividing the
net change in the value of the investment as of the end of the period by the
amount of the initial investment and expressing the result as a percentage.

Further information about the Fund's performance is contained in the Fund's
Annual Report, Semi-Annual Report and Statement of Additional Information, each
of which can be obtained without charge by calling (800) 421-5666 ((800)
421-2833 for the hearing impaired).
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

The Fund is a series of the Van Kampen Trust, a Delaware business trust
organized as of May 10, 1995 (the "Trust"). Shares of the Trust entitle their
holders to one vote per share; however, separate votes are taken by each series
on matters affecting an individual series.

The authorized capitalization of the Fund consists of an unlimited number of
shares of beneficial interest, par value $0.01 per share, divided into classes.
The Fund currently offers three classes of shares, designated Class A Shares,
Class B Shares and Class C Shares. The Fund is permitted to issue an unlimited
number of classes of shares. Other classes may be added from time to time in
accordance with the provisions of the Fund's Declaration of Trust.

Each class of shares represents an interest in the same assets of the Fund and
are identical in all respects except that each class bears certain distribution
expenses and has exclusive voting rights with respect to its distribution fee.
Except as described herein, there are no conversion, preemptive or other
subscription rights. In the event of liquidation, each share of the Fund is
entitled to its pro rata portion of all of the Fund's net assets after all debt
and expenses of the Fund have been paid. Since Class B Shares and Class C Shares
pay higher distribution expenses, the liquidation proceeds to holders of Class B
Shares and Class C Shares are likely to be lower than to holders of Class A
Shares.

The Trust does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of two-thirds of the shares then outstanding cast
in person or by proxy at such meeting. The Trust will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
1940 Act. More detailed information concerning the Trust is set forth in the
Statement of Additional Information.

The Trust's Declaration of Trust provides that no Trustee, officer or
shareholder of the Fund shall be held to any personal liability, nor shall
resort be had to his or her private property for the satisfaction of any
obligation or liability of the Fund but the assets of the Fund only shall be
liable.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

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

The fiscal year end of the Fund is June 30. The Fund sends to its shareholders
at least semi-annually reports showing the Fund's portfolio and other
information. An Annual Report, containing financial statements audited by the
Fund's independent accountants, is sent to shareholders each year. After the end
of each year, shareholders will receive federal income tax information regarding
dividends and capital gains distributions.

33
<PAGE> 34

APPENDIX A

RATINGS OF CORPORATE OBLIGATIONS

STANDARD & POOR'S RATINGS GROUP--A brief description of the applicable Standard
& Poor's Ratings Group (S&P) rating symbols and their meanings (as published by
S&P) follows:

1. DEBT

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

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

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

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

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

2. Nature of and provisions of the obligation;

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

INVESTMENT GRADE

AAA Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated "AA" has a very strong capacity to pay interest
and repay principal and differs from the highest rated
issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in the higher rated categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.

SPECULATIVE GRADE

BB Debt rated "BB", "B", "CCC", "CC", and "C" is regarded as
B having significantly speculative characteristics with
CCC respect to capacity to pay interest and repay principal.
CC "BB" indicates the least degree of speculation and "C" the
C highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions.
BB Debt rated "BB" is less vulnerable to default than other
speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity
to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BBB-" rating.

A-1
<PAGE> 35
B Debt rated "B" is more vulnerable to default but currently
has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is
assigned an actual or implied "BB" or "BB-" rating.
CCC Debt rated "CCC" is currently vulnerable to default, and is
dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial,
or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "B" or "B-"
rating.
CC Debt rated "CC" is currently highly vulnerable to
nonpayment. The rating "CC" is also used for debt
subordinated to senior debt that is assigned an actual or
implied "CCC" debt rating.
C The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed, but debt service
payments are continued. The rating "C" typically is applied
to debt subordinated to senior debt which is assigned an
actual or implied "CCC-" debt rating.
D Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal
payments are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
NR Not rated.
R This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to
principal or volatility of expected returns which are not
addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or
commodities; obligations exposed to severe payment risk --
such as interest-only or principal-only mortgage securities;
and obligations with unusually risky or interest terms, such
as inverse floaters.
DEBT OBLIGATIONS OF ISSUERS OUTSIDE THE UNITED STATES AND
ITS TERRITORIES are rated on the same basis as domestic
corporate and municipal issues. The ratings measure the
creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
BOND INVESTMENT QUALITY STANDARDS: Under present commercial
bank regulations issued by the Comptroller of the Currency,
bonds rated in the top four categories ("AAA", "AA", "A",
"BBB", commonly known as "investment grade" ratings) are
generally regarded as eligible for bank investment. In
addition, the laws of various states governing legal
investments impose certain rating or other standards for
obligations eligible for investment by savings banks, trust
companies, insurance companies and fiduciaries generally.

2. COMMERCIAL PAPER

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

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

A-1 This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined
to possess extremely strong safety characteristics are
denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation
is satisfactory. However, the relative degree of safety is
not as high as for issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B Issues rated "B" are regarded as having significant
speculative characteristics.

A-2
<PAGE> 36
C This rating is assigned to short-term debt obligations with
a doubtful capacity for payment.
D Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal
payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period.
A commercial paper rating is not a recommendation to
purchase, sell or hold a security inasmuch as it does not
comment as to market price or suitability for a particular
investor. The ratings are based on current information
furnished to S&P by the issuer or obtained by S&P from other
sources it considers reliable. S&P does not perform an audit
in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or
unavailability of, such information, or based on other
circumstances.

3. VARIABLE RATE DEMAND BONDS

S&P assigns "dual" ratings to all debt issues that have a put or demand
feature as part of their structure.

The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for example
"AAA/A-1+"). With short-term demand debt, S&P's note rating symbols are used
with the commercial paper rating symbols (for example, "SP-1+/A-1+").

4. NOTES

An S&P note rating reflects the liquidity factors and market access risks
unique to notes. Notes maturing in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assignment:

-- Amortization schedule (the longer the final maturity relative to other
maturities the more likely the issue is to be treated as a note).

-- Source of payment (the more the issue depends on the market for its
refinancing, the more likely it is to be treated as a note).

Note rating symbols and definitions are as follows:

SP-1 Strong capacity to pay principal and interest. Issues determined to
possess very strong characteristics will be given a plus (+)
designation.

SP-2 Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the notes.

SP-3 Speculative capacity to pay principal and interest.

5. PREFERRED STOCK

A S&P preferred stock rating is an assessment of the capacity and willingness
of an issuer to pay preferred stock dividends and any applicable sinking fund
obligations. A preferred stock rating differs from a bond rating inasmuch as it
is assigned to an equity issue, which issue is intrinsically different from, and
subordinated to, a debt issue. Therefore, to reflect this difference, the
preferred stock rating symbol will normally not be higher than the bond rating
symbol assigned to, or that would be assigned to, the senior debt of the same
issuer.

The preferred stock ratings are based on the following considerations:

1. Likelihood of payment-capacity and willingness of the issuer to meet the
timely payment of preferred stock dividends and any applicable sinking fund
requirements in accordance with the terms of the obligation.

2. Nature of, and provisions of, the issue.

3. Relative position of the issue in the event of bankruptcy, reorganization,
or other arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.

A-3
<PAGE> 37
AAA This is the highest rating that may be assigned by S&P to a
preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
AA A preferred stock issue rated 'AA' also qualifies as a
high-quality, fixed income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated 'AAA'.
A An issue rated 'A' is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for
preferred stock in this category than for issues in the "A"
category.
BB Preferred stock rated "BB", "B" and "CCC" are regarded, on
B balance, as predominantly speculative with respect to the
CCC issuer's capacity to pay preferred stock obligations. "BB"
indicates the lowest degree of speculation and "CCC" the
highest. While such issues will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
CC The rating "CC" is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments, but that is
currently paying.
C A preferred stock rated "C" is a nonpaying issue.
D A preferred stock rated "D" is a nonpaying issue with the
issuer in default on debt instruments.
NR This indicates that no rating has been requested, that there
is insufficient information on which to base a rating or
that S&P does not rate a particular type of obligation as a
matter of policy.
PLUS (+) or MINUS (-): To provide more detailed indications
of preferred stock quality, ratings from "AA" to "CCC" may
be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.

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

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

1. LONG-TERM DEBT

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

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

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

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

A-4
<PAGE> 38

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

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

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

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

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

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

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

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

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

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

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

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

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

2. SHORT-TERM DEBT

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

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

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

--Leading market positions in well-established industries.

--High rates of return on funds employed.

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

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

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

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

A-5
<PAGE> 39

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

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

3. PREFERRED STOCK

Preferred stock rating symbols and their definitions are as follows:

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

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

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

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

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

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

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

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

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

NOTE: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "AA" through "B" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

A-6
<PAGE> 40

EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 341-2911.

PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 341-2911.

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

FOR SHAREHOLDER AND
DEALER INQUIRIES THROUGH
TELECOMMUNICATIONS
DEVICE FOR THE DEAF (TDD)
DIAL (800) 421-2833.

FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 847-2424.
VAN KAMPEN HIGH YIELD FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181

Investment Adviser

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

Distributor

VAN KAMPEN FUNDS INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181

Transfer Agent

VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen High Yield Fund

Custodian

STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street, P.O. Box 1713
Boston, MA 02105-1713
Attn: Van Kampen High Yield Fund

Legal Counsel

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

Independent Accountants

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 41

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

HIGH YIELD FUND
- --------------------------------------------------------------------------------

P R O S P E C T U S

OCTOBER 28, 1998

[VAN KAMPEN FUNDS LOGO]
HYF PRO 10/98
<PAGE> 42

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN HIGH YIELD FUND

Van Kampen High Yield Fund (the "Fund") is a separate, diversified series of
Van Kampen Trust (the "Trust"), an open-end management investment company. The
Fund's primary investment objective is to provide a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
will attempt to achieve its investment objectives through investment primarily
in a diversified portfolio of medium and lower grade domestic corporate debt
securities. There is no assurance that the Fund will achieve its investment
objective.

This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for the Fund dated the date
hereof (the "Prospectus"). This Statement of Additional Information does not
include all the information that a prospective investor should consider before
purchasing shares of the Fund, and investors should obtain and read the
Prospectus prior to purchasing shares. A copy of the Prospectus may be obtained
without charge by writing or calling Van Kampen Funds, Inc. at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181 or (800) 341-2911 ((800) 421-2833 for
the hearing impaired). This Statement of Additional Information incorporates by
reference the entire Prospectus.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund and the Trust...................................... B-2
Investment Policies and Restrictions........................ B-3
Additional Investment Considerations........................ B-4
Trustees and Officers....................................... B-13
Legal Counsel............................................... B-22
Transfer Agency............................................. B-22
Investment Advisory and Other Services...................... B-22
Custodian and Independent Accountants....................... B-24
Portfolio Transactions and Brokerage Allocation............. B-24
Tax Status of the Fund...................................... B-25
The Distributor............................................. B-25
Distribution and Service Plans.............................. B-26
Performance Information..................................... B-27
Report of Independent Accountants........................... B-30
Financial Statements........................................ B-31
Notes to the Financial Statements........................... B-44
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED OCTOBER 28, 1998.
<PAGE> 43

THE FUND AND THE TRUST

The Fund is a separate, diversified series of Van Kampen Trust (the "Trust"),
an open-end management investment company. At present, the Fund, Van Kampen
Short-Term Global Income Fund and Van Kampen Strategic Income Fund are the only
series of the Trust, although other series may be organized and offered in the
future. Each series of the Trust will be treated as a separate corporation for
Federal income tax purposes.

Van Kampen Investment Advisory Corp. (the "Adviser"), 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"),
which is an indirect wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The principal office of the Fund, the Adviser, the Distributor and Van Kampen is
located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.

The Trust is an unincorporated business trust established under the laws of
the State of Delaware by an Agreement and Declaration of Trust (the "Declaration
of Trust") dated as of May 10, 1995. The Declaration of Trust permits the
Trustees to create one or more separate investment portfolios and issue a series
of shares for each portfolio. The trustees can further sub-divide each series of
shares into one or more classes of shares for each portfolio. The Trust can
issue an unlimited number of full and fractional shares, par value $0.01 per
share (prior to July 31, 1995, the shares had no par value). Each share
represents an equal proportionate interest in the assets of the series with each
other share in such series and no interest in any other series. No series is
subject to the liabilities of any other series. The Declaration of Trust
provides that shareholders are not liable for any liabilities of the Trust or
any of its series, requires inclusion of a clause to that effect in every
agreement entered into by the Trust or any of its series and indemnifies
shareholders against any such liability.

Shares of the Trust entitle their holders to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon by shareholders of only the series involved. Except as described in the
Prospectus, shares do not have cumulative voting rights, preemptive rights or
any conversion or exchange rights. The Trust does not contemplate holding
regular meetings of shareholders to elect Trustees or otherwise. However, the
holders of 10% or more of the outstanding shares may by written request require
a meeting to consider the removal of Trustees by a vote of two-thirds of the
shares then outstanding cast in person or by proxy at such meeting. The Trust
will assist such holders in communicating with other shareholders of the Fund to
the extent required by the Investment Company Act of 1940, as amended (the "1940
Act").

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

The Trust originally was organized as the Van Kampen Merritt Trust, a
Massachusetts business trust created by a Declaration of Trust dated March 14,
1986 (the "Massachusetts Trust"). The Massachusetts Trust was reorganized into
the Trust under the name Van Kampen American Capital Trust on July 31, 1995
pursuant to an Agreement and Plan of Reorganization and Liquidation. The Trust
was formed pursuant to an Agreement and Declaration of Trust dated May 10, 1995
for the purpose of facilitating the Massachusetts Trust's reorganization into a
Delaware business trust. The Trust filed a Certificate of Trust with the
Delaware Secretary of State on July 28, 1995. On July 14, 1998, the Trust
adopted its current name.

The Fund originally was organized, under the name Van Kampen Merritt High
Yield Fund, as a sub-trust of the Massachusetts Trust. In connection with the
Massachusetts Trust's reorganization into a Delaware business trust, the Fund
was reorganized into a series of the Trust and renamed Van Kampen American
Capital High Yield Fund. On July 14, 1998, the Fund adopted its current name.

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

B-2
<PAGE> 44

of such contract or other document filed as an exhibit to the Registration
Statement of which this Statement of Additional Information forms as part, each
such statement being qualified in all respects by such reference.

INVESTMENT POLICIES AND RESTRICTIONS

The following information supplements the information provided in the
Prospectus under the headings "Investment Objectives and Policies" and
"Investment Practices."

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

1. Purchase any securities (other than obligations issued or guaranteed by
the United States Government or by its instrumentalities) if, as a result,
more than 5% of the Fund's total assets (taken at current value) would
then be invested in securities of a single issuer or, if, as a result, the
Fund would hold more than 10% of the outstanding voting securities of an
issuer; except that up to 25% of the Fund's total assets may be invested
without regard to such limitations, and except that the Fund may purchase
securities of other investment companies without regard to such
limitations 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.

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

3. Borrow money, except for temporary purposes from banks or in reverse
repurchase transactions as described in the Statement of Additional
Information and then in amounts not in excess of 5% of the total asset
value of the Fund, or mortgage, pledge, or hypothecate any assets except
in connection with a borrowing and in amounts not in excess of 10% of the
total asset value of the Fund. Borrowings may not be made for investment
leverage, but only to enable the Fund to satisfy redemption requests where
liquidation of portfolio securities is considered disadvantageous or
inconvenient. In this connection, the Fund will not purchase portfolio
securities during any period that such borrowings exceed 5% of the total
asset value of the Fund. Notwithstanding this investment restriction, the
Fund may enter into "when issued" and "delayed delivery" transactions as
described in the Prospectus.

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

5. Sell any securities "short", unless at all times when a short position is
open the Fund owns an equal amount of the securities or of securities
convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short.

6. Write, purchase, or sell puts, calls or combinations thereof, or purchase
or sell interest rate futures contracts or related options, except that
the Fund may write covered call options with respect to its portfolio
securities and enter into closing purchase transactions with respect to
such options, to a maximum of 25% of its net assets and except that the
Fund may invest in hedging instruments as described in the Prospectus and
the Statement of Additional Information from time to time.

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

8. Make investments for the purpose of exercising control or management,
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.

9. Invest in securities issued by other investment companies except as part
of a merger, reorganization or other acquisition and extent permitted by
(i) the 1940 Act, as amended from time to time, (ii) the

B-3
<PAGE> 45

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

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

11. Purchase or sell real estate, commodities, or commodity contracts, except
for investments in hedging instruments as described in the Prospectus and
this Statement of Additional Information from time to time.

The Fund may not change any of these investment restrictions nor any other
fundamental policy without the approval of the lesser of (i) more than 50% of
the Fund's outstanding voting securities or (ii) 67% of the Fund's shares
present at a meeting at which the holders of more than 50% of the outstanding
shares are present in person or by proxy. As long as the percentage restrictions
described above are satisfied at the time of the investment or borrowing, the
Fund will be considered to have abided by those restrictions even if, at a later
time, a change in values or net assets causes an increase or decrease in
percentage beyond that allowed.

The Fund may invest up to 15% of its total assets in illiquid securities,
which generally includes securities the disposition of which is subject to
substantial legal or contractual restrictions on resale and securities that are
not readily marketable. The sale of such securities often requires more time and
results in higher brokerage charges or dealer discounts and other selling
expenses than does the sale of securities eligible for trading on national
securities exchanges or in the over-the-counter markets. Restricted securities
may sell at a price lower than similar securities that are not subject to
restrictions on resale. Restricted securities salable among qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended, that are determined to be liquid by the Adviser under guidelines
adopted by the Board of Trustees of the Trust (under which guidelines the
Adviser will consider factors such as trading activities and the availability of
price quotations) will not be treated as illiquid or restricted securities by
the Fund for purposes of the limitation set forth above. The Fund's policy with
respect to investment in illiquid and restricted securities is not a fundamental
policy and may be changed by the Board of Trustees, in consultation with the
adviser, without obtaining shareholder approval. Also excluded from this
limitation set forth above are securities purchased by the Fund issued by 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.

ADDITIONAL INVESTMENT CONSIDERATIONS

MEDIUM AND LOWER GRADE DEBT SECURITIES

Discussion concerning the special risk factors of the Fund's investments in
medium and lower grade debt securities appears in the Prospectus under the
heading "Investment Objective and Policies--Special Risk Considerations
Regarding Medium and Lower Grade Debt Securities." Other corporate debt
securities which may also be acquired by the Fund include preferred stocks and
all types of debt obligations having varying terms with respect to security or
credit support, subordination, purchase price, interest payments and maturity.
Such obligations may include, for example, bonds, debentures, notes, mortgage-
or other asset-backed instruments, equipment lease or trust participation
certificates, conditional sales contracts, commercial paper and obligations
issued or guaranteed by the United States government or any of its political
subdivisions, agencies or instrumentalities (including obligations, such as
repurchase agreements, secured by such instruments). Mortgage-backed securities
are securities that directly or indirectly represent a participation in, or are
secured and payable from, mortgage loans secured by real property. The Fund will
not invest in mortgage-backed residual interests. Asset-backed securities have
structural characteristics similar to mortgage-backed securities, but have
underlying assets, such as accounts receivable, that are not mortgage loans or
interests in mortgage loans. Participation certificates are issued by obligors
to finance the acquisition of equipment and facilities and may represent
participations in a lease, an installment purchase contract or a conditional
sales contract. Most debt securities in which the Fund will invest will bear
interest at fixed rates. However, the Fund reserves the right to invest without
limitation in corporate debt securities that have variable rates of interest or
involve equity features, such as contingent interest or participation based on
revenues, sales or profits (i.e., interest or other payments, often in addition
to a fixed rate of return, that are based on the borrower's

B-4
<PAGE> 46

attainment of specified levels of revenues, sales or profits and thus enable the
holder of the security to share in the potential success of the venture).
Corporate debt securities consisting of preferred stocks may have cumulative or
non-cumulative dividend rights. To the extent the Fund invests in non-cumulative
preferred stocks, the Fund's ability to achieve its investment objective of high
current income may be affected adversely. In connection with its investments in
corporate debt securities, the Fund also may invest in equity securities,
including warrants and common stocks. No more than 5% of the Fund's assets will
be invested in such equity securities. The Fund also may invest in convertible
securities, zero coupon securities and payment-in-kind securities.

OTHER INVESTMENT STRATEGIES

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

STRATEGIC TRANSACTIONS. In the course of pursuing these investment strategies,
the Fund may purchase and sell derivative instruments such as exchange-listed
and over-the-counter put and call options on securities, financial futures,
interest rate indices and other financial instruments, purchase and sell
financial futures contracts, enter into various interest rate transactions such
as swaps, caps, floors or collars, and enter into various currency transactions
such as currency forward contracts, currency futures contracts, currency swaps
or options on currency or currency futures (collectively, all the above are
called "Strategic Transactions"). Strategic Transactions may be used to attempt
to protect against possible changes in the market value of securities held in or
to be purchased for the Fund's portfolio resulting from securities markets or
currency exchange rate fluctuations, to protect the Fund's unrealized gains in
the value of its portfolio securities, to facilitate the sale of such securities
for investment purposes, to manage the effective maturity or duration of the
Fund's portfolio, or to establish a position as a temporary substitute for
purchasing or selling particular securities. The Fund may sell options on
securities the Fund owns or has the right to purchase without additional
payments, up to a maximum of 25% of the Fund's net assets, for non-hedging
purposes. Any or all of these investment techniques may be used at any time and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes.

B-5
<PAGE> 47

the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had
not been utilized.

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

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

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

The Fund's ability to close out its position as a purchaser or seller of an
OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

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

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed

B-6
<PAGE> 48

options, which generally have standardized terms and performance mechanics, all
the terms of an OTC option, including such terms as method of settlement, term,
exercise price, premium, guaranties and security, are set by negotiation of the
parties. The Fund will only enter into OTC options that have a buy-back
provision permitting the Fund to require the Counterparty to buy back the option
at a formula price within seven days. The Fund expects generally to enter into
OTC options that have cash settlement provisions, although it is not required to
do so.

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

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

The Fund may purchase and sell for hedging purposes call options on U.S.
Treasury and agency securities, foreign sovereign debt, mortgage-backed
securities, corporate debt securities and foreign debt securities that are
traded on U.S. and foreign securities exchanges and in the over-the-counter
markets and related futures on such securities other than futures on individual
corporate debt securities. All calls sold by the Fund must be "covered" (i.e.,
the Fund must own the securities or futures contract subject to the call) or
must meet the asset segregation requirements described below as long as the call
is outstanding. Even though the Fund will receive the option premium to help
protect it against loss, a call sold by the Fund exposes the Fund during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security and may require the Fund to hold a
security which it might otherwise have sold. In selling calls on securities not
owned by the Fund, the Fund may be required to acquire the underlying security
at a disadvantageous price in order to satisfy its obligation with respect to
the call option. The Fund may sell options on securities the Fund owns or has
the right to purchase without additional payments, up to a maximum of 25% of the
Fund's net assets, for non-hedging purposes.

The Fund may purchase and sell for hedging purposes put options that relate to
U.S. Government Securities, Mortgage-Backed Securities, corporate debt
securities, foreign sovereign debt and foreign debt securities (whether or not
it holds the above securities in its portfolio) or futures on such securities
other than futures on individual corporate debt and individual equity
securities. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

GENERAL CHARACTERISTICS OF FUTURES. The Fund may purchase and sell financial
futures contracts or purchase put and call options on such futures as a hedge
against anticipated interest rate, currency market changes, for duration
management and for risk management purposes. Futures generally are bought and
sold on the commodities exchanges where they are listed with payment of initial
and variation margin as described below. The sale of a futures contract creates
a firm obligation by the Fund, as seller, to deliver the specific type of
financial instrument called for in the contract at a specific future time for a
specified price (or, with respect to index futures and Eurodollar instruments,
the net cash amount). Options on futures contracts are similar to options on
securities except that an option on a futures contract gives the purchaser the
right in return for the premium paid to assume a position in a futures contract.

The Fund's use of financial futures and options thereon will in all cases be
consistent with applicable regulatory requirements and in particular the rules
and regulations of the Commodity Futures Trading

B-7
<PAGE> 49

Commission and will be entered into only for bona fide hedging, risk management
(including duration management) or other portfolio management purposes.
Typically, maintaining a futures contract or selling an option thereon requires
the Fund to deposit with a financial intermediary as security for its
obligations an amount of cash or other specified assets (initial margin) which
initially is typically 1% to 10% of the face amount of the contract (but may be
higher in some circumstances). Additional cash or assets (variation margin) may
be required to be deposited thereafter on a daily basis as the mark to market
value of the contract fluctuates. The purchase of options on financial futures
involves payment of a premium for the option without any further obligation on
the part of the Fund. If the Fund exercises an option on a futures contract it
will be obligated to post initial margin (and potential subsequent variation
margin) for the resulting futures position just as it would for any position.
Futures contracts and options thereon are generally settled by entering into an
offsetting transaction but there can be no assurance that the position will be
offset prior to settlement and that delivery will not occur.

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

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

CURRENCY TRANSACTIONS. The Fund may engage in currency transactions with
Counterparties in order to hedge the value of currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with Counterparties rated A-1 or P-1 by S&P or Moody's,
respectively, or that have an equivalent rating from an NRSRO or (except for OTC
options) are determined to be of equivalent credit quality by the Adviser.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

B-8
<PAGE> 50

The Fund will not enter into a transaction to hedge currency exposure to an
extent greater, after netting all transactions intended to wholly or partially
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency
other than with respect to cross hedging and proxy hedging as described below.

The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which Fund expects to
have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and to buy U.S. dollars. The amount of the contract
would not exceed the value of the Fund's securities denominated in linked
currencies. For example, if the Adviser considers the Austrian schilling is
linked to the German deutschemark (the "D-mark"), the Fund holds securities
denominated in Austrian schillings and the Adviser believes that the value of
schillings will decline against the U.S. dollar, the Adviser may enter into a
contract to sell D-marks and buy dollars, hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived linkage between
various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging. If the Fund enters
into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

RISKS OF CURRENCY TRANSACTIONS. Currency transactions are subject to risks
different from other transactions. Because currency control is of great
importance to the issuing governments and influences economic planning and
policy, purchases and sales of currency and related instruments can be
negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

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

SWAPS, CAPS, FLOORS AND COLLARS. Among the Strategic Transactions into which
the Fund may enter are interest rate, currency and index swaps and the purchase
or sale of related caps, floors and collars. The Fund expects to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund intends to use these transactions as hedges and not as
speculative investments and will not sell interest rate caps or floors where it
does not own securities or other instruments providing the income stream the
Fund may

B-9
<PAGE> 51

be obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

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

RISKS OF STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES. When conducted
outside the United States, Strategic Transactions may not be regulated as
rigorously as in the United States, may not involve a clearing mechanism and
related guarantees, and are subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities, currencies and other
instruments. The value of such positions also could be adversely affected by:
(i) other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lower trading volume
and liquidity.

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
securities with its custodian to the extent Fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or 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. For example, a call option written by the
Fund will require the Fund to hold the securities subject to the call (or
securities convertible into the needed securities without additional
consideration) or to segregate cash or liquid securities sufficient to purchase
and deliver the securities if the call is exercised. A call option sold by the
Fund on an index will require the Fund to own portfolio securities which
correlate with the index or to segregate cash or liquid securities equal to the
excess of the index value over the exercise price on a current basis. A put
option written by the Fund requires the Fund to segregate cash or liquid
securities equal to the exercise price.

Except when the Fund enters into a forward contract for the purchase or sale
of a security denominated in a particular currency, which requires no
segregation, a currency contract which obligates the Fund to buy or sell

B-10
<PAGE> 52

currency will generally require the Fund to hold an amount of that currency or
cash or liquid securities denominated in that currency equal to the Fund's
obligations or to segregate cash or liquid securities equal to the amount of the
Fund's obligation.

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

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

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

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

The Fund's activities involving Strategic Transactions may be limited by the
requirements of the Code for qualification as a regulated investment company.
See "Tax Status" in the Prospectus.

REPURCHASE AGREEMENTS

The Fund will enter into repurchase transactions only with parties meeting
creditworthiness standards approved the Fund's Board of Trustees. The Adviser
will monitor the creditworthiness of such parties, under the general supervision
of the Board of Trustees. In the event of a default or a bankruptcy by a seller,
the Fund will promptly seek to liquidate the collateral. To the extent that the
proceeds from any sale of such collateral upon a default in the obligation to
repurchase are less than the repurchase price, the Fund will suffer the loss.

REVERSE REPURCHASE AGREEMENTS

The Fund may enter into reverse repurchase agreements with respect to debt
obligations which could otherwise be sold by the Fund. A reverse repurchase
agreement is an instrument under which the Fund may sell an underlying debt
instrument and simultaneously obtain the commitment of the purchaser (a
commercial bank or a broker or dealer) to sell the security back to the Fund at
an agreed upon price on an agreed upon date. The value of underlying securities
will be at least equal at all times to the total amount of the resale
obligation, including the interest factor. The Fund receives payment for such
securities only upon physical delivery or evidence of book entry transfer by its
custodian. Regulations of the SEC require either that

B-11
<PAGE> 53

securities sold by the Fund under a reverse repurchase agreement be segregated
pending repurchase or that the proceeds be segregated on the Fund's books and
records pending repurchase. Reverse repurchase agreements could involve certain
risks in the event of default or insolvency of the other party, including
possible delays or restrictions upon the Fund's ability to dispose of the
underlying securities. An additional risk is that the market value of securities
sold by the Fund under a reverse repurchase agreement could decline below the
price at which the Fund is obligated to repurchase them.

During the time a reverse repurchase agreement is outstanding, the Fund will
maintain a segregated custodial account containing cash or liquid securities
having a value equal to the repurchase price under such reverse repurchase
agreement. Any investment gains made by the Fund with monies borrowed through
reverse repurchase agreements will cause the net asset value of the Fund's
shares to rise faster than would be the case if the Fund had not engaged in such
borrowings. On the other hand, if the investment performance resulting from the
investment of borrowings obtained through reverse repurchase agreements fails to
cover the cost of such borrowings to the Fund, the net asset value of the Fund
will decrease faster than would otherwise be the case.

Reverse repurchase agreements will be considered borrowings by the Fund and as
such would be subject to the restrictions on borrowings described under
"Investment Policies and Restrictions" in this Statement of Additional
Information. The Fund will enter into reverse repurchase agreements only with
commercial banks whose deposits are insured by the Federal Deposit Insurance
Corporation and whose assets exceed $500 million or broker-dealers who are
registered with the SEC. In determining whether to enter into a reverse
repurchase agreement with a bank or broker-dealer, the Fund will take into
account the credit-worthiness of such party and will monitor such
credit-worthiness on an ongoing basis.

BORROWING

The Fund may borrow up to 5% of the value of its assets from a bank, or
through reverse repurchase agreements with broker-dealers or banks meeting the
same qualifications as set forth above under "Repurchase Agreements." The Fund
will use such borrowings only for temporary emergency purposes such as paying
for unexpectedly heavy redemptions.

SECURITIES LENDING

Consistent with applicable regulatory requirements, the Fund may lend its
portfolio securities to brokers, dealers and other financial institutions,
provided that such loans are callable at any time by the Fund, and are at all
times secured by cash or liquid securities, which are maintained in a segregated
account pursuant to applicable regulations that are equal to at least the market
value, determined daily, of the loaned securities. The advantage of such loans
is that the Fund continues to receive the income on the loaned securities while
at the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term obligations.

A loan may be terminated by the borrower on one business day's notice, or by
the Fund on two business days' notice. If the borrower fails to deliver the
loaned securities within two days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Adviser to be creditworthy and when the income which can be earned from
such loans justifies the attendant risks. Upon termination of the loan, the
borrower is required to return the securities to the Fund. Any gain or loss in
the market price during the loan period would inure to the Fund. The
creditworthiness of firms to which the Fund lends its portfolio securities will
be monitored on an ongoing basis by the investment adviser pursuant to
procedures adopted and reviewed, on an ongoing basis, by the Board of Trustees
of the Trust.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of such rights
if the matters involved would have a material effect on the Fund's investment in
such loaned

B-12
<PAGE> 54

securities. The Fund may pay reasonable finders', administrative and custodial
fees in connection with a loan of its securities.

"WHEN-ISSUED" AND "DELAYED DELIVERY" SECURITIES

From time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis--i.e., delivery and
payment can take place a month or more after the date of the transactions. The
securities so purchased are subject to market fluctuation and no interest
accrues to the purchaser during this period. While the Fund will only purchase
securities on a when-issued, delayed delivery or forward commitment basis with
the intention of acquiring the securities, the Fund may sell the securities
before the settlement date, if it is deemed advisable. At the time the Fund
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Fund will record the transaction and thereafter reflect the value,
each day, of such security in determining the net asset value of the Fund. At
the time of delivery of the securities, the value may be more or less than the
purchase price. The Fund will also establish a segregated account with the
Fund's custodian bank in which it will continuously maintain cash or liquid
securities equal in value to commitments for such when-issued or delayed
delivery securities; subject to this requirement, the Fund may purchase
securities on such basis without limit. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Fund's net asset
value. The investment adviser does not believe that the Fund's net asset value
or income will be adversely affected by the Fund's purchase of securities on
such basis.

TRUSTEES AND OFFICERS

The tables below list the trustees and officers of the Fund and other
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"), Van Kampen Investment Advisory Corp.
("Advisory Corp."), Van Kampen Asset Management Inc. ("Asset Management"), Van
Kampen Funds Inc., the distributor of the Fund's shares (the "Distributor"), Van
Kampen Management Inc., Van Kampen Advisors Corp., 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., the Fund's transfer agent ("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

B-13
<PAGE> 55

investment companies advised by the Advisers (excluding the Van Kampen American
Capital Exchange Fund).

TRUSTEES

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Co-founder, and prior to August 1996,
1632 Morning Mountain Road Chairman, Chief Executive Officer and President, MDT
Raleigh, NC 27614 Corporation (now known as Getinge/Castle, Inc., a
Date of Birth: 07/14/32 subsidiary of Getinge Industrier AB), a company which
develops, manufactures, markets and services medical and
scientific equipment. Trustee/Director of each of the
funds in the Fund Complex.
Richard M. DeMartini*..................... President and Chief Operating Officer, Individual Asset
Two World Trade Center Management Group, a division of Morgan Stanley Dean
66th Floor Witter & Co. Mr. DeMartini is a Director of InterCapital
New York, NY 10048 Funds, Dean Witter Distributors, Inc. and Dean Witter
Date of Birth: 10/12/52 Trust Company. Trustee of the TCW/DW Funds. Director of
the National Healthcare Resources, Inc. Formerly Vice
Chairman of the Board of the National Association of
Securities Dealers, Inc. and Chairman of the Board of the
Nasdaq Stock Market, Inc. Trustee/Director of each of the
funds in the Fund Complex.
Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an executive
Sears Tower search firm. Prior to 1997, Partner, Ray & Berndtson,
233 South Wacker Drive Inc., an executive recruiting and management consulting
Suite 7000 firm. Formerly, Executive Vice President of ABN AMRO,
Chicago, IL 60606 N.A., a Dutch bank holding company. Prior to 1992,
Date of Birth: 06/03/48 Executive Vice President of La Salle National Bank.
Trustee on the University of Chicago Hospitals Board, The
International House Board and the Women's Board of the
University of Chicago. Trustee/Director of each of the
funds in the Fund Complex.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and Member of the Investment Committee
of the Joyce Foundation, a private foundation.
Trustee/Director of each of the funds in the Fund
Complex.
Jack E. Nelson............................ President, Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President, Nelson Ivest Brokerage Services Inc.,
Date of Birth: 02/13/36 a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors
Protection Corp. ("SIPC"). Trustee/Director of each of
the funds in the Fund Complex.
</TABLE>

B-14
<PAGE> 56

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Don G. Powell*............................ Chairman and a Director of Van Kampen, the Advisers, the
2800 Post Oak Blvd. Distributor. Chairman and a Director of Investor
Houston, TX 77056 Services. Chairman of River View International Inc.
Date of Birth: 10/19/39 Director or officer of certain other subsidiaries of Van
Kampen. Chairman of the Board of Governors and the
Executive Committee of the Investment Company Institute.
Prior to July of 1998, Director and Chairman of VK/AC
Holding, Inc. Prior to November 1996, President, Chief
Executive Officer and a Director of VK/AC Holding, Inc.
Trustee/Director of each of the funds in the Fund Complex
and Trustee of other funds advised by the Advisers or Van
Kampen Management Inc.
Phillip B. Rooney......................... Vice Chairman and Director of The ServiceMaster Company,
One ServiceMaster Way a business and consumer services company. Director of
Downers Grove, IL 60515 Illinois Tool Works, Inc., a manufacturing company; the
Date of Birth: 07/08/44 Urban Shopping Centers Inc., a retail mall management
company; and Stone Container Corp., a paper manufacturing
company. Trustee, University of Notre Dame. Formerly,
President and Chief Executive Officer, Waste Management,
Inc., an environmental services company, and prior to
that President and Chief Operating Officer, Waste
Management, Inc. Trustee/Director of each of the funds in
the Fund Complex.

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

Paul G. Yovovich.......................... Private investor. Prior to April 1996, President of
Sears Tower Advance Ross Corporation. Director of 3Com Corporation,
233 South Wacker Drive APAC Teleservices, Inc., COMARCO, Inc., Applied Language
Suite 9700 Technologies, Focal Communications, and Lante
Chicago, IL 60606 Corporation. Limited Partner of Evercore Partners, LLP.
Date of Birth: 10/29/53 Trustee/Director of each of the Funds in the Fund
Complex.

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

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

OFFICERS

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

B-15
<PAGE> 57

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Dennis J. McDonnell.................. Executive Vice President and a Director of Van Kampen.
Date of Birth: 05/20/42 President, Chief Operating Officer and a Director of the
President Advisers, Van Kampen Advisors Inc., and Van Kampen
Management Inc. Prior to July of 1998, Director and
Executive Vice President of VK/AC Holding, Inc. Prior to
April of 1998, President and a Director of Van Kampen
Merritt Equity Advisors Corp. Prior to April of 1997, he was
a Director of Van Kampen Merritt Equity Holdings Corp. Prior
to September of 1996, Mr. McDonnell was Chief Executive
Officer and Director of MCM Group, Inc., McCarthy, Crisanti
& Maffei, Inc. and Chairman and Director of MCM Asia Pacific
Company, Limited and MCM (Europe) Limited. Prior to July of
1996, Mr. McDonnell was President, Chief Operating Officer
and Trustee of VSM Inc. and VCJ Inc. President of each of
the funds in the Fund Complex. President, Chairman of the
Board and Trustee of other investment companies advised by
the Advisers or their affiliates.

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

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

Ronald A. Nyberg..................... Executive Vice President, General Counsel, Secretary and
Date of Birth: 07/29/53 Director of Van Kampen. Mr. Nyberg is Executive Vice
Vice President and Secretary President, General Counsel, Assistant Secretary and a
Director of the Advisers and the Distributor, Van Kampen
Advisors Inc., Van Kampen Management Inc., Van Kampen
Exchange Corp., American Capital Contractual Services, Inc.
and Van Kampen Trust Company. Executive Vice President,
General Counsel and Assistant Secretary of Investor Services
and River View International Inc. Director or officer of
certain other subsidiaries of Van Kampen. Director of ICI
Mutual Insurance Co., a provider of insurance to members of
the Investment Company Institute. Prior to July of 1998,
Director and Executive Vice President, General Counsel and
Secretary of VK/AC Holding, Inc. Prior to April of 1998,
Executive Vice President, General Counsel and Director of
Van Kampen Merritt Equity Advisors Corp. Prior to April of
1997, he was Executive Vice President, General Counsel and a
Director of Van Kampen Merritt Equity Holdings Corp. Prior
to September of 1996, he was General Counsel of McCarthy,
Crisanti & Maffei, Inc. Prior to July of 1996, Mr. Nyberg
was Executive Vice President and General Counsel of VSM Inc.
and Executive Vice President and General Counsel of VCJ Inc.
Vice President and Secretary of each of the funds in the
Fund Complex and certain other investment companies advised
by the Advisers or their affiliates.
</TABLE>

B-16
<PAGE> 58

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Paul R. Wolkenberg................... Executive Vice President and Director of Van Kampen.
Date of Birth: 11/10/44 Executive Vice President of the Asset Management and the
Vice President Distributor. President and a Director of Investor Services.
President and Chief Operating Officer of Van Kampen
Recordkeeping Services Inc. Prior to July of 1998, Director
and Executive Vice President of VK/AC Holding, Inc. Vice
President of each of the funds in the Fund Complex and
certain other investment companies advised by the Advisers
or their affiliates.

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

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

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

Nicholas Dalmaso..................... Associate General Counsel and Assistant Secretary of Van
Date of Birth: 03/01/65 Kampen. Vice President, Associate General Counsel and
Assistant Secretary Assistant Secretary of the Advisers, the Distributor, Van
Kampen Advisors Inc. and Van Kampen Management Inc.
Assistant Secretary of each of the funds in the Fund Complex
and other investment companies advised by the Advisers or
their affiliates.

Huey P. Falgout, Jr.................. Vice President, Assistant Secretary and Senior Attorney of
Date of Birth: 11/15/63 Van Kampen. Vice President, Assistant Secretary and Senior
Assistant Secretary Attorney of the Advisers, the Distributor, Investor
Services, Van Kampen Management Inc., American Capital
Contractual Services, Inc., Van Kampen Exchange Corp. and
Van Kampen Advisors Inc. Assistant Secretary of each of the
funds in the Fund Complex and other investment companies
advised by the Advisers or their affiliates.
</TABLE>

B-17
<PAGE> 59

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Scott E. Martin...................... Senior Vice President, Deputy General Counsel and Assistant
Date of Birth: 08/20/56 Secretary of Van Kampen. Senior Vice President, Deputy
Assistant Secretary General Counsel and Secretary of the Advisers, the
Distributor, Investor Services, American Capital Contractual
Services, Inc., Van Kampen Management Inc., Van Kampen
Exchange Corp., Van Kampen Advisors Inc., Van Kampen
Insurance Agency of Illinois Inc., Van Kampen System Inc.
and Van Kampen Recordkeeping Services Inc. Prior to July of
1998, Senior Vice President, Deputy General Counsel and
Assistant Secretary of VK/AC Holding, Inc. Prior to April of
1998, Van Kampen Merritt Equity Advisors Corp. Prior to
April of 1997, Senior Vice President, Deputy General Counsel
and Secretary of Van Kampen American Capital Services, Inc.
and Van Kampen Merritt Holdings Corp. Prior to September of
1996, Mr. Martin was Deputy General Counsel and Secretary of
McCarthy, Crisanti & Maffei, Inc., and prior to July of
1996, he was Senior Vice President, Deputy General Counsel
and Secretary of VSM Inc. and VCJ Inc. Assistant Secretary
of each of the funds in the Fund Complex and other
investment companies advised by the Advisers or their
affiliates.

Weston B. Wetherell.................. Vice President, Associate General Counsel and Assistant
Date of Birth: 06/15/56 Secretary of Van Kampen, the Advisers, the Distributor, Van
Assistant Secretary Kampen Management Inc. and Van Kampen Advisors Inc. Prior to
September of 1996, Mr. Wetherell was Assistant Secretary of
McCarthy, Crisanti & Maffei, Inc. Assistant Secretary of
each of the funds in the Fund Complex and other investment
companies advised by the Advisers or their affiliates.

Steven M. Hill....................... Vice President of Van Kampen and the Advisers. Assistant
Date of Birth: 10/16/64 Treasurer of each of the funds in the Fund Complex and other
Assistant Treasurer investment companies advised by the Advisers or their
affiliates.

Michael Robert Sullivan.............. Assistant Vice President of the Advisers. Assistant
Date of Birth: 03/30/33 Controller of each of the funds in the Fund Complex and
Assistant Controller other investment companies advised by the Advisers or their
affiliates.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 64 operating funds in the Fund Complex. For purposes of the following
compensation and benefits discussion, the Fund Complex is divided into the
following three groups: the funds advised by Asset Management (the "AC Funds"),
the funds advised by Advisory Corp. excluding funds organized as series of the
Van Kampen Series Fund, Inc. (the "VK Funds") and the funds advised by Advisory
Corp. organized as series of the Van Kampen Series Fund, Inc. (the "MS Funds").
Each trustee/director who is not an affiliated person of the Advisers, the
Distributor, Van Kampen or Morgan Stanley Dean Witter & Co. (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
(except the money market series of the MS Funds) 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 (except the money market series of the MS Funds) 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 trustees recently reviewed and adopted a standardized compensation and
benefits program for each fund in the Fund Complex. Effective January 1, 1998,
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

B-18
<PAGE> 60

on the first business day of each quarter. Payment of the annual retainer is
allocated among the funds in the Fund Complex (except the money market series of
the MS Funds) on the basis of the relative net assets of each fund as of the
last business day of the preceding calendar quarter. Effective January 1, 1998,
the compensation of each Non-Affiliated Trustee includes a per meeting fee from
each fund in the Fund Complex (except the money market series of the MS Funds)
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.

For each AC Fund's last fiscal year and the period up to and including
December 31, 1997, the compensation of each Non-Affiliated Trustee from the AC
Funds includes an annual retainer in an amount equal to $35,000 per calendar
year, due in four quarterly installments on the first business day of each
calendar quarter. The AC Funds pay each Non-Affiliated Trustee a per meeting fee
in the amount of $2,000 per regular quarterly meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee. Payment of the annual retainer and the regular meeting
fee is allocated among the AC Funds (i) 50% on the basis of the relative net
assets of each AC Fund to the aggregate net assets of all the AC Funds and (ii)
50% equally to each AC Fund, in each case as of the last business day of the
preceding calendar quarter. Each AC Fund which is the subject of a special
meeting of the trustees generally pays each Non-Affiliated Trustee a per meeting
fee in the amount of $125 per special meeting attended by the Non-Affiliated
Trustee, due on the date of such meeting, plus reasonable expenses incurred by
the Non-Affiliated Trustee in connection with his or her services as a trustee,
provided that no compensation will be paid in connection with certain telephonic
special meetings.

For each VK Fund's last fiscal year and the period up to and including
December 31, 1997, the compensation of each Non-Affiliated Trustee from each VK
Fund includes an annual retainer in an amount equal to $2,500 per calendar year,
due in four quarterly installments on the first business day of each calendar
quarter. Each Non-Affiliated Trustee receives a per meeting fee from each VK
Fund in the amount of $125 per regular quarterly meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee. Each Non-Affiliated Trustee receives a per meeting fee
from each VK Fund in the amount of $125 per special meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee, provided that no compensation will be paid in connection
with certain telephonic special meetings.

For the period from July 2, 1997 up to and including December 31, 1997, the
compensation of each Non-Affiliated Trustee from the MS Funds was based
generally on the compensation amounts and methodology used by such funds prior
to their joining the current Fund Complex on July 2, 1997. Each trustee/director
was elected as a director of the MS Funds on July 2, 1997. Prior to July 2,
1997, the MS Funds were part of another fund complex (the "Prior Complex") and
the former directors of the MS Funds were paid an aggregate fee allocated among
the funds in the Prior Complex that resulted in individual directors receiving
total compensation between approximately $8,000 to $10,000 from the MS Funds
during such funds' last fiscal year.

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

B-19
<PAGE> 61

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

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

COMPENSATION TABLE

<TABLE>
<CAPTION>
FUND COMPLEX
------------------------------------------------------------
AGGREGATE AGGREGATE TOTAL
PENSION OR ESTIMATED MAXIMUM COMPENSATION
AGGREGATE COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS BEFORE DEFERRAL
BEFORE DEFERRAL FROM THE ACCRUED AS PART OF FROM THE FUND UPON FROM FUND
NAME(1) TRUST(2) EXPENSES(3) RETIREMENT(4) COMPLEX(5)
------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
J. Miles Branagan* $6,810 $30,328 $60,000 $111,197
Linda Hutton Heagy* 6,210 3,141 60,000 111,197
R. Craig Kennedy* 6,810 2,229 60,000 111,197
Jack E. Nelson* 6,810 15,820 60,000 104,322
Jerome L. Robinson 4,500 32,020 15,750 107,947
Phillip B. Rooney* 6,810 0 60,000 74,697
Dr. Fernando Sisto* 6,810 60,208 60,000 111,197
Wayne W. Whalen* 6,810 10,788 60,000 111,197
</TABLE>

- ---------------
* Currently a member of the Board of Trustees.

(1) Persons not designated by an asterisk are not currently members of the Board
of Trustees, but were members of the Board of Trustees during the Fund's
most recently completed fiscal year. Mr. Robinson retired from the Board of
Trustees on December 31, 1997. Mr. Yovovich joined the Board of Trustees on
October 22, 1998 and therefore has no historical information to report as of
the date of this Statement of Additional Information.

(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral from all three series of the Trust, including the Fund, with
respect to the Trust's fiscal year ended June 30, 1998. The detail of
aggregate compensation before deferral from each series of the Trust,
including the Fund, is shown in Table A below. The following trustees
deferred compensation from all three series of the Trust, including the Fund
during the fiscal year ended June 30, 1998 as follows; Mr. Branagan, $6,810;
Ms. Heagy, $6,210; Mr. Kennedy, $3,406; Mr. Nelson, $6,810; Mr. Robinson,
$4,500; Mr. Rooney, $6,810; Dr. Sisto, $3,406; and Mr. Whalen, $6,810. The
detail of amounts deferred for each series of the Trust, including the Fund,
is shown, in Table B below. Amounts deferred are retained by the Fund and
earn a rate of return determined by reference to either the return on the
common shares of the Fund or other funds in the Fund Complex as selected by
the respective Non-Affiliated Trustee, with the same economic effect as if
such Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, each Fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The cumulative deferred
compensation (including interest) accrued with respect to each trustee,
including former trustees from all three series of the Trust, including the
Fund, as of the Trusts fiscal year ended June 30, 1998 is as follows: Mr.
Branagan, $17,434; Mr. Gaughan, $9,426; Ms. Heagy, $23,877; Mr. Kennedy,
$40,248; Mr. Miller, $31,230; Mr. Nelson, $55,643; Mr. Rees, $9,322; Mr.
Robinson, $46,656; Mr. Rooney, $7,804; Dr. Sisto, $6,490; and Mr. Whalen,
$47,019. The detail of cumulative deferred compensation (including interest)
for each series, including the Fund, is shown in Table C below. The deferred
compensation plan is described above the Compensation Table.

B-20
<PAGE> 62

(3) The amounts shown in this column represent the sum of the retirement
benefits expected to be accrued by all of the operating investment companies
in the Fund Complex for each of the trustees for such investment companies'
respective fiscal years ended in 1997. The retirement plan is described
above the Compensation Table.

(4) For Mr. Robinson, this is the sum of the actual annual benefits payable by
the operating investment companies in the Fund Complex as of the date of his
retirement for each year of the 10-year period since his retirement. For the
remaining trustees, this is the sum of the estimated maximum annual benefits
payable by the operating investment companies in the Fund Complex for each
year of the 10-year period commencing in the year of such trustee's
anticipated retirement. The Retirement Plan is described above the
Compensation Table. Each Non-Affiliated Trustee of the Board of Trustees has
served as a member of the Board of Trustees of each series of the Trust
since he or she was first appointed or elected in the year set forth in
Table D below.

(5) The amounts shown in this column represent the aggregate compensation paid
by all operating investment companies in the Fund Complex as of December 31,
1997 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, 1997. 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
$268,447 during the calendar year ended December 31, 1997.

TABLE A

FISCAL YEAR 1998 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL --------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN HEAGY KENNEDY NELSON ROBINSON ROONEY SISTO WHALEN
--------- -------- -------- ----- ------- ------ -------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield Fund........................... 06/30 $2,451 $2,251 $2,451 $2,451 $1,500 $2,451 $2,451 $2,451
Short-Term Global Income Fund............. 06/30 2,159 1,959 2,159 2,159 1,500 2,159 2,159 2,159
Strategic Income Fund..................... 06/30 2,200 2,000 2,200 2,200 1,500 2,200 2,200 2,200
------ ------ ------ ------ ------ ------ ------ ------
Trust Total............................. $6,810 $6,210 $6,810 $6,810 $4,500 $6,810 $6,810 $6,810
</TABLE>

TABLE B

FISCAL YEAR 1998 AGGREGATE COMPENSATION DEFERRED FROM
THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL --------------------------------------------------------------------------
FUND NAME YEAR-END BRANAGAN HEAGY KENNEDY NELSON ROBINSON ROONEY SISTO WHALEN
--------- -------- -------- ----- ------- ------ -------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield Fund........................... 06/30 $2,451 $2,251 $1,226 $2,451 $1,500 $2,451 $1,226 $2,451
Short-Term Global Income Fund............. 06/30 2,159 1,959 1,080 2,159 1,500 2,159 1,080 2,159
Strategic Income Fund..................... 06/30 2,200 2,000 1,100 2,200 1,500 2,200 1,100 2,200
------ ------ ------ ------ ------ ------ ------ ------
Trust Total............................. $6,810 $6,210 $3,406 $6,810 $4,500 $6,810 $3,406 $6,810
</TABLE>

B-21
<PAGE> 63

TABLE C

FISCAL YEAR 1998 CUMULATIVE COMPENSATION DEFERRED (PLUS INTEREST)
FROM THE TRUST AND EACH SERIES
<TABLE>
<CAPTION>
TRUSTEE
------------------------------------------------------------------

FISCAL
FUND NAME YEAR-END BRANAGAN HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- -------- -------- ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield Fund.......................... 06/30 $ 6,007 $ 8,152 $13,515 $18,744 $2,799 $2,257 $15,867
Short-Term Global Income Fund............ 06/30 5,691 7,841 13,355 18,427 2,480 2,106 15,554
Strategic Income Fund.................... 06/30 5,736 7,884 13,378 18,472 2,525 2,127 15,598
------- ------- ------- ------- ------ ------ -------
Trust Total............................ $17,434 $23,877 $40,248 $55,643 $7,804 $6,490 $47,019

<CAPTION>
TRUSTEE
-------------------------------------
FORMER TRUSTEES
-------------------------------------
FUND NAME GAUGHAN MILLER REES ROBINSON
--------- ------- ------ ---- --------
<S> <C> <C> <C> <C>
High Yield Fund.......................... $3,142 $10,410 $3,018 $15,552
Short-Term Global Income Fund............ 3,142 10,410 3,152 15,552
Strategic Income Fund.................... 3,142 10,410 3,152 15,552
------ ------- ------ -------
Trust Total............................ $9,426 $31,230 $9,322 $46,656
</TABLE>

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------
FUND NAME BRANAGAN HEAGY KENNEDY NELSON ROBINSON ROONEY SISTO WHALEN
- --------- -------- ----- ------- ------ -------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield Fund...................................... 1995 1995 1993 1986 1992 1997 1995 1986
Short-Term Global Income Fund........................ 1995 1995 1993 1990 1992 1997 1995 1990
Strategic Income Fund................................ 1995 1995 1993 1993 1993 1997 1995 1993
</TABLE>

As of October 16, 1998, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

As of October 16, 1998, no person was known by the Fund to own beneficially or
to hold of record as much as 5% of the outstanding Class A Shares, Class B
Shares or Class C Shares of the Fund, except as follows:

<TABLE>
<CAPTION>
AMOUNT OF
OWNERSHIP AT CLASS OF PERCENTAGE
NAME AND ADDRESS OF HOLDER SEPTEMBER 3, 1998 SHARES OWNERSHIP
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Van Kampen Trust Company.................................... 2,148,182 A 7.630%
2800 Post Oak Blvd. 713,278 B 5.044%
Houston, TX 77056
MLPF&S For the Sole Benefit of Its Customers ............... 713,825 B 5.048%
Attn: Fund Administration 174,341 C 15.228%
4800 Deer Lake Dr. EFL 3
Jacksonville, FL 32246-6484
</TABLE>

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

LEGAL COUNSEL

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

TRANSFER AGENCY

During the fiscal years ended June 30, 1998, 1997 and 1996, Van Kampen
Investor Services Inc., transfer agent, shareholder service agent and dividend
disbursing agent for the Fund, received fees aggregating $458,909, $431,600 and
$406,100, respectively, for these services. Beginning in 1998, the transfer
agency prices are determined through negotiations with the Fund's Board of
Trustees and are based on competitive market benchmarks. Prior to 1998, the
transfer agency prices were determined on a cost plus profit basis.

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISORY AGREEMENT.

Van Kampen Investment Advisory Corp. (the "Adviser") is the Fund's investment
adviser. The Adviser's principal office is located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181. The Adviser is a

B-22
<PAGE> 64

wholly owned subsidiary of Van Kampen Investments Inc. ("Van Kampen") which is
an indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co.

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

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

The Adviser's activities are subject to the review and supervision of the
Fund's Trustees to whom the Adviser renders periodic reports of the Fund's
investment activities.

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

The Adviser has undertaken to reimburse the Fund for annual expenses of the
Fund which exceed the most stringent limit prescribed by any State in which the
Fund's shares are offered for sale. In addition to making any required
reimbursements, the Adviser may in its discretion, but is not obligated to,
waive all or any portion of its fee or assume all or any portion of the expenses
of the Fund.

For the years ended June 30, 1998, 1997 and 1996, the Fund recognized advisory
expenses of $3,298,466, $3,011,682 and $2,614,970, respectively.

OTHER AGREEMENTS.

ACCOUNTING SERVICES AGREEMENT. The Fund has also entered into an accounting
services agreement pursuant to which the Adviser provides accounting services
supplementary to those provided by the Custodian. Such services are expected to
enable the Fund to more closely monitor and maintain its accounts and records.
The Fund shares together with the other funds advised by the Adviser or its
affiliates and distributed by the Distributor 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
cost based proportionally on their respective net assets per fund.

For the years ended June 30, 1998, 1997 and 1996, the Fund recognized expenses
of approximately $42,000, $24,500 and $11,300, respectively, representing the
Adviser's cost of providing certain accounting services.

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

For the years ended June 30, 1998, 1997 and 1996, the Fund recognized expenses
of approximately $13,000, $16,900 and $14,300, respectively, representing Van
Kampen Investments Inc.'s cost of providing legal services.

B-23
<PAGE> 65

CUSTODIAN AND INDEPENDENT ACCOUNTANTS

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

The independent accountants for the Fund are KPMG Peat Marwick LLP, Chicago,
Illinois. The selection of independent accountants will be subject to
ratification by the shareholders of the Fund at any annual meeting of
shareholders.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser will place orders for portfolio transactions for the Fund with
broker-dealer firms giving consideration to the quality, quantity and nature of
each firm's professional services. These services include execution, clearance
procedures, wire service quotations and statistical and other research
information provided to the Fund or the Adviser, including quotations necessary
to determine the value of the Fund's net assets. Any research benefits derived
are available for all clients of the 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. If it is believed to be in the best interests of the Fund, the
Adviser may place portfolio transactions with brokers who provide the types of
research service described above, even if it means the Fund will have to pay a
higher commission (or, if the broker's profit is part of the cost of the
security, will have to pay a higher price for the security) than would be the
case if no weight were given to the broker's furnishing of those research
services. This will be done, however, only if, in the opinion of the Adviser,
the amount of additional commission or increased cost is reasonable in relation
to the value of such services.

If purchases or sales of securities for the Fund and for one or more other
investment companies or clients supervised by the Fund's Adviser are considered
at or about the same time, transactions in such securities will be allocated
among the several investment companies and clients in a manner deemed equitable
to all by the Adviser, taking into account the respective sizes of the funds and
the amount of securities to be purchased or sold. Although it is possible that
in some cases this procedure could have a detrimental effect on the price or
volume of the security as far as the Fund is concerned, it is also possible that
the ability to participate in volume transactions and to negotiate lower
brokerage commissions will be beneficial to the Fund.

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

The Board of Trustees has adopted certain policies incorporating the standards
of Rule 17e-1 issued by the SEC under the 1940 Act which requires that the
commissions paid to the Distributor and other affiliates of the Fund must be
reasonable and fair compared to the commissions, fees or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time.
The rule and procedures also contain review requirements and require the Adviser
to furnish reports to the Board of Trustees and to maintain records in
connection with such reviews. After consideration of all factors deemed
relevant, the Board of Trustees will consider from time to time whether the
advisory fee will be reduced by all or a portion of the brokerage commission
given to affiliated brokers.

During the year ended June 30, 1998, the Fund paid no brokerage commissions on
transactions to brokers related to research services provided to the Adviser.

Effective October 31, 1996, Morgan Stanley Group Inc. ("Morgan Stanley")
became an affiliate of the Adviser. Effective May 31, 1997, Dean Witter Discover
& Co. ("Dean Witter") became an affiliate of the Adviser. The negotiated
commission paid to an affiliated broker on any transaction would be comparable
to that payable to a non-affiliated broker in a similar transaction.

B-24
<PAGE> 66

The Fund paid the following commissions to all brokers and affiliates brokers
during the periods shown.

<TABLE>
<CAPTION>
AFFILIATED BROKERS
----------------------------
BROKERS MORGAN STANLEY DEAN WITTER
------- -------------- -----------
<S> <C> <C> <C>
Commissions paid:
Fiscal year 1996......................................... $ 0 N/A N/A
Fiscal year 1997......................................... $ 0 $ 0 $ 0
Fiscal year 1998......................................... $ 0 $ 0 $ 0
Fiscal year 1998 Percentages:
Commissions with affiliate to total commissions.......... 0% 0%
Value of brokerage transactions with affiliate to total
transactions.......................................... 0% 0%
</TABLE>

TAX STATUS OF THE FUND

The Trust and each of its series, including the Fund, will be treated as
separate corporations for federal income tax purposes. The Fund has elected and
qualified, and intends to continue to qualify each year, to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). If the Fund complies with certain requirements of the Code
relating to, among other things, the source of its income and the
diversification of its assets, the Fund will not be subject to federal income
tax on any income distributed to its shareholders. The Fund will be subject to
tax if, among other things, it fails to distribute net capital gains, or if its
annual distributions, as a percentage of its income, are less than the
distributions required by tax laws.

THE DISTRIBUTOR

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
dealers. 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) by the Fund's Trustees or by a vote of a majority of the
Fund's outstanding voting securities and (b) by the affirmative vote of a
majority of Trustees who are not parties to the Distribution and Service
Agreement or interested persons of any party, by votes cast in person at a
meeting called for such purpose. The Distribution and Service Agreement provides
that it will terminate if assigned, and that it may be terminated without
penalty be either party on 90 days' written notice. Total underwriting
commissions on the sale of shares of the Fund for the fiscal periods indicated
are as follows:

<TABLE>
<CAPTION>
AMOUNTS
TOTAL UNDERWRITING RETAINED
COMMISSIONS BY DISTRIBUTOR
------------------ --------------
<S> <C> <C>
Fiscal Year Ended June 30, 1998............................. $653,254 $ 78,100
Fiscal Year Ended June 30, 1997............................. $725,021 $ 92,626
Fiscal Year Ended June 30, 1996............................. $785,205 $118,900
</TABLE>

B-25
<PAGE> 67

DISTRIBUTION AND SERVICE PLANS

The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan are
sometimes 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 Plans are being implemented through the
Distribution and Service Agreement with the Distributor and sub-agreements
between the Distributor and members of the NASD acting as securities dealers and
NASD members or eligible non-members acting as brokers or agents (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."

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

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

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

For the fiscal year ended June 30, 1998, the Fund's aggregate expenses under
the Class A Plan were $689,467 or 0.25% of the Class A shares' average net
assets. For the fiscal year ended June 30, 1998, the Fund's aggregate expenses
under the Class B Plan were $1,313,792 or 1.00% of the Class B shares' average
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $969,108 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B shares of the Fund and
$344,684 for fees paid to financial intermediaries for servicing Class B
shareholders and administering the Plans. For the fiscal year ended June 30,
1998, the Fund's aggregate expenses under the Plans for Class C shares were
$83,899 or 1.00% of the Class C shares' average net assets. Such expenses were
paid to reimburse the Distributor for the following payments: $30,688 for
commissions and transaction fees

B-26
<PAGE> 68

paid to financial intermediaries in respect of sales of Class C shares of the
Fund and $53,211 for fees paid to financial intermediaries for servicing Class C
shareholders and administering the Class C Plan.

PERFORMANCE INFORMATION

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

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

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

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 Van Kampen believes the Fund compares relative to other funds advised by the
Adviser or its affiliates. Materials may also discuss the Dalbar Financial
Services study from 1984 to 1994 which examined 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 if shareholders
purchased their funds in direct or sales force distribution channels. The study
showed that investors working with a professional representative have tended
over time to earn higher returns than those who invested directly. The Fund will
also be marketed on the Internet.

The Fund may, in supplemental sales literature, advertise non-standardized
total return figures representing the cumulative, non-annualized total return of
each class of shares of the Fund from a given date to a subsequent given date.
Cumulative total return is calculated by measuring the value of an initial
investment in a given class of shares of the Fund at a given time, deducting the
maximum sales charge, if any, determining the value of all subsequent reinvested
distributions, and dividing the net change in the value of the investment as of
the end of the period by the amount of the initial investment and expressing the
result as a percentage. Non-standardized total return will be calculated
separately for each class of shares. Non-standardized total return calculations
do not reflect the imposition of a CDSC, and if any such CDSC with respect to
the CDSC Shares imposed at the time of redemption were reflected, it would
reduce the performance quoted.

B-27
<PAGE> 69

CLASS A SHARES

The Fund's yield for the 30-day period ending June 30, 1998 (calculated in the
manner described in the Prospectus under the heading "Fund Performance") for
Class A Shares was 7.77%. In determining the Fund's net investment income for a
stated 30 day period, the Fund calculates yield to maturity on each portfolio
security on a daily basis. The Fund's distribution rate for the 30-day period
ending June 30, 1998 (calculated in the manner described in the Prospectus under
the heading "Fund Performance") for Class A Shares was 8.09%.

The Fund's average total returns, including payment of the maximum sales
charge, for Class A Shares for (i) the one year period ended June 30, 1998 was
4.18%, (ii) the five year period ended June 30, 1998 was 8.01%, (iii) the ten
year period ended June 30, 1998 was 8.31% and (iv) the approximately twelve year
period since June 27, 1986, the commencement of investment operations, through
June 30, 1998 was 8.54%.

The Fund's cumulative non-standardized total return, including payment of the
maximum sales charge, for Class A Shares from inception through June 30, 1998
(as calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 167.63%.

The Fund's cumulative non-standardized total return, excluding the payment of
the maximum front-end sales charge, with respect to the Class A Shares from the
commencement of operations through June 30, 1998 (as calculated in the manner
described in the Prospectus under the heading "Fund Performance") was 180.93%.

CLASS B SHARES

The Fund's yield for the 30-day period ending June 30, 1998 (calculated in the
manner described in the Prospectus under the heading "Fund Performance") for
Class B Shares was 7.38%. In determining the Fund's net investment income for a
stated 30-day period, the Fund calculates yield to maturity on each portfolio
security on a daily basis. The Fund's distribution rate for the 30-day period
ending June 30, 1998 (calculated in the manner described in the Prospectus under
the heading "Fund Performance") for Class B Shares was 7.77%.

The Fund's average total return, including payment of the CDSC, for Class B
Shares for (i) the one year period ended June 30, 1998 was 5.28% and (ii) the
five year period ended June 30, 1998 was 8.17%. (iii) the approximately five
year one month period since May 17, 1993, the commencement of investment
operations, through June 30, 1998 was 8.72%.

The Fund's cumulative non-standardized total return, including payment of the
CDSC, for Class B Shares from inception through June 30, 1998 (as calculated in
the manner described in the Prospectus under the heading "Fund Performance") was
53.45%.

The Fund's cumulative non-standardized total return, excluding the payment of
the maximum front-end sales charge, with respect to the Class B Shares from June
30, 1993 (the commencement of the sale of Class B Shares) through June 30, 1998
(as calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 54.42%.

CLASS C SHARES

The Fund's yield for the 30-day period ending June 30, 1998 (calculated in the
manner described in the Prospectus under the heading "Fund Performance") for
Class C Shares was 7.38%. In determining the Fund's net investment income for a
stated 30 day period, the Fund calculates yield to maturity on each portfolio
security on a daily basis. The Fund's distribution rate for the 30-day period
ending June 30, 1998 (calculated in the manner described in the Prospectus under
the heading "Fund Performance") for Class C Shares was 7.77%.

The Fund's average total returns, including payment of the CDSC, for Class C
Shares for (i) the one year period ended June 30, 1998 was 7.47%, and (ii) the
approximately 58 month period from August 13, 1993 (commencement of distribution
of Class C shares) through June 30, 1998 was 8.27%.

B-28
<PAGE> 70

The Fund's cumulative non-standardized total return, including payment of the
CDSC, for Class C Shares from inception through June 30, 1998 (as calculated in
the manner described in the Prospectus under the heading "Fund Performance") was
47.35%.

The Fund's cumulative non-standardized total return, excluding the payment of
the maximum front-end sales charge, with respect to the Class C Shares from June
30, 1994 (the commencement of the sale of Class C Shares) through June 30, 1998
(as calculated in the manner described in the Prospectus under the heading "Fund
Performance") was 47.35%.

B-29
<PAGE> 71

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of

Van Kampen High Yield Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen High Yield Fund (the "Fund"), including the portfolio of investments, as
of June 30, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen High Yield Fund as of June 30, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Chicago, Illinois
August 3, 1998

B-30
<PAGE> 72

PORTFOLIO OF INVESTMENTS

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DOMESTIC CORPORATE BONDS 72.7%
AEROSPACE & DEFENSE 2.5%
$ 1,000 Compass Aerospace Corp., 144A Private
Placement (a)................................ 10.125% 04/15/05 $ 1,020,000
4,850 Dyncorp...................................... 9.500 03/01/07 4,995,500
2,200 Sequa Corp................................... 9.625 10/15/99 2,271,500
2,600 Sequa Corp................................... 9.375 12/15/03 2,717,000
------------
11,004,000
------------
AUTOMOBILE 3.2%
2,750 Aetna Industries, Inc........................ 11.875 10/01/06 2,983,750
2,800 Collins and Aikman Products Co............... 11.500 04/15/06 3,129,000
2,400 Insilco Corp................................. 10.250 08/15/07 2,520,000
2,000 Standyne Automotive Corp., (Including 3,000
common stock warrants) 144A Private Placement
(a).......................................... 10.250 12/15/07 2,045,000
3,100 Talon Automotive Group, Inc., 144A Private
Placement (a)................................ 9.625 05/01/08 3,123,250
------------
13,801,000
------------
BEVERAGE, FOOD & TOBACCO 3.2%
1,000 Aurora Foods, Inc., 144A Private Placement
(a).......................................... 8.750 07/01/08 1,010,000
2,250 Fleming Cos., Inc............................ 10.500 12/01/04 2,334,375
900 Fleming Cos., Inc............................ 10.625 07/31/07 940,500
3,700 Jitney Jungle Stores America, Inc............ 12.000 03/01/06 4,181,000
2,078 Pantry, Inc.................................. 12.500 11/15/00 2,187,095
3,200 Pantry, Inc.................................. 10.250 10/15/07 3,256,000
------------
13,908,970
------------
BUILDINGS & REAL ESTATE 3.5%
5,300 American Standard, Inc. (c).................. 10.875 05/15/99 5,512,000
500 Cemex International Capital, Inc., 144A
Private Placement (a)........................ 9.660 12/29/49 483,100
1,750 Home Interiors & Gifts, Inc., 144A Private
Placement (a)................................ 10.125 06/01/08 1,793,750
1,500 Kevco, Inc................................... 10.375 12/01/07 1,563,750
2,750 Schuler Homes Inc., 144A Private Placement
(a).......................................... 9.000 04/15/08 2,660,625
3,250 Webb (Del E.) Corp........................... 9.375 05/01/09 3,193,125
------------
15,206,350
------------
CHEMICALS, PLASTICS & RUBBER 1.8%
4,258 ISP Holdings, Inc............................ 9.750 02/15/02 4,513,480
3,210 Pioneer Americas Acquisition Corp............ 9.250 06/15/07 3,177,900
------------
7,691,380
------------
CONTAINERS, PACKAGING & GLASS 1.3%
3,700 Fonda Group, Inc............................. 9.500 03/01/07 3,607,500
900 Sweetheart Cup, Inc.......................... 9.625 09/01/00 895,500
1,000 Vicap SA, 144A Private Placement (a)......... 10.250 05/15/02 1,006,200
------------
5,509,200
------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING 1.4%
4,600 Communications & Power Industries, Inc....... 12.000 08/01/05 5,175,000
1,000 Moll Industries, Inc., 144A Private Placement
(a).......................................... 10.500 07/01/08 1,020,000
------------
6,195,000
------------
</TABLE>

See Notes to Financial Statements

B-31
<PAGE> 73
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ECOLOGICAL 0.8%
$ 2,500 Envirosource, Inc............................ 9.750% 06/15/03 $ 2,512,500
500 Envirosource, Inc. Series B.................. 9.750 06/15/03 495,000
550 Norcal Waste Systems, Inc.................... 13.250 11/15/05 639,375
------------
3,646,875
------------
ELECTRONICS 0.9%
1,950 DecisionOne Corp............................. 9.750 08/01/07 1,881,750
3,100 DecisionOne Corp. (Including 3,100 common
stock warrants) (b).......................... 0/11.500 08/01/08 1,829,000
------------
3,710,750
------------
ENERGY 1.0%
2,000 Chesapeake Energy Corp., 144A Private
Placement (a)................................ 9.625 05/01/05 2,010,000
1,000 Hurricane Hydrocarbons....................... 11.750 11/01/04 980,000
2,200 Universal Compression, Inc., 144A Private
Placement (a)................................ * 02/15/08 1,380,500
------------
4,370,500
------------
FINANCE 2.5%
3,300 Americo Life, Inc., 144A Private Placement
(a) (c)...................................... 9.250 06/01/05 3,399,000
2,800 Americredit Corp............................. 9.250 02/01/04 2,856,000
2,000 Americredit Corp., 144A Private Placement
(a).......................................... 9.250 02/01/04 2,040,000
2,750 Contifinancial Corp.......................... 8.125 04/01/08 2,777,500
------------
11,072,500
------------
HEALTHCARE 4.6%
2,000 Alliance Imaging, Inc........................ 9.625 12/15/05 2,050,000
3,000 Hudson Respiratory Care, Inc., 144A Private
Placement (a)................................ 9.125 04/15/08 2,955,000
1,100 Imagyn Medical Technologies, Inc............. 12.500 04/01/04 440,000
2,000 Mediq, Inc., 144A Private Placement (a)...... 11.000 06/01/08 2,050,000
4,000 Oxford Health Plans, Inc., 144A Private
Placement (a)................................ 11.000 05/15/05 4,100,000
4,500 Paragon Health Network, Inc.................. * 11/01/07 2,970,000
1,700 Paragon Health Network, Inc.................. 9.500 11/01/07 1,729,750
2,000 Sun Healthcare Group, Inc., 144A Private
Placement (a)................................ 9.375 05/01/08 2,040,000
2,000 Vencor, Inc.................................. 9.875 05/01/05 1,970,000
------------
20,304,750
------------
HOTEL, MOTEL, INNS & GAMING 3.4%
3,250 Argosy Gaming Co............................. 13.250 06/01/04 3,672,500
3,075 Coast Hotels & Casinos, Inc.................. 13.000 12/15/02 3,551,625
3,950 Grand Casino, Inc. (c)....................... 10.125 12/01/03 4,285,750
1,000 Hard Rock Hotel, Inc., 144A Private Placement
(a).......................................... 9.250 04/01/05 1,025,000
2,000 Majestic Star Casino......................... 12.750 05/15/03 2,180,000
------------
14,714,875
------------
</TABLE>

See Notes to Financial Statements

B-32
<PAGE> 74
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LEISURE 4.3%
$ 1,800 Booth Creek Ski Holdings, Inc................ 12.500% 03/15/07 $ 1,948,500
300 Booth Creek Ski Holdings, Inc., 144A Private
Placement (a)................................ 12.500 03/15/07 324,750
2,000 Premier Parks, Inc........................... 9.250 04/01/06 2,065,000
6,000 Selmer, Inc.................................. 11.000 05/15/05 6,570,000
4,000 Silver Cinemas International, Inc., 144A
Private Placement (a)........................ 10.500 04/15/05 4,060,000
1,650 Viacom International, Inc.................... 10.250 09/15/01 1,823,250
1,703 Waterford Gaming............................. 12.750 11/15/03 1,890,330
------------
18,681,830
------------
MINING, STEEL, IRON & NON-PRECIOUS METAL 1.6%
1,000 Inland Steel Co.............................. 12.000 12/01/98 1,025,000
2,000 Pen Holdings, Inc., 144A Private Placement
(a).......................................... 9.875 06/15/08 2,005,000
1,950 Renco Steel Holdings, Inc., 144A Private
Placement (a)................................ 10.875 02/01/05 1,959,750
2,000 WCI Steel, Inc............................... 10.000 12/01/04 2,060,000
------------
7,049,750
------------
OIL & GAS 4.7%
4,700 Dawson Production Services, Inc.............. 9.375 02/01/07 4,617,750
1,150 Giant Industries, Inc........................ 9.750 11/15/03 1,201,750
4,450 Giant Industries, Inc........................ 9.000 09/01/07 4,639,125
1,350 KCS Energy, Inc.............................. 11.000 01/15/03 1,451,250
3,700 National Energy Group, Inc................... 10.750 11/01/06 3,367,000
1,000 Petroleum Heat & Power, Inc.................. 12.250 02/01/05 992,500
2,200 Pride Petroleum Services, Inc................ 9.375 05/01/07 2,348,500
2,050 Wainoco Oil Corp., 144A Private Placement (a) 9.125 02/15/06 2,065,375
------------
20,683,250
------------
PERSONAL & NON-DURABLE 1.3%
5,100 Cole National Group, Inc..................... 9.875 12/31/06 5,520,750
------------
PRINTING, PUBLISHING & BROADCASTING 8.9%
3,000 Capstar Broadcasting Partners................ 9.250 07/01/07 3,150,000
2,500 Century Communications Corp.................. 8.875 01/15/07 2,656,250
1,850 Century Communications Corp.................. 8.750 10/01/07 1,956,375
1,050 CSC Holdings, Inc............................ 8.125 08/15/09 1,123,500
2,600 CSC Holdings, Inc............................ 10.500 05/15/16 3,055,000
3,500 EZ Communications, Inc....................... 9.750 12/01/05 3,867,500
3,350 Gray Communications Systems, Inc............. 10.625 10/01/06 3,676,625
1,250 Interep National Radio Sales, Inc. 144A
Private Placement (a)........................ 10.000 07/01/08 1,250,000
2,700 International Cabletel, Inc. (b)............. 0/12.750 04/15/05 2,369,250
2,750 International Cabletel, Inc. (b)............. 0/11.500 02/01/06 2,248,125
4,000 K-III Communications Corp.................... 10.250 06/01/04 4,290,000
2,100 Northland Cable Television, Inc.............. 10.250 11/15/07 2,247,000
4,700 Pegasus Communications Corp.................. 9.625 10/15/05 4,841,000
2,000 Young Broadcasting, Inc...................... 11.750 11/15/04 2,220,000
------------
38,950,625
------------
RAIL & SHIPPING 0.4%
1,750 Alpha Shipping, 144A Private Placement (a)... 9.500 02/15/08 1,649,375
------------
</TABLE>

See Notes to Financial Statements

B-33
<PAGE> 75
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES 0.7%
$ 2,900 S.D. Warren Co. (c).......................... 12.000% 12/15/04 $ 3,204,500
------------
RETAIL 1.2%
1,250 Big 5 Corp................................... 10.875 11/15/07 1,300,000
2,050 Community Distributors, Inc.................. 10.250 10/15/04 2,142,250
1,750 Hosiery Corp. America, Inc................... 13.750 08/01/02 1,929,375
------------
5,371,625
------------
TELECOMMUNICATIONS 14.0%
2,000 American Mobile Satellite Corp., 144A Private
Placement (a)................................ 12.250 04/01/08 1,870,000
4,205 Centennial Cellular Corp..................... 10.125 05/15/05 4,730,625
1,500 Clearview Cinema Group, Inc., 144A Private
Placement (a)................................ 10.875 06/01/08 1,526,250
3,000 CTI Holdings, 144A Private Placement (a)..... 11.500 04/15/08 1,665,000
4,000 Echostar Communications Corp. (b)............ 0/12.875 06/01/04 3,910,000
4,000 GST Network Funding, Inc., 144A Private
Placement (a) (b)............................ 0/10.500 05/01/08 2,390,000
1,350 Intermedia Communications of Florida, Inc.... 13.500 06/01/05 1,599,750
2,600 Intermedia Communications, Inc. (b).......... 0/11.250 07/15/07 1,907,750
6,000 Intermedia Communications, Inc., 144A Private
Placement (a)................................ 8.600 06/01/08 6,060,000
4,000 Metronet Communications Corp. (b)............ 0/9.950 06/15/08 2,460,000
2,000 MJD Communications, Inc., 144A Private
Placement (a)................................ 9.500 05/01/08 2,045,000
3,500 Nextlink Communications, Inc., 144A Private
Placement (a)................................ 9.450 04/15/08 2,135,000
1,000 Onepoint Communications Corp. (Including
1,000 common stock warrants) 144A Private
Placement (a)................................ 14.500 06/01/08 945,000
2,500 Optel, Inc., 144A Private Placement (a) (d).. 11.500 07/01/08 2,503,125
1,000 Park N View, Inc., 144A Private Placement (a) 13.000 05/15/08 997,500
8,000 Pinnacle Holdings, Inc., 144A Private
Placement (a)................................ 10.000 03/15/08 5,260,000
4,355 PSINet, Inc.................................. 10.000 02/15/05 4,431,213
2,500 RSL Communications, 144A Private Placement (a) * 03/01/08 1,487,500
3,750 Spectrasite Holdings, Inc., 144A Private
Placement (a)................................ 12.000 07/15/08 2,081,250
3,000 Startec Global Communications, 144A Private
Placement (a)................................ 12.000 05/15/08 2,925,000
2,000 Telecommunications Tech Co., 144A Private
Placement (a)................................ 9.750 05/15/08 2,045,000
2,750 Triton Communications, Inc., 144A Private
Placement (a)................................ * 05/01/08 1,553,750
7,550 United International Holdings, Inc........... 10.750 02/15/08 4,681,000
------------
61,209,713
------------
TEXTILES 1.8%
1,750 Cluett American Corp., 144A Private Placement
(a).......................................... 10.125 05/15/08 1,732,500
1,650 Pillowtex Corp............................... 10.000 11/15/06 1,769,625
2,850 Pillowtex Corp............................... 9.000 12/15/07 2,928,375
1,500 Scovill Fasteners, Inc....................... 11.250 11/30/07 1,548,750
------------
7,979,250
------------
TRANSPORTATION 1.6%
3,000 Atlas Air, Inc. 144A Private Placement (a)... 9.250 04/15/08 2,992,500
4,000 U.S. Airways, Inc............................ 8.625 09/01/98 4,015,760
------------
7,008,260
------------
</TABLE>

See Notes to Financial Statements

B-34
<PAGE> 76
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTILITIES 2.1%
$ 4,250 AES Corp. (c)................................ 10.250% 07/15/06 $ 4,621,875
1,200 AES Corp..................................... 8.375 08/15/07 1,215,000
600 El Paso Electric Co.......................... 8.250 02/01/03 640,500
1,500 El Paso Electric Co.......................... 8.900 02/01/06 1,680,000
854 Midland Cogeneration Venture................. 10.330 07/23/02 922,185
------------
9,079,560
------------
TOTAL DOMESTIC CORPORATE BONDS 72.7%............................. 317,524,638
------------
</TABLE>

<TABLE>
<CAPTION>
Par
Amount
in Local
Currency
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FOREIGN BONDS AND DEBT SECURITIES 19.1%
ARGENTINA 2.1%
$ 3,000 Banco De Credito Argentino (US$)............. 9.500% 04/24/00 $ 3,045,000
1,000 Credito Argentino Sa (US$)................... 9.500 04/24/00 1,015,000
1,000 Federal Republic of Argentina (Var. Rate
Cpn.) (US$).................................. 5.750 03/31/23 744,375
1,000 Republic of Argentina (Var. Rate Cpn.)
(US$)........................................ 6.625 03/31/23 812,500
3,800 Republic of Argentina (US$).................. 6.625 03/31/05 3,355,400
------------
8,972,275
------------
AUSTRALIA 0.2%
1,100 Commonwealth of Australia (AU$).............. 10.000 10/15/02 803,145
------------
BRAZIL 1.6%
1,806 Brazil Media Trust (US$)..................... 6.5625 09/15/07 1,461,403
3,000 Companhia Paranaen (US$)..................... 9.750 05/02/05 2,805,000
2,000 Federal Republic of Brazil (US$)............. 10.125 05/15/27 1,726,000
500 Multicanal Participacoes Series B (US$)...... 12.625 06/18/04 501,250
500 Multicanal Participacoes (US$)............... 12.625 06/18/04 501,250
------------
6,994,903
------------
CANADA 3.6%
1,000 Canadian Airlines Corp. (US$)................ 10.000 05/01/05 1,010,000
5,400 Fonorola, Inc. (US$)......................... 12.500 08/15/02 5,980,500
3,500 Fundy Cable Ltd. (US$)....................... 11.000 11/15/05 3,850,000
4,500 Trizec Finance (US$)......................... 10.875 10/15/05 5,085,000
------------
15,925,500
------------
CHILE 0.2%
1,000 Empresa Electrica Delaware Norte Sa, (US$)
144A Private Placement (a)................... 7.750 03/15/06 863,530
------------
COLUMBIA 1.1%
2,500 Financiera Energetica (US$).................. 9.375 06/15/06 2,425,000
2,300 Financiera Energetica (US$), 144A Private
Placement (a)................................ 9.375 06/15/06 2,231,000
------------
4,656,000
------------
</TABLE>

See Notes to Financial Statements

B-35
<PAGE> 77
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
in Local
Currency
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ITALY 0.2%
1,500,000 Federal Republic of Italy (Lira)............. 10.000% 08/01/03 1,042,212
------------
KOREA 0.5%
1,100 Korea Dev Bk (US$)........................... 6.250 05/01/00 1,006,478
1,500 Republic of Korea (US$)...................... 8.875 04/15/08 1,365,000
------------
2,371,478
------------
LUXEMBOURG 1.5%
8,500 Millicom International Cellular (US$) (b)
(c).......................................... 0/13.500 06/01/06 6,566,250
------------
MEXICO 1.9%
5,000 Satelites Mexicanos S A De CV, (US$) 144A
Private Placement (a)........................ 10.125 11/01/04 4,900,000
2,000 United Mexican States (US$).................. 11.375 09/15/16 2,226,000
1,000 United Mexican States (US$).................. 6.250 12/31/19 828,125
500 United Mexican States (US$).................. 11.500 05/15/26 568,750
------------
8,522,875
------------
MOROCCO 1.0%
5,000 Morocco Trust A Loan (US$) (e)............... 6.5625 01/01/09 4,287,500
------------
PANAMA 0.9%
4,000 Republic of Panama (US$)..................... 8.875 09/30/27 3,780,000
------------
POLAND 1.2%
1,000 Government of Poland (Var. Rate Cpn.)
(US$)........................................ 6.6875 10/27/24 984,375
4,250 Netia Holdings B V (US$)..................... 10.250 11/01/07 4,122,500
------------
5,106,875
------------
RUSSIA 1.7%
2,000 City of Moscow (US$)......................... 9.500 05/31/00 1,701,400
4,000 Ministry of Finance Russia (US$)............. 10.000 06/26/07 3,010,000
2,000 Russia Principal Loans (US$) (e)............. 6.625 12/15/20 953,750
3,000 Vnesheconombank (US$) (e).................... * 12/15/15 1,430,625
768 Vnesheconombank (US$) 144A Private Placement
(Var. Rate Cpn.) (a)......................... 6.625 12/02/98 427,498
------------
7,523,273
------------
UNITED KINGDOM 1.4%
1,500 Cenargo International Ltd., (US$) 144A
Private Placement (a)........................ 9.75 06/15/08 1,477,500
2,700 Diamond Cable Commerce Plc (US$) (b)......... 0/10.75 02/15/07 1,984,500
1,400 Esprit Telecom Group Plc (US$)............... 11.500 12/15/07 1,445,500
1,250 Esprit Telecom Group Plc, (US$) 144A Private
Placement (a)................................ 10.875 06/15/08 1,246,875
------------
6,154,375
------------
TOTAL FOREIGN BONDS AND DEBT SECURITIES 19.1%.................... 83,570,191
------------
TOTAL CORPORATE BONDS 91.8%...................................... 401,094,829
------------
</TABLE>

See Notes to Financial Statements

B-36
<PAGE> 78
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Market Value
- ----------------------------------------------------------------------------------------------
<S> <C>
EQUITIES 2.1%
American Telecasting, Inc. (8,370 common stock warrants)(g)..................... $ 4,185
Capital Gaming International, Inc. (5,000 common stock warrants) (g)............ 0
Coastal Finance, Inc. (40,000 preferred shares)................................. 980,000
CSC Holdings, Inc. (1 preferred share).......................................... 122
El Paso Electric Co. (22,459 preferred shares)(f)............................... 2,425,610
Hosiery Corp. America, Inc. (1,000 common stock warrants)(g).................... 52,500
Intermedia Communications of Florida, Inc. (3,150 common stock warrants), 144A
Private Placement (a) (g)..................................................... 441,000
Meditrust (3,867 common stock warrants)(g)...................................... 107,793
Time Warner, Inc. (4,799 preferred shares) (f).................................. 5,338,887
Urohealth Systems, Inc. (2,550 common stock warrants), 144A Private Placement
(a) (g)....................................................................... 26
------------
TOTAL EQUITIES.................................................................. 9,350,123
------------
SWAP TRANSACTIONS 0.0%
Merrill Lynch, 20.0 million US$ notional amount, maturing 9/1/98, payment based
upon the spread of the Merrill Lynch Master Index............................... 23,798
------------
TOTAL LONG-TERM INVESTMENTS 93.9%
(Cost $407,409,972)........................................................... 410,468,750
------------
REPURCHASE AGREEMENT 4.1%
J.P. Morgan Securities, (U.S. T-Note, $13,355,000 par, 12.000% coupon, due
05/15/05 dated 06/30/98 to be sold on 07/01/98 at $18,004,750)
(Cost $18,002,000)............................................................ 18,002,000
------------
TOTAL INVESTMENTS 98.0%
(Cost $425,411,972)........................................................... 428,470,750
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0%..................................... 8,589,321
------------
NET ASSETS 100.0%.............................................................. $437,060,071
============
</TABLE>

*Zero coupon bond

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

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

(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments, open options, futures, forwards or swap transactions.

(d) Securities purchased on a when issued or delayed delivery basis.

(e) Security is a bank loan participation.

(f) Payment-in-kind security.

(g) Non-income producing security.

See Notes to Financial Statements

B-37
<PAGE> 79

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $425,411,972)....................... $ 428,470,750
Cash........................................................ 213,636
Receivables:
Investments Sold.......................................... 8,559,865
Interest.................................................. 7,169,496
Fund Shares Sold.......................................... 768,415
Forward Currency Contracts.................................. 15,198
Other....................................................... 14,161
--------------
Total Assets.......................................... 445,211,521
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,750,000
Income Distributions...................................... 1,817,044
Fund Shares Repurchased................................... 632,649
Distributor and Affiliates................................ 380,544
Investment Advisory Fee................................... 236,298
Variation Margin on Futures............................... 28,125
Trustees' Deferred Compensation and Retirement Plans........ 127,410
Options at Market Value (Net premiums paid of $1,775)....... 3,750
Accrued Expenses............................................ 175,630
--------------
Total Liabilities..................................... 8,151,450
--------------
NET ASSETS.................................................. $ 437,060,071
==============
NET ASSETS CONSIST OF:
Capital..................................................... $ 521,893,588
Net Unrealized Appreciation................................. 2,966,018
Accumulated Distributions in Excess of Net Investment
Income.................................................... (1,685,377)
Accumulated Net Realized Loss............................... (86,114,158)
--------------
NET ASSETS.................................................. $ 437,060,071
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $280,565,914 and 28,360,164 shares of
beneficial interest issued and outstanding)............. $ 9.89
Maximum sales charge (4.75%* of offering price)......... .49
--------------
Maximum offering price to public........................ $ 10.38
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $145,003,244 and 14,662,143 shares of
beneficial interest issued and outstanding)............. $ 9.89
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $11,490,913 and 1,162,594 shares of
beneficial interest issued and outstanding)............. $ 9.88
==============
*On sales of $100,000 or more, the sales charge will be
reduced.
</TABLE>

See Notes to Financial Statements

B-38
<PAGE> 80

STATEMENT OF OPERATIONS

For the Year Ended June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (Net of foreign withholding taxes of $7,881)....... $40,758,538
Dividends................................................... 951,901
Other....................................................... 1,196,387
-----------
Total Income............................................ 42,906,826
-----------
EXPENSES:
Investment Advisory Fee..................................... 3,298,466
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, and C of $687,422, $1,410,829, and $98,799,
respectively)............................................. 2,197,050
Shareholder Services........................................ 644,982
Custody..................................................... 120,938
Trustees' Fees and Expenses................................. 31,475
Legal....................................................... 28,850
Other....................................................... 297,676
-----------
Total Expenses.......................................... 6,619,437
Less Fees Waived........................................ 439,795
-----------
Net Expenses............................................ 6,179,642
-----------
NET INVESTMENT INCOME....................................... $36,727,184
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................. $ 9,805,802
Options................................................. (104,912)
Futures................................................. 497,291
Forwards................................................ 46,182
Foreign Currency Transactions........................... (6,359)
-----------
Net Realized Gain........................................... 10,238,004
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 11,798,356
-----------
End of the Period:
Investments............................................. 3,058,778
Options................................................. (5,525)
Futures................................................. (87,188)
Foreign Currency Translation............................ (47)
-----------
2,966,018
-----------
Net Unrealized Depreciation During the Period............... (8,832,338)
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 1,405,666
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $38,132,850
===========
</TABLE>

See Notes to Financial Statements

B-39
<PAGE> 81

STATEMENT OF CHANGES IN NET ASSETS

For the Years Ended June 30, 1998 and 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1998 June 30, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 36,727,184 $ 34,529,017
Net Realized Gain.................................... 10,238,004 9,725,173
Net Unrealized Appreciation/Depreciation During the
Period............................................. (8,832,338) 6,256,307
----------- ----------
Change in Net Assets from Operations................. 38,132,850 50,510,497
----------- ----------
Distributions from Net Investment Income............. (36,588,695) (34,529,017)
Distributions in Excess of Net Investment Income..... -0- (412,288)
----------- ----------
Distributions from and in Excess of Net Investment
Income*.......................................... (36,588,695) (34,941,305)
Return of Capital Distribution*...................... -0- (612,243)
----------- ----------
Total Distributions................................ (36,588,695) (35,553,548)
----------- ----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... 1,544,155 14,956,949
----------- ----------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 141,976,974 151,222,275
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 14,616,655 13,768,097
Cost of Shares Repurchased........................... (145,829,346) (130,375,583)
----------- -----------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... 10,764,283 34,614,789
----------- -----------
TOTAL INCREASE IN NET ASSETS......................... 12,308,438 49,571,738
NET ASSETS:
Beginning of the Period.............................. 424,751,633 375,179,895
----------- -----------
End of the Period (Including accumulated
distributions in excess of net investment income of
$1,685,377 and $1,905,853, respectively)........... $437,060,071 $424,751,633
============ ============
</TABLE>

<TABLE>
<CAPTION>
Year Ended Year Ended
*Distributions by Class June 30, 1998 June 30, 1997
- -------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of
Net Investment Income:
Class A Shares................... $(24,757,453) $(24,888,535)
Class B Shares................... (11,057,055) (9,438,468)
Class C Shares................... (774,187) (614,302)
------------- ------------
$(36,588,695) $(34,941,305)
============= ============
Return of Capital Distribution:
Class A Shares................... $ -0- $ (430,710)
Class B Shares................... -0- (170,818)
Class C Shares................... -0- (10,715)
------------- ------------
$ -0- $ (612,243)
============= ============
</TABLE>

See Notes to Financial Statements

B-40
<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 A Shares 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 9.854 $ 9.493 $ 9.398 $ 9.643 $10.380
-------- ------- -------- ------- --------
Net Investment Income............. .857 .857 .878 .844 .908
Net Realized and Unrealized
Gain/Loss....................... .037 .384 .147 (.099) (.595)
-------- ------- -------- ------- --------
Total from Investment Operations.... .894 1.241 1.025 .745 .313
-------- ------- -------- ------- --------
Less:
Distributions from and in Excess
of Net Investment Income........ .855 .865 .880 .815 .950
Return of Capital Distribution.... -0- .015 .050 .175 .100
-------- ------- -------- ------- --------
Total Distributions................. .855 .880 .930 .990 1.050
-------- ------- -------- ------- --------
Net Asset Value, End of the
Period............................ $ 9.893 $ 9.854 $ 9.493 $ 9.398 $ 9.643
======== ======= ======== ======= ========
Total Return* (a)................... 9.36% 13.60% 11.26% 8.50% 2.92%
Net Assets at End of the Period (In
millions)......................... $ 280.6 $ 288.0 $ 271.1 $ 253.3 $ 260.7
Ratio of Expenses to Average Net
Assets *.......................... 1.14% 1.17% 1.31% 1.31% 1.32%
Ratio of Net Investment Income to
Average Net Assets *.............. 8.61% 8.83% 9.16% 9.13% 8.85%
Portfolio Turnover.................. 154% 125% 102% 152% 203%
*If certain expenses had not been waived or reimbursed by Van Kampen, total return would
have been lower and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................ 1.24% 1.26% 1.31% N/A N/A
Ratio of Net Investment Income to
Average Net Assets................ 8.51% 8.73% 9.15% N/A N/A
</TABLE>

(a) Total return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

N/A -- Not applicable.

See Notes to Financial Statements

B-41
<PAGE> 83
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------
Class B Shares 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $ 9.855 $ 9.497 $ 9.398 $ 9.638 $10.382
------- ------- ------- ------- -------
Net Investment Income................. .782 .777 .797 .788 .889
Net Realized and Unrealized
Gain/Loss........................... .036 .389 .160 (.115) (.665)
------- ------- ------- ------- -------
Total from Investment Operations........ .818 1.166 .957 .673 .224
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income............... .783 .794 .812 .751 .877
Return of Capital Distribution........ -0- .014 .046 .162 .091
------- ------- ------- ------- -------
Total Distributions..................... .783 .808 .858 .913 .968
------- ------- ------- ------- -------
Net Asset Value, End of the Period...... $ 9.890 $ 9.855 $ 9.497 $ 9.398 $ 9.638
======= ======= ======= ======= =======
Total Return* (a)....................... 9.28% 12.64% 10.55% 7.61% 2.11%
Net Assets at End of the Period (In
millions)............................. $ 145.0 $ 128.7 $ 97.1 $ 55.9 $ 33.2
Ratio of Expenses to Average Net
Assets*............................... 1.91% 1.93% 2.07% 2.04% 2.13%
Ratio of Net Investment Income to
Average Net Assets*................... 7.84% 8.03% 8.39% 8.35% 7.94%
Portfolio Turnover...................... 154% 125% 102% 152% 203%
*If certain expenses had not been waived or reimbursed by Van Kampen, total return would
have been lower and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets................................ 2.01% 2.02% 2.07% N/A N/A
Ratio of Net Investment Income to
Average Net Assets.................... 7.74% 7.94% 8.38% N/A N/A
</TABLE>

(a) Total Return is based upon Net Asset Value which does not include payment of
maximum sales charge or contingent deferred sales charge.

N/A -- Not applicable.

See Notes to Financial Statements

B-42
<PAGE> 84
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
August 13, 1993
Year Ended June 30, (Commencement of
------------------------------------- Distribution) to
Class C Shares 1998 1997 1996 1995 June 30, 1994(a)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 9.851 $ 9.495 $ 9.396 $ 9.643 $10.340
------- ------- ------- ------- -------
Net Investment Income............... .780 .780 .828 .745 .761
Net Realized and Unrealized
Gain/Loss......................... .036 .384 .129 (.079) (.605)
------- ------- ------- ------- -------
Total from Investment Operations...... .816 1.164 .957 .666 .156
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income............. .783 .794 .812 .751 .763
Return of Capital Distribution...... -0- .014 .046 .162 .090
------- ------- ------- ------- -------
Total Distributions................... .783 .808 .858 .913 .853
------- ------- ------- ------- -------
Net Asset Value, End of Period........ $ 9.884 $ 9.851 $ 9.495 $ 9.396 $ 9.643
======= ======= ======= ======= =======
Total Return* (b)..................... 8.47% 12.65% 10.55% 7.61% 1.37%**
Net Assets at End of Period
(In millions)....................... $ 11.5 $ 8.1 $ 7.0 $ 2.0 $ 2.2
Ratio of Expenses to Average Net
Assets*............................. 1.91% 1.93% 2.06% 2.12% 2.14%
Ratio of Net Investment Income to
Average Net Assets*................. 7.83% 8.08% 8.38% 8.13% 7.91%
Portfolio Turnover.................... 154% 125% 102% 152% 203%**
*If certain expenses had not been waived or reimbursed by Van Kampen, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets.............................. 2.01% 2.03% 2.07% N/A N/A
Ratio of Net Investment Income to
Average Net Assets.................. 7.73% 7.99% 8.38% N/A N/A
</TABLE>

** Non-Annualized

(a) Based on average shares outstanding.

(b) Total Return is based upon Net Asset Value which does not include payment of
maximum sales charge or contingent deferred sales charge.

N/A -- Not applicable.

See Notes to Financial Statements

B-43
<PAGE> 85

NOTES TO FINANCIAL STATEMENTS

June 30, 1998
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen High Yield Fund, formerly known as Van Kampen American Capital High
Yield Fund, (the "Fund") is organized as a series of Van Kampen Trust, a
Delaware business trust (the "Trust"), and is registered as a diversified
open-end management investment company under the Investment Company Act of 1940,
as amended. The Fund's primary investment objective is to provide a high level
of current income through investment in medium and lower grade domestic
corporate debt securities. The Fund also may invest up to 35% of its assets in
foreign government and corporate debt securities of comparable quality. The Fund
commenced investment operations on June 27, 1986. The Fund commenced
distribution of its Class B and C shares on May 17, 1993 and August 13, 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 are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.

B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made.

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

B-44
<PAGE> 86
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

along with other investment companies advised by Van Kampen Investment Advisory
Corp. (the "Adviser") or its affiliates, the daily aggregate of which is
invested in repurchase agreements. Repurchase agreements are fully
collateralized by the underlying debt security. The Fund will make payment for
such securities only upon physical delivery or evidence of book entry transfer
to the account of the custodian bank. The seller is required to maintain the
value of the underlying security at not less than the repurchase proceeds due
the Fund.

C. INCOME AND EXPENSES--Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Bond discount is amortized
over the expected life of each applicable security. Expenses of the Fund are
allocated on a pro rata basis to each class of shares, except for distribution
and service fees and transfer agency costs which are unique to each class of
shares.

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

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At June 30, 1998, the Fund had an accumulated capital loss carryforward
for tax purposes of $85,906,541, which will expire between June 30, 1999 and
June 30, 2004. Of this amount, $39,385,731 will expire on June 30, 1999. Net
realized gains or losses may differ for financial and tax reporting purposes
primarily as a result of wash sales, currency gains, and mark to market on
futures contracts at June 30, 1998.

At June 30, 1998, for federal income tax purposes, the cost of long- and
short-term investments is $425,712,303; the aggregate gross unrealized
appreciation is $9,418,800 and the aggregate gross unrealized depreciation is
$6,684,151, resulting in net unrealized appreciation of $2,734,649.

E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. Net investment income for federal income
tax purposes includes gains and losses realized on foreign currency
transactions. These gains and losses are included as net realized gains and
losses for financial reporting purposes.

B-45
<PAGE> 87
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

Net realized gains, if any, are distributed annually. Distributions from net
realized gains for book purposes may include short-term capital gains, which are
included as ordinary income for tax purposes.

Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
for the 1998 fiscal year have been identified and appropriately reclassified.
Permanent book and tax basis differences relating to the recognition of net
realized gains on foreign currency transactions of $81,987 were reclassified
from accumulated net realized gain/loss to accumulated undistributed net
investment income.

F. CURRENCY TRANSLATION--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated into
U.S. dollars at the mean of the quoted bid and ask prices of such currencies
against the U.S. dollar. Purchases and sales of portfolio securities are
translated at the rate of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated at rates prevailing when accrued.

G. BANK LOAN PARTICIPATIONS--The Fund invests in participation interests of
loans to foreign entities. When the Fund purchases a participation of a foreign
loan interest, the Fund typically enters into a contractual agreement with the
lender or other third party selling the participation, but not with the borrower
directly. As such, the Fund assumes credit risk for the borrower, selling
participant or other persons positioned between the Fund and the borrower.

2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:

<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- --------------------------------------------------------------------------
<S> <C>
First $500 million.................................. .75 of 1%
Over $500 million................................... .65 of 1%
</TABLE>

For the year ended June 30, 1998, the Adviser waived a portion of its
advisory fee. This waiver is voluntary and may be discontinued at any time.

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $15,900 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.

B-46
<PAGE> 88
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $55,000 representing Van Kampen Funds Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting and legal services to
the Fund.

Van Kampen Investor Services Inc., ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended June
30, 1998, the Fund recognized expenses of approximately $458,900. Beginning in
1998, the transfer agency fees are determined through negotiations with the
Fund's Board of Trustees and are based on competitive market benchmarks.

Additionally, for the year ended June 30, 1998, the Fund reimbursed Van
Kampen approximately $19,600 related to the direct cost of consolidating the Van
Kampen open-end fund complex. Payment was contingent upon the realization by the
Fund of cost efficiencies resulting from the consolidation.

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.

3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized. At June 30, 1998, capital aggregated
$369,566,903,

B-47
<PAGE> 89
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

$141,033,457 and $11,293,228 for Class A, B and C shares, respectively. For the
year ended June 30, 1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 8,945,784 $ 89,317,500
Class B.................................. 4,588,921 45,799,499
Class C.................................. 687,284 6,859,975
----------- -------------
Total Sales................................ 14,221,989 $ 141,976,974
=========== =============
Dividend Reinvestment:
Class A.................................. 997,599 $ 9,948,016
Class B.................................. 427,244 4,261,071
Class C.................................. 40,893 407,568
----------- -------------
Total Dividend Reinvestment................ 1,465,736 $ 14,616,655
=========== =============
Repurchases:
Class A.................................. (10,812,030) $(107,994,896)
Class B.................................. (3,408,945) (33,992,220)
Class C.................................. (385,647) (3,842,230)
----------- -------------
Total Repurchases.......................... (14,606,622) $(145,829,346)
=========== =============
</TABLE>

B-48
<PAGE> 90
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

At June 30, 1997, capital aggregated $378,296,283, $124,965,107 and
$7,867,915 for Class A, B and C shares, respectively. For the year ended June
30, 1997, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 9,665,241 $ 93,909,024
Class B.................................. 5,509,891 53,363,176
Class C.................................. 406,766 3,950,075
---------- -------------
Total Sales................................ 15,581,898 $ 151,222,275
=========== =============
Dividend Reinvestment:
Class A.................................. 1,014,981 $ 9,862,811
Class B.................................. 369,698 3,593,610
Class C.................................. 32,085 311,676
----------- -------------
Total Dividend Reinvestment................ 1,416,764 $ 13,768,097
=========== =============
Repurchases:
Class A.................................. (10,008,711) $ (97,324,996)
Class B.................................. (3,049,089) (29,617,644)
Class C.................................. (353,416) (3,432,943)
----------- -------------
Total Repurchases.......................... (13,411,216) $(130,375,583)
=========== =============
</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 will
automatically convert to Class A shares after the eighth year following
purchase. The CDSC will be imposed on most redemptions made within six years of
the purchase for Class B and one year of the purchase for Class C as detailed in
the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- ---------------------------------------------------------------------------
<S> <C> <C>
First............................................ 4.00% 1.00%
Second........................................... 3.75% None
Third............................................ 3.50% None
Fourth........................................... 2.50% None
Fifth............................................ 1.50% None
Sixth............................................ 1.00% None
Seventh and Thereafter........................... None None
</TABLE>

B-49
<PAGE> 91
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

For the year ended June 30, 1998, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$78,100 and CDSC on redeemed shares of approximately $342,100. 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 $657,401,849 and $607,133,236,
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 and to manage the portfolio's effective yield, foreign currency
exposure, maturity and duration, 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 unrealized appreciation/depreciation.
Upon disposition, a realized gain or loss is recognized accordingly, except when
exercising a call option contract or taking delivery of a security underlying a
futures or forward contract. In these instances, the recognition of gain or loss
is postponed until the disposal of the security underlying the option, futures
or forward contract. Risks may arise as a result of the potential inability of
the counterparties to meet the terms of their contracts.

Summarized below are the specific types of derivative financial instruments
used by the Fund.

A. OPTION CONTRACTS--An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Fund
to manage the portfolio's effective maturity and duration.

Transactions in options for the year ended June 30, 1998, were as follows:

<TABLE>
<CAPTION>
CONTRACTS PREMIUM
- -----------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 30, 1997.................... 0 $ 0
Options Written and Purchased (Net)............. 700 (179,977)
Options Terminated in Closing Transactions
(Net)......................................... (200) 60,976
Options Expired (Net)........................... (200) 117,226
---- ---------
Outstanding at June 30, 1998.................... 300 $ (1,775)
==== =========
</TABLE>

B-50
<PAGE> 92
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

The related futures contracts of the outstanding option transactions as of
June 30, 1998, and the descriptions and market values are as follows:

<TABLE>
<CAPTION>
MARKET
EXPIRATION MONTH/ VALUE OF
CONTRACTS EXERCISE PRICE OPTIONS
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Euro Dollar Options
Sep 1998--Purchased Put..... 100 Sep/94 $ 2,500
Sep 1998--Purchased Put..... 50 Sep/94 1,250
Sep 1998--Written Call...... 100 Sep/94.5 (5,000)
Sep 1998--Written Call...... 50 Sep/94.5 (2,500)
--- --------
300 $(3,750)
=== ========
</TABLE>

B. FUTURES CONTRACTS--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in futures on U.S. Treasury Bonds and typically closes
the contract prior to the delivery date. These contracts are generally used to
manage the portfolio's effective maturity and duration.

Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, 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). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.

Transactions in futures contracts for the year ended June 30, 1998, were as
follows:

<TABLE>
<CAPTION>
Contracts
- ------------------------------------------------------------------
<S> <C>
Outstanding at June 30, 1997......................... -0-
Futures Opened....................................... 1,675
Futures Closed....................................... (1,575)
------
Outstanding at June 30, 1998......................... 100
======
</TABLE>

B-51
<PAGE> 93
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 1998
- --------------------------------------------------------------------------------

The futures contracts outstanding as of June 30, 1998, and the descriptions
and unrealized depreciation are as follows:

<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS DEPRECIATION
- -----------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS:
U.S. Treasury Bond Future Sep 1998
(Current notional value $123,594 per
contract).................................. 20 $ 49,375
U.S. Treasury Bond Future Sep 1998
(Current notional value $123,594 per
contract).................................. 30 25,313
U.S. Treasury Bond Future Sep 1998
(Current notional value $123,594 per
contract).................................. 25 5,469
U.S. Treasury Bond Future Sep 1998
(Current notional value $123,594 per
contract).................................. 25 7,031
--- --------
100 $ 87,188
=== ========
</TABLE>

C. FORWARD CURRENCY CONTRACTS--These instruments are commitments to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The gain
or loss arising from the difference between the original value of the contract
and the closing value of such contract is included as a component of realized
gain/loss on forwards.

At June 30, 1998, the Fund has realized gains on closed but unsettled
forward currency contracts of $15,198 scheduled to settle on July 15, 1998.

D. SWAP TRANSACTIONS--These securities, which are identified in the portfolio of
investments, represent an agreement between two parties to exchange a series of
cash flows based upon various indices at specified intervals.

6. DISTRIBUTION AND SERVICE PLANS

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

Annual fees under the Plans of up to .25% for Class A net assets and 1.00%
each for Class B and Class C net assets are accrued daily. Included in these
fees for the year ended June 30, 1998, are payments retained by Van Kampen of
approximately $1,017,300.

B-52