VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST/, 485BPOS, 1998-09-30

VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST/
485BPOS, 1998-09-30

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998

REGISTRATION NOS. 33-8122
811-4805
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]

Post-Effective Amendment No. 29 [X]
and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 30 [X]
</TABLE>

VAN KAMPEN EQUITY TRUST

(Exact Name of Registrant as Specified in the Agreement and Declaration of
Trust)

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

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

RONALD A. NYBERG, ESQ.
Executive Vice President, General Counsel and Secretary,

Van Kampen Investments Inc.

One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Name and Address of Agent for Service)

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

Copies to:

WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.

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

333 W. Wacker Drive
Chicago, IL 60606
(312) 407-0700
------------------------

Approximate Date of Proposed Public Offering: As soon as practicable
following effectiveness of this Registration Statement.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

[X] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (B)

[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)

[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485

IF APPROPRIATE CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.

TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, PAR VALUE
$0.01 PER SHARE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

EXPLANATORY NOTE

This Post-Effective Amendment No. 29 to the Registration Statement contains
six Prospectuses and six Statements of Additional Information describing the six
series of the Registrant (the "Applicable Series"). The Registration Statement
is organized as follows:

Facing Page

Cross Reference Sheet with respect to the Applicable Series

Prospectuses relating to the Applicable Series, in the following order:

Van Kampen Utility Fund

Van Kampen Growth Fund

Van Kampen American Capital Value Fund

Van Kampen Great American Companies Fund

Van Kampen Prospector Fund

Van Kampen Aggressive Growth Fund

Statements of Additional Information relating to the Applicable Series, in
the following order:

Van Kampen Utility Fund

Van Kampen Growth Fund

Van Kampen American Capital Value Fund

Van Kampen Great American Companies Fund

Van Kampen Prospector Fund

Van Kampen Aggressive Growth Fund

Part C Information

Exhibits
<PAGE> 3

VAN KAMPEN UTILITY FUND

VAN KAMPEN GROWTH FUND

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

VAN KAMPEN PROSPECTOR FUND

VAN KAMPEN AGGRESSIVE GROWTH FUND

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

<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A IN PROSPECTUS
-------------- -------------------
<S> <C> <C>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.................. Cover Page
Item 2. Synopsis.................... PROSPECTUS SUMMARY; SHAREHOLDER TRANSACTION EXPENSES;
ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
Item 3. Condensed Financial
Information............... SHAREHOLDER TRANSACTION EXPENSES; ANNUAL FUND OPERATING
EXPENSES AND EXAMPLE; FUND PERFORMANCE; ADDITIONAL
INFORMATION
Item 4. General Description of
Registrant................ PROSPECTUS SUMMARY; THE FUND; INVESTMENT OBJECTIVE AND
POLICIES; INVESTMENT PRACTICES; DESCRIPTION OF SHARES OF
THE FUND
Item 5. Management of the
Fund...................... ANNUAL FUND OPERATING EXPENSES AND EXAMPLE; INVESTMENT
PRACTICES; INVESTMENT ADVISORY SERVICES; SHAREHOLDER
SERVICES
Item 6. Capital Stock and Other
Securities................ DISTRIBUTIONS FROM THE FUND; REDEMPTION OF SHARES; THE
DISTRIBUTION AND SERVICE PLANS; TAX STATUS; SHAREHOLDER
SERVICES;
DESCRIPTION OF SHARES OF THE FUND; ADDITIONAL INFORMATION
Item 7. Purchase of Securities
Being Offered............. SHAREHOLDER TRANSACTION EXPENSES; ALTERNATIVE SALES
ARRANGEMENTS; PURCHASE OF SHARES; THE DISTRIBUTION AND
SERVICE PLANS; SHAREHOLDER SERVICES; FUND PERFORMANCE
Item 8. Redemption or
Repurchase................ PURCHASE OF SHARES; REDEMPTION OF SHARES; SHAREHOLDER
SERVICES
Item 9. Pending Legal
Proceedings............... Not Applicable
</TABLE>

i
<PAGE> 4

<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A IN PROSPECTUS
-------------- -------------------
<S> <C> <C>
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page.................. Cover Page
Item 11. Table of Contents........... Table of Contents
Item 12. General Information
and History............... The Fund and the Trust
Item 13. Investment Objectives
and Policies.............. Investment Policies and Restrictions
Item 14. Management of the
Fund...................... Officers and Trustees
Item 15. Control Persons and
Principal Holders of
Securities................ Officers and Trustees
Item 16. Investment Advisory and
Other Services............ Contained in Prospectus under captions: PURCHASE OF
SHARES; INVESTMENT ADVISORY SERVICES, THE DISTRIBUTION AND
SERVICE PLANS; Investment Advisory and Other Services;
Legal Counsel; Officers and Trustees; The Distributor
Item 17. Brokerage Allocation and
Other Practices........... Portfolio Transactions and Brokerage Allocation
Item 18. Capital Stock and
Other Securities.......... Contained in the Prospectus under the caption: DESCRIPTION
OF SHARES OF THE FUND
Item 19. Purchase, Redemption
and Pricing of
Securities Being
Offered................... Contained in the Prospectus under captions: ALTERNATIVE
SALES ARRANGEMENTS; PURCHASE OF SHARES; SHAREHOLDER
SERVICES; REDEMPTION OF SHARES
Item 20. Tax Status.................. Contained in Prospectus under captions: TAX STATUS;
PURCHASE OF SHARES; Tax Status of the Fund
Item 21. Underwriters................ The Distributor
Item 22. Calculation of Performance
Data...................... Contained in the Prospectus under the caption: FUND
PERFORMANCE; Performance Information
Item 23. Financial Statements........ Not Applicable
</TABLE>

PART C

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

ii
<PAGE> 5

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VAN KAMPEN UTILITY FUND

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Van Kampen Utility Fund (the "Fund") is a diversified, open-end management
investment company, commonly known as a mutual fund. The Fund's investment
objective is to seek to provide its shareholders with capital appreciation and
current income. The Fund seeks to achieve its investment objective by investing
in a diversified portfolio of common stocks and income securities (as described
in the Prospectus) issued by companies engaged in the utilities industry
("Utility Securities"). Companies engaged in the utilities industry include
those involved in the production, transmission or distribution of electric
energy, gas, telecommunications services or the provision of other utility or
utility related goods or services. Under normal market conditions, at least 80%
of the Fund's assets will be invested in Utility Securities. The Fund may invest
up to 35% of its assets in securities issued by non-U.S. issuers. There can be
no assurance that the Fund will achieve its investment objective. The Fund is
organized as a separate series of Van Kampen Equity Trust (the "Trust").

The Fund's investment adviser is Van Kampen Investment Advisory Corp. (the
"Adviser"). This Prospectus sets forth certain information about the Fund that a
prospective investor should know before investing in the Fund. Please read it
carefully and retain it 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 September 30, 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 SEPTEMBER 30, 1998.

<PAGE> 6

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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.................................................... 8
Investment Objective and Policies........................... 8
Investment Practices........................................ 12
Investment Advisory Services................................ 15
Alternative Sales Arrangements.............................. 16
Purchase of Shares.......................................... 17
Shareholder Services........................................ 23
Redemption of Shares........................................ 26
Distribution and Service Plans.............................. 27
Distributions from the Fund................................. 28
Tax Status.................................................. 29
Fund Performance............................................ 32
Description of Shares of the Fund........................... 32
Additional Information...................................... 33
</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 DISTRIBUTORS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTORS 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> 7

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

THE FUND. Van Kampen Utility Fund (the "Fund") is a separate, diversified
series of Van Kampen Equity 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 (or less as described under "Purchase
of Shares").

INVESTMENT OBJECTIVE. The Fund's investment objective is to provide its
shareholders with capital appreciation and current income. There is no assurance
that the Fund will achieve its investment objective. See "Investment Objective
and Policies."

INVESTMENT POLICY AND RISKS. The Fund seeks to achieve its investment objective
by investing primarily in the securities summarized below.

Utility Securities. The Fund seeks to achieve its investment objective by
investing in a diversified portfolio of common stocks and income securities (as
described herein) issued by companies engaged in the utilities industry
("Utility Securities"). Companies engaged in the utilities industry include
those involved in the production, transmission, or distribution of electric
energy, gas, telecommunications services or the provision of other utility or
utility related goods or services. Under normal market conditions, at least 80%
of the Fund's assets are invested in Utility Securities. Because of the Fund's
policy of concentrating its investments in Utility Securities, the Fund may be
more susceptible than an investment company without such a policy to any single
economic, political or regulatory occurrence affecting the public utilities
industry. Under normal market conditions, the Fund may invest up to 20% of its
assets in securities other than Utility Securities, including common stocks and
income securities of issuers not engaged in the utilities industry, cash and
money market instruments.

Income Securities and Lower Grade Income Securities. The Fund's investments in
income securities are rated, at the time of investment, at least BBB by Standard
& Poor's Ratings Group ("S&P"), or at least Baa by Moody's Investors Service,
Inc. ("Moody's") or comparably rated by any other nationally recognized
statistical rating organization; provided, however, the Fund may invest up to
20% of its assets in income securities that are rated BB or B by S&P or Ba or B
by Moody's (or comparably rated by any other nationally recognized statistical
rating service) or in unrated income securities considered by the Fund's
investment adviser to be of comparable or higher quality. Such lower rated or
unrated income securities are commonly referred to as "junk bonds" and are
regarded by S&P and Moody's as predominately speculative with respect to the
capacity to pay interest or repay principal in accordance with their terms. The
Fund does not invest in securities rated below B by S&P and below B by Moody's.
While offering opportunities for higher yields, lower-grade securities are
considered below "investment grade" and involve a greater degree of credit risk
than investment grade income securities; although the lower-grade income
securities of an issuer generally involve a lower degree of credit risk than its
common stock. For a discussion of lower grade securities, please see the section
of the prospectus captioned "Investment Objective and Policies -- Portfolio
Securities -- Income Securities and Risks of Lower Grade Income Securities."

Foreign Securities. The Fund may invest up to 35% of its assets in securities
issued by non-U.S. issuers. Investments in foreign securities involve certain
risks not ordinarily associated with investments in securities of domestic
issuers, including fluctuations in foreign exchange rates, future political and
economic developments, confiscatory taxation and the possible imposition of
exchange controls or other foreign governmental laws or restrictions.

The Fund's net asset value per share will fluctuate depending on market
conditions and other factors. See "Investment Objective and Policies."

INVESTMENT PRACTICES. The Fund also may use various investment techniques
including engaging in Strategic Transactions, as herein defined, entering into
when-issued or delayed delivery transactions, lending portfolio securities,
repurchase agreements and reverse repurchase agreements. Such transactions
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."

3
<PAGE> 8

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. Distributions from net investment income are
declared and paid quarterly; net realized 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
the 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> 9

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

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 Year
1--4.00% 1--1.00%
Year After--None
2--3.75%
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 $50,000 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 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."

5
<PAGE> 10

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

12b-1 Fees(1) (as a percentage of average daily net
assets)................................................... 0.25% 1.00%(2) 1.00%(2)

Other Expenses (as a percentage of average daily net
assets)................................................... 0.40% 0.42% 0.41%

Total Expenses (as a percentage of average daily net
assets)................................................... 1.30% 2.07% 2.06%
</TABLE>

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

(1) 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 0.75% (as a
percentage of net asset value) paid to investors' broker-dealers as sales
compensation. See "Distribution and Service Plans."

(2) 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 1.30% for Class
A Shares, 2.07% for Class B Shares and 2.06% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at
the end of each time period:
Class A Shares............................................ $70 $ 96 $125 $205
Class B Shares............................................ $61 $100 $126 $220*
Class C Shares............................................ $31 $ 65 $111 $239
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of
each period:
Class A Shares............................................ $70 $ 96 $125 $205
Class B Shares............................................ $21 $ 65 $111 $220*
Class C Shares............................................ $21 $ 65 $111 $239
</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. 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> 11

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for one share outstanding throughout the period)
- --------------------------------------------------------------------------------

The following schedule presents financial highlights for one Class A Share,
one Class B Share and one Class C Share of the Fund throughout 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 CLASS B SHARES
------------------------------------------------------ -----------------
FROM
JULY 28, 1993
(COMMENCEMENT
YEAR ENDED JUNE 30, OF INVESTMENT YEAR ENDED JUNE 30,
------------------------------------- OPERATIONS) TO -----------------
1998 1997 1996 1995 JUNE 30, 1994 1998 1997
------- ------- ------- ------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $16.441 $15.298 $13.386 $12.906 $14.300 $16.434 $15.296
------- ------- ------- ------- ------- ------- -------
Net Investment Income........................... 0.429 0.637 0.538 0.595 0.479 0.309 0.519
Net Realized and Unrealized Gain/Loss........... 3.909 1.317 2.077 0.485 (1.513) 3.891 1.314
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations................. 4.338 1.954 2.615 1.080 (1.034) 4.200 1.833
------- ------- ------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income............................. 0.480 0.610 0.703 0.600 0.323 0.360 0.494
Distributions from and in Excess of Net
Realized Gain................................. 1.691 0.201 --0-- --0-- 0.037 1.691 0.201
Return of Capital Distribution.................. 0.951 --0-- --0-- --0-- --0-- 0.951 --0--
Total Distributions.............................. 3.122 0.811 0.703 0.600 0.360 3.002 0.695
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of the Period............... $17.657 $16.441 $15.298 $13.386 $12.906 $17.632 $16.434
======= ======= ======= ======= ======= ======= =======
Total Return(a).................................. 28.17% 13.20% 19.93% 8.70% (7.38%)* 27.20% 12.30%
Net Assets at End of the Period (In millions).... $60.4 $52.5 $57.7 $50.4 $51.5 $86.8 $83.3
Ratio of Expenses to Average Net Assets(b)....... 1.30% 1.41% 1.38% 1.34% 1.34% 2.07% 2.17%
Ratio of Net Investment Income to Average Net
Assets(b)....................................... 2.47% 4.03% 3.61% 4.55% 4.10% 1.74% 3.27%
Portfolio Turnover............................... 23% 102% 121% 109% 102%* 23% 102%
</TABLE>

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

FROM
JULY 28, 1993
YEAR ENDED JUNE 30, (COMMENCEMENT
------------------ OPERATIONS) TO
1996 1995 JUNE 30, 1994
------- ------- --------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $13.356 $12.880 $14.300
------- ------- -------
Net Investment Income........................... 0.426 0.507 0.394
Net Realized and Unrealized Gain/Loss........... 2.080 0.461 (1.519)
------- ------- -------
Total from Investment Operations................. 2.506 0.968 (1.125)
------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income............................. 0.566 0.492 0.258
Distributions from and in Excess of Net
Realized Gain................................. --0-- --0-- 0.037
Return of Capital Distribution.................. --0-- --0-- --0--
Total Distributions.............................. 0.566 0.492 0.295
------- ------- -------
Net Asset Value, End of the Period............... $15.296 $13.356 $12.880
======= ======= =======
Total Return(a).................................. 19.08% 7.80% (8.02%)*
Net Assets at End of the Period (In millions).... $92.9 $81.0 $83.7
Ratio of Expenses to Average Net Assets(b)....... 2.13% 2.05% 2.06%
Ratio of Net Investment Income to Average Net
Assets(b)....................................... 2.86% 3.84% 3.36%
Portfolio Turnover............................... 121% 109% 102%*
</TABLE>

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

FROM
AUGUST 13, 1993
YEAR ENDED JUNE 30, (COMMENCEMENT OF
------------------------------------- DISTRIBUTION) TO
1998 1997 1996 1995 JUNE 30, 1994
------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $16.426 $15.290 $13.356 $12.868 $14.460
------- ------- ------- ------- -------
Net Investment Income........................... 0.308 0.503 0.470 0.482 0.330
Net Realized and Unrealized Gain/Loss........... 3.887 1.328 2.030 0.498 (1.627)
------- ------- ------- ------- -------
Total from Investment Operations................. 4.195 1.831 2.500 0.980 (1.297)
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income............................. 0.360 0.494 0.566 0.492 0.258
Distributions from and in Excess of Net
Realized Gain................................. 1.691 0.201 --0-- --0-- 0.037
Return of Capital Distribution.................. 0.951 --0-- --0-- --0-- --0--
Total Distributions.............................. 3.002 0.695 0.566 0.492 0.295
------- ------- ------- ------- -------
Net Asset Value, End of the Period............... $17.619 $16.426 $15.290 $13.356 $12.868
======= ======= ======= ======= =======
Total Return(a).................................. 27.14% 12.37% 19.00% 7.88% (9.11%)*
Net Assets at End of the Period (In millions).... $5.9 $4.9 $5.0 $1.3 $1.1
Ratio of Expenses to Average Net Assets(b)....... 2.06% 2.17% 2.13% 2.09% 2.05%
Ratio of Net Investment Income to Average Net
Assets(b)....................................... 1.73% 3.23% 2.78% 3.80% 3.38%
Portfolio Turnover............................... 23% 102% 121% 109% 102%*

- ---------------
*Non-Annualized
(a) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) For the years ended June 30, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to the Adviser
reimbursement of certain expenses was less than 0.01%.

N/A = Not Applicable

</TABLE>

See Financial Statements and Notes Thereto.

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THE FUND
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Van Kampen Utility Fund (the "Fund") is a separate, diversified series of Van
Kampen Equity 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.

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INVESTMENT OBJECTIVE AND POLICIES
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The Fund's investment objective is to provide its shareholders with capital
appreciation and current income. The Fund will seek to achieve its investment
objective by investing in a diversified portfolio of common stock and income
securities issued by companies engaged in the utilities industry ("Utility
Securities"). Companies engaged in the utilities industry include those engaged
in the production, transmission, or distribution of electric energy, gas,
telecommunications services or the provision of other utility or utility related
goods or services. Under normal market conditions, at least 80% of the Fund's
assets will be invested in Utility Securities. Under normal market conditions,
the Fund may invest up to 20% of its assets in other than Utility Securities,
including common stock and income securities of issuers not engaged in the
utilities industry, cash and money market instruments. Income securities include
preferred stock and debt securities of various maturities. The Fund's
investments in income securities will be rated, at the time of investment, at
least BBB by Standard & Poor's Ratings Group ("S&P"), or at least Baa by Moody's
Investors Service, Inc. ("Moody's") or comparably rated by any other nationally
recognized statistical rating organization ("NRSRO"); provided, however, the
Fund may invest up to 20% of its assets in income securities that are rated BB
or B by S&P or Ba or B by Moody's (or comparably rated by any other NRSRO) or
unrated income securities determined by the Fund's investment adviser to be of
comparable or higher quality. Such lower rated or unrated income securities are
commonly referred to as "junk bonds" and are regarded by S&P and Moody's as
predominately speculative with respect to the capacity to pay interest or repay
principal in accordance with their terms. While offering opportunities for
higher yields, lower-grade securities are considered below "investment grade"
and involve a greater degree of credit risk than investment grade income
securities; although the lower-grade income securities of an issuer generally
involve a lower degree of credit risk than its common stock. Such securities are
regarded by the rating agencies, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation; assurance of interest and principal payments or
maintenance of other terms of the securities over any long period of time may be
small. The Fund may invest up to 35% of its assets in securities issued by
non-U.S. issuers. The foregoing policies are fundamental and cannot be changed
without approval of the shareholders. 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 Adviser believes that the historical performance of Utility Securities,
together with ongoing developments in the utilities industry, indicate the
potential for achieving both capital appreciation and current income from
investment in a diversified portfolio of Utility Securities. The Adviser
believes that the historical characteristics of Utility Securities which are
common stocks indicate potential for capital appreciation. The Adviser also
believes that many companies engaged in the utilities industry have established
a reputation for paying regular quarterly dividends and for increasing their
common stock dividends over time, despite fluctuations in interest rates over
time. The annual dividends per share of the Utility Securities comprising the
S&P Utilities Index, for the four year period 1993 through 1997, have increased
while interest rates during such period, as measured by the six month U.S.
Treasury rate, have fluctuated widely. The Adviser believes that the historical
characteristics of Utility Securities which are income securities indicate the
potential for current income.

In evaluating particular issuers of Utility Securities, the Adviser will
consider a number of factors, including historical growth rates, rates of return
on capital, financial condition and resources, geographic location and service
area, management skills and such utilities industry factors as regulatory
environment, energy sources, the costs of alternative

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fuels and, in the case of electric energy utilities, the extent and nature of
their involvement with nuclear powers. The Adviser will place special emphasis
on the potential for capital appreciation, current and projected yields,
prospective growth in earnings and dividends in relation to price or earnings
ratios and risk. The Adviser believes that Utility Securities provide
above-average dividend returns and below-average price or earnings ratios which
in the view of the Adviser are factors that not only provide current income but
also generally tend to moderate risk. The Adviser will buy and sell securities
for the Fund's portfolio with a view toward seeking capital appreciation
together with current income and will select securities which the Adviser
believes entail reasonable credit risk considered in relation to the investment
policies of the Fund. As a result, the Fund will not necessarily invest in the
highest yielding Utility Securities permitted by the investment policies if the
Adviser determines that market risks or credit risks associated with such
investments would subject the Fund's portfolio to excessive risk. Other than for
tax purposes, frequency of portfolio turnover generally will not be a limiting
factor if the Fund considers it advantageous to purchase or sell securities. A
high rate of portfolio turnover (100% or more) involves correspondingly greater
brokerage commission expenses or dealer costs than a lower rate, which expenses
and costs must be borne by the Fund and its shareholders. A high portfolio
turnover rate may result in the realization of more short-term capital gain than
if the Fund had a lower portfolio turnover rate. The Fund's annual portfolio
turnover rate is shown in the table of "Financial Highlights."

PORTFOLIO SECURITIES

UTILITY SECURITIES. Utility Securities are common stocks and income securities
of companies engaged in the utilities industry. Companies engaged in the
utilities industry include a variety of entities involved in (i) production,
transmission or distribution of electric energy, (ii) the provision of natural
gas, (iii) the provision of telephone, mobile communication and other
telecommunications services or (iv) the provision of other utility or utility
related goods or services, including entities engaged in cogeneration, waste
disposal system provision, solid waste electric generation, independent power
producers and non-utility generators.

The public utilities industry has experienced significant changes in recent
years. Many issuers of Utility Securities have been favorably effected by lower
fuel and financing costs, deregulation, the full or near completion of major
construction programs and an increasing customer base. In addition, many utility
companies have generated cash flows in excess of current operating expenses and
construction expenditures, permitting some degree of diversification into
unregulated businesses. Some electric utilities have also taken advantage of the
right to sell power outside of their historical territories.

The rate of return of issuers of Utility Securities generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes generally lag changes in
financing costs, and thus can favorably or unfavorably affect the earnings or
dividend payments on Utility Securities depending upon whether such rates and
costs are declining or rising.

Companies engaged in the public utilities industry historically have been
subject to a variety of risks depending, in part, on such factors as the type of
utility company involved and its geographic location. Such risks include
increases in fuel and other operating costs, high interest expenses for capital
construction programs, costs associated with compliance with environmental and
nuclear safety regulations, service interruption due to environmental,
operational or other mishaps, the effects of economic slowdowns, surplus
capacity, competition and changes in the overall regulatory climate. In
particular, regulatory changes with respect to nuclear and conventionally fueled
generating facilities could increase costs or impair the ability of utility
companies to operate such facilities, thus reducing utility companies' earnings
or resulting in losses. There can be no assurance that regulatory policies or
accounting standard changes will not negatively affect utility companies'
earnings or dividends. Companies engaged in the public utilities industry are
subject to regulation by various authorities and may be affected by the
imposition of special tariffs and changes in tax laws. To the extent that rates
are established or reviewed by governmental authorities, companies engaged in
the public utilities industry are subject to the risk that such authority will
not authorize increased rates. In addition, because of the Fund's policy of
concentrating its investments in Utility Securities, the Fund may be more
susceptible than an investment company without such a policy to any single
economic, political or regulatory occurrence affecting the public utilities
industry. Under market conditions that are unfavorable to the utilities
industry, the Adviser may significantly reduce the Fund's investment in that
industry.

TELECOMMUNICATIONS UTILITIES. The telecommunications industry is experiencing
significant changes as local and long distance telephone companies, wireless
communications companies and cable television providers begin to compete to
provide telecommunications services and as new technologies develop. The Adviser
anticipates that new

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telecommunications legislation also will have a significant impact on the
telecommunications industry. Although there can be no assurance that increased
competition and other structural changes will not adversely affect the
profitability of such utilities, or that other negative factors will not develop
in the future, in the Adviser's opinion, competition and technological advances
may over time provide better-positioned utility companies with opportunities for
enhanced profitability.

GAS AND ELECTRIC UTILITIES. Convergence of gas utilities and electric
utilities continues, as electric utilities begin to deregulate and customers
begin to use a single energy provider instead of multiple energy providers. Gas
companies have been deregulated to a greater extent than electric utilities and
have developed more of the business practices necessary to operate in a
non-monopoly environment. Electric utilities generally are just beginning to
deregulate and may be more likely to experience significant changes than gas
companies, which changes may increase the risk of investing in securities of
electric utilities. In addition, gas and electric utility companies will
continue to be affected by changes in fuel prices and interest rates.

OTHER UTILITIES. Other issuers of Utility Securities are emerging as new
technologies develop and as old technologies are refined. Such issuers include
entities engaged in cogeneration, waste disposal system provision, solid waste
electric generation, independent power producers and non-utility generators.

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other shareholder or class of shareholders,
after making required payments to holders of such entity's preferred stock and
other senior equity. Common stock usually carries with it the right to vote and
frequently an exclusive right to do so. In selecting common stocks for
investment, the Fund will focus both on the security's potential for
appreciation and on its dividend paying capacity.

The average dividend yield of Utility Securities which are common stocks
historically has exceeded the average dividend yield of common stocks of
industrial issuers by a significant amount. For example, the common stocks
comprising the S&P Utilities Index for calendar 1998 had an average dividend
yield of 3.85%, or more than twice the 1.29% average dividend yield for the
common stocks comprising the S&P 400 Industrials Index. However, the Fund's
portfolio will not necessarily reflect the securities which comprise the S&P
Utilities Index and there can be no assurance that the historical investment
performance for any industry (including the public utilities industry) is
indicative of future performance.

INCOME SECURITIES AND RISKS OF LOWER GRADE INCOME SECURITIES. The Fund may
invest its assets in income securities, which include preferred stocks, debt
securities of various maturities and securities convertible into, or ultimately
exchangeable for, common stocks. The Fund's investments in income securities
will be rated, at the time of investment, at least BBB by S&P, or at least Baa
by Moody's or comparably rated by any other NRSRO; provided, however, the Fund
may invest up to 20% of its assets in income securities that are rated BB or B
by S&P or Ba or B by Moody's (or comparably rated by any other NRSRO) or unrated
income securities determined by the Fund's investment adviser to be of
comparable or higher quality. Lower grade income securities in which the Fund
may invest are rated between BB and B by S&P or between Ba and B by Moody's.
Income securities with such ratings from S&P and Moody's are commonly referred
to as "junk bonds" and are regarded by S&P and Moody's as predominately
speculative with respect to the capacity to pay interest and/or repay principal
in accordance with their terms. Investment in lower grade securities involves
special risks as compared with investment in higher grade securities. The market
for lower grade securities is considered to be less liquid than the market for
investment grade securities which may adversely affect the ability of the Fund
to dispose of such securities in a timely manner at a price which reflects the
value of such security in the Adviser's judgment. Because issuers of lower grade
securities frequently choose not to seek a rating of their securities, the Fund
will rely more heavily on the Adviser's ability to determine the relative
investment quality of such securities than if the Fund invested exclusively in
higher grade securities. For a description of the ratings assigned to income
securities, including lower grade income securities, please see "Description of
Securities Ratings" in the Statement of Additional Information.

The net asset value of the Fund will change with changes in the value of its
portfolio securities. The values of income securities may change as interest
rate levels fluctuate. To the extent that the Fund invests in income securities,
the net asset value of the Fund can be expected to change as general levels of
interest rates fluctuate. When interest rates decline, the value of a portfolio
invested in income securities generally can be expected to rise. Conversely,
when interest rates rise, the value of a portfolio invested in income securities
generally can be expected to decline. Volatility may be greater during periods
of general economic uncertainty.

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The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
NRSRO) or, in the case of unrated income securities, the Adviser, downgrades its
assessment of the credit characteristics of a particular issuer. In determining
whether the Fund will retain or sell such a security, in addition to the factors
described above, the Adviser may consider such factors as the Adviser's
assessment of the credit quality of the issuer of such security, the price at
which such security could be sold and the rating, if any, assigned to such
security by other nationally recognized statistical rating organizations.

FOREIGN SECURITIES. The Fund may invest up to 35% of its assets in securities
issued by non-U.S. issuers of similar quality as the securities described above
as determined by the Adviser. Investments in securities of foreign entities and
securities denominated in foreign currencies involve risks not typically
involved in domestic investment, including fluctuations in foreign exchange
rates, future foreign political and economic developments, and the possible
imposition of exchange controls or other foreign or United States governmental
laws or restrictions applicable to such investments. Since the Fund may invest
in securities denominated or quoted in currencies other than the United States
dollar, changes in foreign currency exchange rates may affect the value of
investments in the portfolio and the accrued income and unrealized appreciation
or depreciation of investments. Changes in foreign currency exchange rates
relative to the U.S. dollar will affect the U.S. dollar value of the Fund's
assets denominated in that currency and the Fund's yield on such assets.

With respect to certain foreign countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or social instability
or diplomatic developments which could affect investment in those countries.
There may be less publicly available information about a foreign security than
about a United States security, and foreign entities may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to those of United States entities. In addition, certain foreign
investments made by the Fund may be subject to foreign income, withholding or
other taxes, which would reduce the Fund's total return on such investments and
the amounts available for distributions by the Fund to its shareholders. See
"Tax Status."

Foreign financial markets, while growing in volume, have, for the most part,
substantially less volume than United States markets, and securities of many
foreign companies are less liquid and their prices more volatile than securities
of comparable domestic companies. The foreign markets also have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are not
invested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Costs associated with transactions in foreign
securities, including custodial costs and foreign brokerage commissions, are
generally higher than with transactions in United States securities. In
addition, the Fund will incur costs in connection with conversions between
various currencies. There is generally less government supervision and
regulation of exchanges, financial institutions and issuers in foreign countries
than there is in the United States.

The Adviser believes that many foreign issuers of Utility Securities have yet
to experience the growth that certain issuers of Utility Securities located in
the United States have experienced and that as such foreign issuers develop
their domestic markets, they may become attractive investments. In addition, the
Adviser believes that certain foreign governments may engage in programs of
privatization of issuers of Utility Securities and that the Utility Securities
issued by privatized companies may offer attractive investment opportunities
with the potential for long-term growth. However it is not possible to predict
the terms of offerings by privatized companies or the effect of privatizations
in the domestic securities market of such privatized companies. There can be no
assurance that securities of privatized companies will be offered to the public
or to foreign companies such as the Fund.

DEFENSIVE STRATEGIES. At times, conditions in the markets for Utility
Securities may, in the Adviser's judgment, make pursuing the Fund's basic
investment strategy inconsistent with the best interests of its shareholders. At
such times, the Adviser may use alternative strategies primarily designed to
reduce fluctuations in the value of the Fund's assets. In implementing these
"defensive" strategies, the Fund may invest to a substantial degree in
high-quality, short-term

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obligations. Such taxable obligations may include: obligations of the U.S.
Government, its agencies or instrumentalities; other debt securities rated
within the four highest grades by either S&P or Moody's (or comparably rated by
any other NRSRO); commercial paper rated in the highest grade by either rating
service (or comparably rated by any other NRSRO); certificates of deposit and
bankers' acceptances; repurchase agreements with respect to any of the foregoing
investments; or any other fixed-income securities that the Adviser considers
consistent with such strategy.

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.

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INVESTMENT PRACTICES
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In connection with the investment policies described above, the Fund may
engage in strategic transactions, enter into currency transactions, purchase and
sell securities on a "when issued" and "delayed delivery" basis, enter into
repurchase and reverse repurchase agreements and lend its portfolio securities
in each case, subject to the limitations set forth below. These investments
entail risks.

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 and
purchase and sell financial futures contracts and enter into various currency
transactions such as currency forward contracts, currency futures contracts,
currency swaps or options on currencies or currency futures. Collectively, all
of 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, 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 interest rate exposure of the Fund's portfolio, to protect against
changes in currency exchange rates, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Any or all of these investment techniques may be used at
any time and there is no particular strategy that dictates the use of one
technique rather than another, as use of any Strategic Transaction is a function
of numerous variables including market conditions. The ability of the Fund to
utilize these Strategic Transactions successfully will depend on the Adviser's
ability to predict pertinent market movements, which cannot be assured. The Fund
will comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.

Strategic Transactions 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 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

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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. Income earned or deemed
to be earned, if any, by the Fund from its Strategic Transactions will generally
be taxable income of the Fund. See "Tax Status."

REPURCHASE AGREEMENTS. The Fund may use up to 20% of its assets to enter into
repurchase agreements with selected banks and broker-dealers under which the
Fund acquires securities and agrees to resell the securities at an agreed upon
time and at an agreed upon price. The Fund accrues as interest the difference
between the amount it pays for the securities and the amount it receives upon
resale. 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. The Adviser will monitor the value of the
underlying security in this regard. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund will enter into 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 repurchase agreement with a bank or broker-dealer, the Fund will take
into account the credit-worthiness of such party and will monitor its
credit-worthiness on an ongoing basis. In the event of default by such party,
the delays and expenses potentially involved in establishing the Fund's rights
to, and in liquidating, the security may result in loss to the Fund. Repurchase
agreements that mature in more than seven days are treated by the Fund as
illiquid and are subject to the 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.

"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 or is earned by the Fund on portfolio 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 such securities at delivery may be more or less than
their purchase price, and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objectives and policies and not for the
purposes of investment leverage. 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.

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 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 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

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the availability of price quotations) will not be treated as illiquid securities
by the Fund for purposes of the investment limitations set forth above.

LOANS OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to selected commercial
banks or broker-dealers, up to a maximum of 50% of the assets of the Fund. Such
loans must be callable at any time and be continuously secured by collateral
deposited by the borrower in a segregated account with the Fund's custodian
consisting of cash or liquid securities, which collateral is equal at all times
to at least 100% of the value of the securities loaned, including accrued
interest. The Fund will receive amounts equal to earned income for having made
the loan. Any cash collateral pursuant to these loans will be invested in
short-term instruments. The Fund is the beneficial owner of the loaned
securities in that any gain or loss in the market price during the loan inures
to the Fund and its shareholders. Thus, when the loan is terminated, the value
of the securities may be more or less than their value at the beginning of the
loan. In determining whether to lend its portfolio securities to a bank or
broker-dealer, the Fund will take into account the credit-worthiness of such
borrower and will monitor such credit-worthiness on an ongoing basis in as much
as default by the other party may cause delays or other collection difficulties.
The Fund may pay finders' fees in connection with loans of its portfolio
securities.

REVERSE REPURCHASE AGREEMENTS AND BORROWINGS. The Fund may enter into reverse
repurchase agreements with respect to securities which could otherwise be sold
by the Fund. Reverse repurchase agreements involve sales by the Fund of
portfolio assets concurrently with an agreement by the Fund to repurchase the
same assets at a later date at a fixed price which is greater than the sales
price. During the reverse repurchase agreement period, the Fund continues to
receive principal and interest payments on these securities. Reverse repurchase
agreements involve the risk that the market value of the securities retained by
the Fund may decline below the price of the securities the Fund has sold but is
obligated to repurchase under the agreement. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, the Fund's use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities. Reverse
repurchase agreements create leverage and will be treated as borrowings for the
purposes of the Fund's investment restriction on borrowings.

The Fund is authorized to borrow money from banks or enter into reverse
repurchase agreements with banks in an amount up to 33 1/3% of the Fund's total
assets (after giving effect to any such borrowing) which amount includes no more
than 5% in borrowings and reverse repurchase agreements from any entity for
temporary purposes, such as clearances of portfolio transactions, share
repurchases and payment of dividends and distributions. The Fund has no current
intention to borrow money other than for such temporary purposes. Accordingly,
the Fund will not acquire additional Utility Securities during any period in
which its borrowings exceed 5% of the Fund's total assets. The Fund will borrow
only when the Adviser believes that such borrowings will benefit the Fund.

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

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 Investment Company Act of 1940,
as amended (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 fixed-income securities in which the Fund may invest
are traded principally in the over-the-counter market. In the over-the-counter
market, securities generally are traded on a net basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a mark-up to the dealer. Securities purchased
in underwritten offerings generally include, in the price, a fixed amount of
compensation for
14
<PAGE> 19

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 may place portfolio transactions, to the extent permitted by law,
with brokerage firms which are affiliated with the Fund, the Adviser or the
Distributor and with firms participating in the distribution of the Fund's
shares if it reasonably believes that the quality of execution and the
commission are comparable to that available from other qualified firms. 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 $65
billion under management or supervision. Van Kampen's more than 50 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
Adviser's principal office is located at 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 global custody, securities clearance services 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 average daily net
assets of the Fund as follows:

<TABLE>
<CAPTION>
% PER ANNUM
AVERAGE DAILY NET ASSETS --------------
<S> <C>
First $500 million.......................................... 0.65% of 1.00%
Next $500 million........................................... 0.60% of 1.00%
Over $1 billion............................................. 0.55% of 1.00%
</TABLE>

15
<PAGE> 20

costs of calculating net asset value, costs of acquiring and disposing of
portfolio securities, interest (if any) on obligations incurred by the Fund,
costs of share certificates, membership dues in the Investment Company Institute
or any similar organization, reports and notices to shareholders, costs of
registering shares of the Fund under 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 INVESTING POLICIES. The Fund and the Adviser have adopted Codes of
Ethics designed to recognize the fiduciary relationship between the Fund and the
Adviser and its employees. The Codes permit trustees, directors, officers and
employees to buy and sell securities for their personal accounts subject to
certain restrictions. Persons with access to certain sensitive information are
subject to preclearance and other procedures designed to prevent conflict of
interest.

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by
Christine Drusch. Ms. Drusch has assisted in co-managing the Fund's investment
portfolio since August 1997 and has been primarily responsible for managing the
Fund's investment portfolio since February 1998. Ms. Drusch has been an
Assistant Vice President of the Adviser and Van Kampen Asset Management Inc.
("Asset Management") since September 1995. Prior to that time, Ms. Drusch was
Associate Portfolio Manager of the Adviser. Matthew Hart has been responsible as
a co-manager for the day-to-day management of the Fund's investment portfolio
since January, 1998. Mr. Hart has been Associate Portfolio Manager of the
Adviser and Asset Management since August 1997. Prior to that time, Mr. Hart was
with AIM Capital Management.

- --------------------------------------------------------------------------------
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 the aggregate distribution and services 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
Shares accounts under $1 million) or (b) on a contingent deferred basis (Class A
Share accounts of $1 million or more, 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

16
<PAGE> 21

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 share have different shareholder
service options available. Generally, a class of shares subject to a higher
ongoing distribution fee 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 expenses 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
Internal Revenue Code of 1986, as amended (the "Code").

- --------------------------------------------------------------------------------
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 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.

17
<PAGE> 22

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 intermediaries 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 seminar 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 pays 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. As indicated previously, at the discretion of
the Distributor, the entire sales charge may be reallowed to such broker, dealer
or financial intermediary. The staff of the SEC has taken the position that
brokers, dealers or financial intermediaries who receive more than 90% or more
of the sales charge may be deemed to be "underwriters" as that term is defined
in the Securities Act of 1933, as amended.

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 $50,000........................................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............................. 4.75 4.99 4.00
$100,000 but less than $250,000............................. 3.75 3.90 3.00
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
</TABLE>

- --------------------------------------------------------------------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, although 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 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.

18
<PAGE> 23

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
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 valve 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.

19
<PAGE> 24

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.

(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.

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

(7) Accounts as to which a 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.

20
<PAGE> 25

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, dealer or financial intermediary 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 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 any CDSC Share
acquired through the exchange privilege is determined by reference to the
Participating Fund from which such share was originally 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 shares of the respective CDSC class. 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 the 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).

21
<PAGE> 26

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 will not change the price an investor will pay for
CDSC Shares or the amount that the Fund will receive 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.

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> <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.

22
<PAGE> 27

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

Portfolio securities are valued by using market quotations, prices provided by
market makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics in accordance with
procedures established in good faith by the Board of Trustees of the Trust, of
which the Fund is a series. Securities with remaining maturities of 60 days or
less 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. Any securities or other assets for which current market quotations are
not readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Board
of 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. Each shareholder has an investment account under which the
investor's shares of the Fund are held by Investor Services, the Funds transfer
agent and a wholly-owned subsidiary of Van Kampen. Investor Services performs
bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. 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.

23
<PAGE> 28

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 and 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.
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 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 suspensions 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.

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 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 or 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 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

24
<PAGE> 29

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 these 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.

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 of shares is a taxable
event.

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.van-kampen.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 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.

25
<PAGE> 30

- --------------------------------------------------------------------------------
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. VK and the Fund may be
liable for any losses due to unauthorized or fraudulent instructions if
reasonable procedures are not followed. Telephone redemptions may not be
available if the shareholder cannot reach 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 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.

26
<PAGE> 31

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 CDSCs 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 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 death or the initial determination of disability.

GENERAL REDEMPTION INFORMATION. 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 Privileges") next determined after the order is received,
which must be within 180 days after the date of the redemption. See "Purchase of
Shares -- Waiver of Contingent Deferred Sales Charge." 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
- --------------------------------------------------------------------------------

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

27
<PAGE> 32

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 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 $1,852,656 and $6,981 of unreimbursed distribution-related expenses
attributable to Class B Shares and Class C Shares respectively, representing
2.14% and 0.12% 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
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 and pay quarterly to holders of each class of shares
distributions of all or substantially all net investment income of the Fund
attributable to the respective class. Net investment income consists of all
interest income, dividends, other ordinary income earned by the

28
<PAGE> 33

Fund on its portfolio assets and net short-term capital gains, less all expenses
of the Fund attributable to the class of shares in question. Expenses of the
Fund are accrued each day. Net realized long-term capital gains, if any, are
expected to be distributed, to the extent permitted by applicable law, to
shareholders at least annually. Distributions cannot be assured, and the amount
of each quarterly distribution may vary.

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

Investors will be entitled to begin receiving dividends on their shares on the
business day after Investor Services receives payments for such shares. However,
investors' 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 or 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 dividend 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 the 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 following discussion reflects applicable federal income tax laws, as of
the date of this Prospectus.

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

If the Fund so qualifies and distributes each year to its Shareholders at
least 90% of its net investment income (which includes taxable income and net
short-term capital gain, but not net capital gains, which are the excess of net
long-term capital gains over net short-term capital losses) in each year, 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 necessary to satisfy the 90% distribution requirement. The
Fund will not be subject to federal income tax on any net capital gains
distributed to Shareholders.

In order to avoid a 4% excise tax, the Fund will be required to distribute, by
December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income (not including tax-exempt income) for such year and (ii) 98%
of its capital gain net income (the latter of which generally is computed on the
basis of the one-year period ending on October 31st of such year), 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.

29
<PAGE> 34

qualify as a regulated investment company for its first taxable year or, if
immediately after qualifying as a regulated investment company for any taxable
year, it failed to qualify for a period greater than one taxable year, the Fund
would be required to recognize any net built-in gains (the excess of aggregate
gains, including items of income, over aggregate losses that would have been
realized if it had been liquidated) in order to qualify as a regulated
investment company in a subsequent year.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," are subject to special
provisions of the Code that, among other things, may defer the use of certain
losses of the Fund and affect the holding period of the securities held by the
Fund and the character of the gains or losses realized by the Fund. These
provisions may also require the Fund to recognize income or gain without
receiving cash with which to make distributions in the amounts necessary to
satisfy the 90% distribution requirement and the distribution requirements for
avoiding income and excise taxes. The Fund will monitor its transactions and may
make certain tax elections in order to mitigate the effect of these rules and
prevent disqualification of the Fund as a regulated investment company.

Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
Shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
to generate sufficient cash to make distributions necessary to satisfy the 90%
distribution requirement and to avoid income and excise taxes, the Fund may have
to dispose of securities that it would otherwise have continued to hold.

PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (i) at least
75% of its gross income is passive income or (ii) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, a regulated investment company that holds stock of a PFIC
will be subject to federal income tax on (i) a portion of any "excess
distribution" received on such stock or (ii) any gain from a sale or disposition
of such stock (collectively, "PFIC income"), plus interest on such amounts, even
if the regulated investment company distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the regulated investment company's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders. If the Fund invests in a PFIC and elects to treat the PFIC
as a "qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the qualified electing fund's annual ordinary earnings and net
capital gain, which most likely would have to be distributed to satisfy the 90%
distribution requirement and the distribution requirement for avoiding income
and excise taxes. In most instances it will be very difficult to make this
election due to certain requirements imposed with respect to the election.

As an alternative to making the above-described election to treat the PFIC as
a qualified electing fund, the Fund may make an election to annually
mark-to-market PFIC stock that it owns (a "PFIC Mark-to-Market Election").
"Marking-to-market," in this context, means recognizing as ordinary income or
loss each year an amount equal to the difference between the Fund's adjusted tax
basis in such PFIC stock and its fair market value. Losses will be allowed only
to the extent of net mark-to-market gain previously included by the Fund
pursuant to the election for prior taxable years. The Fund may be required to
include in its taxable income for the first taxable year in which it makes a
PFIC Mark-to-Market Election an amount equal to the interest charge that would
otherwise accrue with respect to distributions on, or dispositions of, the PFIC
stock. This amount would not be deductible from the Fund's taxable income. The
PFIC Mark-to-Market Election applies to the taxable year for which made and to
all subsequent taxable years, unless the Internal Revenue Service consents to
revocation of the election. By making the PFIC Mark-to-Market Election, the Fund
could ameliorate the adverse tax consequences arising from its ownership of PFIC
stock, but in any particular year may be required to recognize income in excess
of the distributions it receives from the PFIC and proceeds from the
dispositions of PFIC stock.

30
<PAGE> 35

excess of the Fund's earnings and profits will first reduce the adjusted tax
basis of a holder's Shares and, after such adjusted tax basis is reduced to
zero, will constitute capital gains to such holder (assuming such Shares are
held as a capital asset). For a summary of the tax rates applicable to capital
gains (including capital gain dividends), see "Capital Gains Rates" below. The
Fund will inform Shareholders of the source and tax status of all distributions
promptly after the close of each calendar year. Some portion of the
distributions from the Fund will be eligible for the dividends received
deduction for corporations if the Fund receives qualifying dividends during the
year and if certain other requirements of the Code are satisfied.

Shareholders receiving distributions in the form of additional Shares issued
by the Fund will be treated for federal income tax purposes as receiving a
distribution in an amount equal to the fair market value of the Shares received,
determined as of the distribution date. The basis of such Shares will equal the
fair market value on the distribution date. Shareholders receiving distributions
in the form of additional Shares purchased by the Plan Agent under the Fund's
Dividend Reinvestment Plan will be treated for federal income tax purposes as
receiving the amount of cash received by the Plan Agent on their behalf. In
general, the basis of such Shares will equal the price paid by the Plan Agent
for such Shares.

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

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

The Fund is required, in certain circumstances, to withhold 31% of taxable
dividends and certain other payments, including redemptions, paid to
Shareholders who do not furnish to the Fund their correct taxpayer
identification number (in the case of individuals, their social security number)
and certain required certifications or who are otherwise subject to backup
withholding. Foreign Shareholders, including Shareholders who are non-resident
aliens, may be subject to United States 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.

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

CAPITAL GAINS RATES. The maximum tax rate applicable to net capital gains
recognized by individuals and other non-corporate taxpayers is (i) the same as
ordinary income rates for capital assets held for one year or less or (ii) 20%
for capital assets held for more than one year. A special 28% tax rate may apply
to a portion of the capital gain dividends paid by the Fund with respect to its
taxable year ended June 30, 1998.

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

31
<PAGE> 36

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

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information will include the average total return of the Fund calculated on a
compounded basis for specified periods of time. Such advertisements and sales
material may also include a yield quotation as of a current period. In each
case, such total return and yield information, if any, will be calculated
pursuant to rules established by the SEC and will be computed separately for
each class of the Fund's shares. 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.

From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund. Distribution rate is a measure of the level of
income and short-term capital gain dividends, if any, distributed for a
specified period. Distribution rate is determined by annualizing the
distributions per share for a stated period and dividing the result by the
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 since, for instance, it may not include the effect of amortization of
bond premiums, and may include non-recurring short-term capital gains and
premiums from futures transactions engaged in by the Fund. Distribution rates
will be computed separately for each class of the Fund's shares.

- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

The Fund is a series of the Van Kampen Equity 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, 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 established from time to time in
accordance with the Fund's Declaration of Trust.

Each class of shares represent 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.

32
<PAGE> 37

The Trusts' 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> 38

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 UTILITY 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 Utility Fund

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

Attn: Van Kampen Utility 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> 39

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

UTILITY FUND

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

P R O S P E C T U S

SEPTEMBER 30, 1998

[VAN KAMPEN LOGO]

UTLF PRO 9/98

<PAGE> 40

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

VAN KAMPEN GROWTH FUND

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

Van Kampen Growth Fund (the "Fund") is a diversified, open-end management
investment company, commonly known as a mutual fund. The Fund's investment
objective is to seek capital growth. The Fund seeks to achieve its investment
objective by investing primarily in a diversified portfolio of common stocks and
other equity securities of growth companies. Growth companies generally include
companies with established records of growth in sales or earnings and companies
with new products, services or processes that the Fund's investment adviser
believes offer investors above average potential for capital growth. Any income
received on such securities is incidental to the objective of capital growth.
There is no assurance that the Fund will achieve its investment objective. The
Fund is organized as a series of Van Kampen Equity Trust (the "Trust").

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

A Statement of Additional Information, dated September 30, 1998, containing
additional information about the Fund is hereby incorporated by reference in its
entirety into this prospectus. A copy of the Statement of Additional Information
may be obtained without charge by calling (800) 341-2911 or for
Telecommunications 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 SEPTEMBER 30, 1998.

<PAGE> 41

- --------------------------------------------------------------------------------
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.................................................... 8
Investment Objective and Policies........................... 8
Portfolio Securities........................................ 8
Investment Practices........................................ 10
Investment Advisory Services................................ 13
Alternative Sales Arrangements.............................. 14
Purchase of Shares.......................................... 15
Shareholder Services........................................ 22
Redemption of Shares........................................ 24
Distribution and Service Plans.............................. 26
Distributions from the Fund................................. 27
Tax Status.................................................. 28
Fund Performance............................................ 30
Description of Shares of the Fund........................... 30
Additional Information...................................... 31
</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> 42

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

THE FUND. Van Kampen Growth Fund (the "Fund") is a separate, diversified series
of Van Kampen Equity 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 investment objective of the Fund is to seek capital
growth. There is no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."

INVESTMENT POLICY. The Fund seeks to achieve its investment objective by
investing primarily in a diversified portfolio of common stocks and other equity
securities of growth companies. Growth companies generally include companies
with established records of growth in sales or earnings and companies with new
products, services or processes that the Fund's investment adviser believes
offer investors above average potential for capital growth. The net asset value
per share of the Fund may increase or decrease depending on changes in the
securities markets, and other factors affecting the issuers of securities in
which the Fund may invest. See "Investment Objective and Policies."

INVESTMENT PRACTICES. The Fund may invest up to 25% of its assets in foreign
securities. Subject to certain limitations, the Fund may enter into strategic
transactions, lend its portfolio securities and enter into repurchase agreements
with selected commercial banks and broker-dealers. 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." The Fund's investment results are based on historical
performance and are not intended to indicate future performance. The Fund
commenced investment operations on December 27, 1995. From December 27, 1995 up
to February 3, 1997, the Fund operated with a limited amount of capital invested
by affiliates of the Fund's Adviser. Prior to February 3, 1997, the Fund had not
engaged in a broad continuous public offering of its shares, had sold shares to
only a limited number of investors and had not been subject to redemption
requests. The Fund commenced a broad public offering of its shares on February
3, 1997. The Fund was offered for a limited time and then was closed to new
investors on March 14, 1997 after raising new assets of approximately
$100,000,000. As discussed herein, the Fund may, from time to time, reopen and
close the offering of its shares to new investors as market conditions permit.
The Fund's Adviser believes that the Fund's portfolio prior to February 3, 1997
was managed in a manner substantially the same as if the Fund had been open for
a broader distribution to public investors. No assurances can be given, however,
that the Fund's investment performance would have been the same during such
period if the Fund had been broadly distributed.

Investment opportunities for growth company securities may be more limited than
those in other sectors of the market. In order to facilitate the management of
the Fund's portfolio, the Fund may, from time to time, reopen and close the
offering of its shares to new investors. Any such limited offerings of the Fund
may commence and terminate without any prior notice.

REDEMPTION. Class A Shares generally may be redeemed at net asset value per
share, 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.

3
<PAGE> 43

DISTRIBUTIONS FROM THE FUND. Distributions from net investment income and
realized 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 the 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> 44

- --------------------------------------------------------------------------------
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 a percentage
of the offering price).................................... 5.75%(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 Year
1--5.00% 1--1.00%
Year After--None
2--4.00%
Year
3--3.00%
Year
4--2.50%
Year
5--1.50%
After--None
Redemption fees (as a percentage of amount redeemed)........ None None None
Exchange fees............................................... None None None
</TABLE>

- --------------------------------------------------------------------------------
(1) Reduced on investments of $50,000 or more. See "Purchase of Shares -- Class
A Shares."

5
<PAGE> 45

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

ANNUAL FUND OPERATING EXPENSES AND EXAMPLE

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees(1) (as a percentage of average daily net
assets; after fee waiver)................................. 0.75% 0.75% 0.75%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.25% 1.00%(3) 1.00%(3)
Other Expenses(1) (as a percentage of average daily net
assets)................................................... 0.59% 0.59% 0.59%
Total Expenses(1) (as a percentage of average daily net
assets; after fee waiver)................................. 1.59% 2.34% 2.34%
</TABLE>

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

(1) The Adviser is currently waiving a portion of its management fees. Absent
the Adviser's waiver, "Management Fees" are 0.75% for each class of shares,
and "Total Expenses" are 1.59%, 2.34% and 2.34% for Class A Shares, Class B
Shares and Class C Shares, respectively. See "Investment Advisory Services."

(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 0.75% (as a
percentage of average daily net assets) paid to investors' broker-dealers as
sales compensation. See "Distribution and Service Plans."

(3) 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 1.30% for Class A
Shares, 2.05% for Class B Shares and 2.05% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at the
end of each time period:
Class A Shares............................................ $73 $105 $139 $236
Class B Shares............................................ $74 $103 $140 $249*
Class C Shares............................................ $34 $ 73 $125 $268
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of each
period:
Class A Shares............................................ $73 $105 $139 $236
Class B Shares............................................ $24 $ 73 $125 $249*
Class C Shares............................................ $24 $ 73 $125 $268
</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 Adviser has discontinued the voluntary fee waivers and
expense reimbursements for the Fund thus increasing the expected total annual
Fund operating expenses for future periods compared to the historical expense
ratios shown in the Fund's "Financial Highlights." 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. As
the Fund's assets increase, the fees waived or expenses reimbursed by the
Adviser are expected to decrease. Accordingly, it is unlikely that future
expenses as projected will remain consistent with those determined based on the
"Annual Fund Operating Expenses" table. 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> 46

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period)
- --------------------------------------------------------------------------------

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 the
periods indicated. The financial highlights have been audited by KPMG Peat
Marwick LLP, independent accountants, for the periods indicated and their report
thereon appears in the Fund's 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 CLASS B SHARES
-------------------------------------------- --------------------------------------------
DECEMBER 27, 1995 DECEMBER 27, 1995
YEAR ENDED JUNE 30, (COMMENCEMENT OF YEAR ENDED JUNE 30, (COMMENCEMENT OF
------------------- INVESTMENT OPERATIONS) ------------------- INVESTMENT OPERATIONS)
1998 1997(a) TO JUNE 30, 1996 1998 1997(a) TO JUNE 30, 1996
------- ------- ---------------------- ------- ------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $17.878 $13.696 $10.000 $17.796 $13.695 $10.000
------- ------- ------- ------- ------- -------
Net Investment Income/Loss (0.136) 0.031 (0.044) (0.270) (0.093) (0.045)
Net Realized and Unrealized Gain 6.711 4.810 3.740 6.637 4.853 3.740
------- ------- ------- ------- ------- -------
Total from Investment Operations 6.575 4.841 3.696 6.367 4.760 3.695
------- ------- ------- ------- ------- -------
Less:
Distributions from and in Excess
of Net Realized Gain 0.990 0.353 -0- 0.990 0.353 -0-
Return of Capital Distribution -0- 0.306 -0- -0- 0.306 -0-
------- ------- ------- ------- ------- -------
Total Distributions 0.990 0.659 -0- 0.990 0.659 -0-
------- ------- ------- ------- ------- -------
Net Asset Value, End of the Period $23.463 $17.878 $13.696 $23.173 $17.796 $13.695
======= ======= ======= ======= ======= =======
Total Return*(b) 38.52% 36.00% 37.00%** 37.56% 35.32% 37.00%**
Net Assets at End of the Period
(In millions) $ 64.9 $ 53.1 $ 0.1 $ 79.7 $ 55.0 $ 0.1
Ratio of Expenses to Average Net
Assets* 1.30% 1.32% 1.46% 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets* (0.64%) 0.19% (0.79%) (1.40%) (0.56%) (0.74%)
Portfolio Turnover 125% 139% 94%** 125% 139% 94%**
- ----------------
* If certain fees had not been assumed by the Adviser, Total Return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average
Net Assets..................... 1.59% 2.31% 15.69% 2.34% 3.04% 15.70%
Ratio of Net Investment Income
to Average Net Assets.......... (0.92%) (0.80%) (15.02%) (1.68%) (1.53%) (14.97%)

<CAPTION>
CLASS C SHARES
--------------------------------------------
DECEMBER 27, 1995
YEAR ENDED JUNE 30, (COMMENCEMENT OF
------------------- INVESTMENT OPERATIONS)
1998 1997(a) TO JUNE 30, 1996
------- ------- ----------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period $17.793 $13.695 $10.000
------- ------- -------
Net Investment Income/Loss (0.311) (0.096) (0.045)
Net Realized and Unrealized Gain 6.681 4.853 3.740
------- ------- -------
Total from Investment Operations 6.370 4.757 3.695
------- ------- -------
Less:
Distributions from and in Excess
of Net Realized Gain 0.990 0.353 -0-
Return of Capital Distribution -0- 0.306 -0-
------- ------- -------
Total Distributions 0.990 0.659 -0-
------- ------- -------
Net Asset Value, End of the Period $23.173 $17.793 $13.695
======= ======= =======
Total Return*(b) 37.56% 35.32% 37.00%**
Net Assets at End of the Period
(In millions) $ 9.2 $ 8.3 $ 0.1
Ratio of Expenses to Average Net
Assets* 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets* (1.39%) (0.57%) (0.74%)
Portfolio Turnover 125% 139% 94%**
- ----------------
* If certain fees had not been a
follows:
Ratio of Expenses to Average
Net Assets..................... 2.34% 3.04% 15.70%
Ratio of Net Investment Income
to Average Net Assets.......... (1.68%) (1.55%) (14.97%)
</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.

See Financial Statements and Notes Thereto

7
<PAGE> 47

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

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

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of the Fund is to seek capital growth. This objective
is fundamental and cannot be changed without approval of the shareholders of the
Fund. Any income received on such securities is incidental to the objective of
capital growth. There can be no assurance that the Fund will achieve its
investment objective.

The Fund seeks to achieve its investment objective by investing primarily in
common stocks and other equity securities of growth companies. Growth companies
generally include companies with established records of growth in sales or
earnings and companies with new products, services or processes that the Adviser
believes offer investors above average potential for capital growth. The Fund
may also invest in companies in cyclical industries during periods when the
Adviser believes that such investments offer an above average potential for
capital growth. The Fund may also invest in investment grade income securities
for purposes of capital growth and cash management or as a temporary defensive
measure. See "Portfolio Securities --Income Securities." The Fund may also
invest in shares of other investment companies that pursue investment objectives
consistent with that of the Fund to the extent and subject to the limitations
discussed below. The Fund may invest up to 25% of its total assets in securities
of foreign issuers.

The Fund's primary approach is to seek what the Adviser believes to be above
average growth opportunities on an individual company basis. Such growth company
securities may have above average price volatility. The Fund may also invest in
special situations involving new management, special products and techniques,
unusual developments, mergers or liquidations. Investments in special situations
and less seasoned companies often involve much greater risks than are inherent
in more conservative investments. The Fund attempts to reduce overall exposure
to risk from declines in individual security prices by spreading its investments
over many different companies in a variety of industries.

An investment in the Fund may not be appropriate for all investors. Because
prices of common stocks and other securities fluctuate, the value of an
investment in the Fund will vary based upon the Fund's investment performance.
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.

DEFENSIVE STRATEGIES. When, in the judgment of the Adviser, economic and
market conditions warrant, the Fund may invest temporarily for defensive
purposes up to 100% of its total assets in U.S. Government securities of various
maturities, investment grade corporate debt securities, preferred stocks,
convertible bonds, banker's acceptances and certificates of deposit.
- --------------------------------------------------------------------------------
PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other class of securities, including such
entity's debt securities, preferred stock and other senior equity securities.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. In selecting common stocks for investment, the Fund
will focus primarily on the security's potential for capital growth.

OTHER EQUITY SECURITIES. The Fund may invest in other equity securities,
including convertible securities or preferred stock. A convertible security is a
bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or a different issuer within a particular period of time at
a specified price or formula. A convertible security entitles the holder to
receive interest paid

8
<PAGE> 48

or accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible income
securities in that they ordinarily provide a stream of income with generally
higher yields than those of common stocks of the same or similar issuers.
Convertible securities rank senior to common stock in a corporation's capital
structure but are usually subordinated to comparable nonconvertible securities.
The Fund may invest in adjustable or fixed rate preferred stock. Preferred stock
generally has a preference as to dividends and liquidation over an issuer's
common stock but ranks junior to debt securities in an issuer's capital
structure. Unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer's board of directors.
Preferred stock also may be subject to optional or mandatory redemption
provisions.

WARRANTS. The Fund may invest in warrants, which are securities permitting,
but not obligating, their holders to subscribe for other securities. Warrants do
not carry with them the right to dividends or voting rights with respect to the
securities that they entitle their holder to purchase, and they do not represent
any rights in the assets of the issuer. As a result, an investment in warrants
may be considered to be more speculative than most other types of equity
investment. In addition, the value of a warrant does not necessarily change with
the value of the underlying securities and a warrant ceases to have value if it
is not exercised prior to its expiration date. The Fund may retain in its
portfolio any securities received upon the exercise of a warrant.

INVESTMENTS IN SPECIAL SITUATIONS AND LESS SEASONED COMPANIES. Investments in
special situations and securities of less seasoned companies may present greater
opportunities for growth but also involve greater risks than customarily are
associated with investments in securities of more established companies. Special
situations and securities of less seasoned companies may be subject to more
abrupt or erratic market movements than more established companies.
Additionally, these companies may have limited product lines, markets or
financial resources, may be dependent upon a limited management group, may be
subject to a greater degree of change in earnings and business prospects and may
be subject to greater uncertainties generally than more established companies.
In addition, securities of small capitalization companies are traded in lower
volume than those issued by larger companies.

Foreign financial markets, while growing in volume, have, for the most part,
substantially less volume than United States markets, and securities of many
foreign companies are less liquid and their prices more volatile than securities
of comparable domestic companies. The foreign markets also have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are not
invested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Costs associated with transactions in foreign
securities, including custodial costs and foreign brokerage commissions, are
generally higher than with transactions in United States securities. In
addition, the Fund will incur costs in

9
<PAGE> 49

connection with conversions between various currencies. There is generally less
government supervision and regulation of exchanges, financial institutions and
issuers in foreign countries than there is in the United States.

INCOME SECURITIES. The Fund may invest in income securities, which include
primarily debt securities of various maturities. The Fund will only invest in
income securities that are investment grade at the time of investment.
Investment grade securities are securities that are rated at least BBB by
Standard & Poor's Ratings Group ("S&P"), Baa by Moody's Investors Services, Inc.
("Moody's") or comparably rated by any nationally recognized statistical rating
organization, or, if unrated, are considered by the Adviser to be of comparable
quality to securities so rated. Income securities rated A or higher by S&P or A
or higher by Moody's generally are regarded as high grade and as having a strong
to outstanding capacity to pay interest or dividends and repay principal or
capital. Medium grade securities (i.e., securities rated BBB by S&P or Baa by
Moody's) are regarded as having an adequate capacity to pay interest or
dividends, and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make such
payments. Securities rated Baa are regarded by Moody's as having some
speculative characteristics. For a description of such ratings see the Statement
of Additional Information.

The net asset value of the Fund will change with changes in the value of its
portfolio securities. The values of income securities may change as interest
rate levels fluctuate. When interest rates decline, the value of a portfolio
invested in income securities generally can be expected to rise. Conversely,
when interest rates rise, the value of a portfolio invested in income securities
generally can be expected to decline. Volatility may be greater during periods
of general economic uncertainty.

The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
rating organization) or, in the case of unrated income securities, the Adviser,
downgrades its assessment of the credit characteristics of a particular issuer.
In determining whether the Fund will retain or sell such a security, the Adviser
may consider such factors as the Adviser's assessment of the credit quality of
the issuer of such security, the price at which such security could be sold and
the rating, if any, assigned to such security by other nationally recognized
statistical rating organizations.

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

In connection with the investment policies described above, the Fund may also
engage in the investment practices described below. These practices entail
risks. The investment practices described below are not fundamental and can be
changed without a vote of the shareholders of the Fund.

LOANS OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to selected commercial
banks or broker-dealers up to a maximum of 50% of the assets of the Fund. Such
loans must be callable at any time and be continuously secured by collateral
deposited by the borrower in a segregated account with the Fund's custodian
consisting of cash or liquid securities, which collateral is equal at all times
to at least 100% of the value of the securities loaned, including accrued
interest. The Fund will receive amounts equal to earned income for having made
the loan. Any cash collateral pursuant to these loans will be invested in
short-term instruments. The Fund is the beneficial owner of the loaned
securities in that any gain or loss in the market price during the loan inures
to the Fund and its shareholders. Thus, when the loan is terminated, the value
of the securities may be more or less than their value at the beginning of the
loan. In determining whether to lend its portfolio securities to a bank or
broker-dealer, the Fund will take into account the credit-worthiness of such
borrower and will monitor such credit-worthiness on an ongoing basis in as much
as default by the other party may cause delays or other collection difficulties.
The Fund may pay finders' fees in connection with loans of its portfolio
securities.

10
<PAGE> 50

REPURCHASE AGREEMENTS. The Fund may use up to 20% of its assets to enter into
repurchase agreements with selected banks and broker-dealers under which the
Fund acquires securities and agrees to resell the securities at an agreed upon
time and at an agreed upon price. The Fund accrues as interest the difference
between the amount it pays for the securities and the amount it receives upon
resale. 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. The Adviser will monitor the value of the
underlying security in this regard. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund will enter into 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 repurchase agreement with a bank or broker-dealer, the Fund will take
into account the credit-worthiness of such party and will monitor its
credit-worthiness on an ongoing basis. In the event of default by such party,
the delays and expenses potentially involved in establishing the Fund's rights
to, and in liquidating, the security may result in loss to the Fund. Repurchase
agreements that mature in more than seven days are treated by the Fund as
illiquid securities and are subject to the 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 exemption 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.

"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 or is earned by the Fund on portfolio 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
fluctuations, the value of such securities at delivery may be more or less than
their purchase price, and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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 account of such purchase commitments until payment is made. The Fund will
make commitments to purchase securities on such basis early with the intention
of actually acquiring these securities, but the Fund may sell such securities
prior to the settlement date if such sale is considered to be advisable. To the
extent the Fund engages in "when issued" and "delayed delivery" transactions, it
will do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage. 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.

11
<PAGE> 51

clearances of portfolio transactions, share repurchase and payment of dividends
and distributions. If the Fund is otherwise fully invested and the Adviser
believes market conditions exist with additional investment opportunities for
capital growth, the Fund may use borrowings to acquire additional portfolio
securities. Utilization of such investment leverage may result in higher returns
but may also increase the volatility of the Fund's net asset value and the
effects of leverage in a declining market would result in a greater decrease in
net asset value than if the Fund were not leveraged. The Fund has no current
intention to borrow money other than for temporary purposes. See the Fund's
Statement of Additional Information for a more complete discussion of borrowings
and certain of the associated risks.

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, equity and fixed-income indices and other financial
instruments and purchase and sell financial futures contracts and enter into
various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures.
Collectively, all of the above are referred to as "Strategic Transactions." The
Fund may also invest in income securities the terms of which include elements of
or are similar in effect to Strategic Transactions in which it may engage.
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, 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 protect against changes in
currency exchange rates, or to establish a position in the derivatives markets
as a temporary substitute for purchasing or selling particular securities.

Any or all of these investment techniques may be used at any time and there is
no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of the Fund to utilize these Strategic
Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. The Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments.

Strategic Transactions 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 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. To the extent that a futures contract or
an option thereon is used to protect against possible changes in the market
value of securities that the Fund anticipates acquiring and the Fund
subsequently does not acquire such securities, the Fund will have incurred the
transactional expenses associated with entering into such transaction and will
be subject to the risks inherent in an unhedged purchase of such futures
contract or option. 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. Income earned or deemed to be earned, if
any, by the Fund from its Strategic Transactions will generally be taxable
income of the Fund. See "Tax Status."

12
<PAGE> 52

securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). See "Investment Policies and Restrictions" in the Statement of
Additional Information.

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. The Adviser's primary considerations in selecting the manner of executing
securities transactions for the Fund will be prompt execution of orders, the
size and breadth of the market for the security, the reliability, integrity and
financial condition and execution capability of the firm, the size of and
difficulty in executing the order, and the best net price. There are many
instances when, in the judgment of the Adviser, more than one firm can offer
comparable execution services. In selecting among such firms, consideration is
given to those firms which supply research and other services in addition to
execution services. If it is believed in the best interests of the Fund, the
Adviser may place portfolio transactions with brokers who provide research or
other services, even if the Fund will have to pay a higher commission than would
be the case if no weight were given to the broker's furnishing of such 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 and this
will be done only when, in the opinion of the Fund's Adviser, the amount of
additional commission or increased cost is reasonable in relation to the value
of such services to the Fund.

The Adviser may place portfolio transactions, to the extent permitted by law,
with brokerage firms which are affiliated with the Fund, the Adviser or the
Distributor and with firms participating in the distribution of the Fund if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. See "Portfolio
Transactions and Brokerage Allocation" in the Statement of Additional
Information for more information.

The Fund purchases securities which are believed by the Adviser to have
potential for capital growth. Common stocks are disposed of in situations where
it is believed that potential for such capital growth has lessened or that other
common stocks have a greater potential. Therefore, the Fund may purchase and
sell securities without regard to the length of time the security is to be, or
has been held. The Fund's annual portfolio turnover rate is shown in the table
of "Financial Highlights." The rate may exceed 100% in any given year, which is
higher than that of many other investment companies. A 100% turnover rate
occurs, for example, if all the Fund's portfolio securities are replaced during
one year. High portfolio activity increases the Fund's transaction costs,
including brokerage commissions, and may result in the realization of more
short-term capital gains than if the Fund had low portfolio activity. The
turnover rate will not be a limiting factor, however, if the Adviser deems
portfolio changes appropriate.

- --------------------------------------------------------------------------------
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 $65
billion under management or supervision. Van Kampen's more than 50 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 sponsor of the funds mentioned
above, is a wholly-owned subsidiary of Van Kampen. Van Kampen is an indirect
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's
principal office is located at One Parkview Plaza, Oakbrook Terrace, Illinois
60181.

13
<PAGE> 53

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS PERCENTAGE PER ANNUM
- ------------------------ --------------------
<S> <C>
First $500 million.......................................... 0.75 of 1.00%
Next $500 million........................................... 0.70 of 1.00%
Over $1 billion............................................. 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), 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 INVESTING POLICIES The Fund and the Adviser have adopted Codes of
Ethics designed to recognize the fiduciary relationship between the Fund and the
Adviser and its employees. The Codes permit trustees, directors, officers and
employees to buy and sell securities for their personal accounts subject to
certain restrictions. Persons with access to certain sensitive information are
subject to preclearance and other procedures designed to prevent conflicts of
interest.

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by Jeff
New. Mr. New has been primarily responsible for managing the Fund's investment
portfolio since its inception. Mr. New has been Vice President and Portfolio
Manager of the Adviser since June 1995 and of Van Kampen Asset Management Inc.
("Asset Management") since 1994. Prior to that time, Mr. New was an Associate
Portfolio Manager with Asset Management. Evan Harrel and Michael Davis have been
responsible as co-managers for the day-to-day management of the Fund's
investment portfolio since March, 1988. Mr. Harrel has been Vice President of
the Adviser and Asset Management since October 1996. Prior to that time, Mr.
Harrel was Associate Portfolio Manager of Asset Management. Prior to May 1994,
Mr. Harrel was a Vice President with Fayez Sarafim and Co. Mr. Davis has been
Vice President and Portfolio Manager of Asset Management and the Adviser since
March 1998. Prior to that time, Mr. Davis was the owner of Davis Equity, a stock
research company.

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

14
<PAGE> 54

a contingent deferred sales charge (a "CDSC") sometimes are referred to herein
collectively as "Contingent Deferred Sales Charge Shares" or "CDSC 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
purchases 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 fee 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 fee and service fee or not subject to
the conversion feature. The per share net asset values of the different classes
of shares are expected to be substantially the same; from time to time, however,
the per share net asset values of the classes may differ. The net asset value
per share of each class of shares of the Fund will be determined as described in
this Prospectus under "Purchase of Shares -- Net Asset Value."

- --------------------------------------------------------------------------------
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 also are offered
through members of the National Association of Securities Dealers, Inc. ("NASD")
acting as securities dealers ("dealers") and through NASD members acting as
brokers for investors ("brokers") or eligible non-NASD members acting as agents
for investors ("financial intermediaries").

15
<PAGE> 55

Investment opportunities for growth company securities may be more limited
than those in other sectors of the market. In order to facilitate the management
of the Fund's portfolio, the Fund may, from time to time, reopen and close the
offering of its shares to new investors. Any such limited offerings of the Fund
may commence and terminate without any 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 determines 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 intermediaries 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 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 pays 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 or agency
commissions paid to brokers with respect to sales of Class A Shares. The sales
charge is allocated between an investor's broker, dealer or financial
intermediary and the Distributor. As indicated previously, at the discretion of
the Distributor, the entire sales charge may be reallowed to such broker, dealer
or financial intermediary. The staff of the SEC has taken the position that
brokers, dealers and financial intermediaries who

16
<PAGE> 56

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.

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 $50,000........................................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............................. 4.75 4.99 4.00
$100,000 but less than $250,000............................. 3.75 3.90 3.00
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
</TABLE>

- --------------------------------------------------------------------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, although 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

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.

17
<PAGE> 57
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 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

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.

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

(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.

18
<PAGE> 58

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

(7) Accounts as to which a 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 serves as custodian will not
be eligible for net asset value purchases based on the aggregate
investment made by the plan or the number of eligible employees, except
under certain uniform criteria established by the Distributor from time to
time. 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 organization 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.

DEFERRED SALES CHARGE ALTERNATIVES

19
<PAGE> 59

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 4.00% (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 will not change the price an investor will pay for CDSC Shares
or the amount that the Fund will receive 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.

20
<PAGE> 60

CLASS B SHARES. Class B Shares redeemed within five 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....................................................... 5.00%
Second...................................................... 4.00%
Third....................................................... 3.00%
Fourth...................................................... 2.50%
Fifth....................................................... 1.50%
Sixth 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."

CONVERSION FEATURE. Class B shares automatically convert to Class A shares
eight years after the end of the calendar month in which the shares were
purchased. Such conversion will be on the basis of the relative net asset values
per share, without the imposition of any sales load, fee or other charge. The
conversion schedule applicable to any share acquired through the exchange
privilege is determined by reference to the Participating Fund from which such
share originally was purchased.

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 also is 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

21
<PAGE> 61

values obtained from yield data relating to instruments or securities with
similar characteristics in accordance with procedures established in good faith
by the Board of Trustees of the Trust of which the Fund is a series. Securities
with remaining maturities of 60 days or less 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. Any securities or other assets for
which current market quotations are not readily available are valued at their
fair value as determined in good faith under procedures established by and under
the general supervision of the Board of Trustees.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

INVESTMENT ACCOUNT. Each shareholder has an investment account under which the
investor's shares of the Fund are held by Van Kampen Investor Services Inc., the
Fund's transfer agent and a wholly-owned subsidiary of Van Kampen. Investor
Services performs bookkeeping, data processing and administration services
related to the maintenance of shareholder accounts. 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.

22
<PAGE> 62

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.

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 or Class C Shares are subject to the CDSC
schedule imposed by the Participating Fund from which such shares were
originally purchased.

23
<PAGE> 63

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 thirty days' notice to its shareholders. Any
gain or loss realized by the shareholder upon redemption of shares is a taxable
event.

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

24
<PAGE> 64

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.

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.

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 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 death or the initial determination of disability.

25
<PAGE> 65

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

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.

26
<PAGE> 66

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 $1,994,702 and
$5,872 of unreimbursed distribution-related expenses with respect to Class B
Shares and Class C Shares, respectively, representing 2.50% and 0.06% 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 the 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
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 annually dividends to holders of each class of shares
from net investment income and net short-term capital gains attributable to each
respective class. The Fund also presently intends to make distributions of net
long-term capital gains, if any, annually. Dividends are composed of all or a
portion of investment income earned by each class of shares of the Fund plus all
or a portion of net short-term capital gains by the Fund on transactions in
securities and futures and options hedging transactions, less the expenses
attributable to the respective class. Long-term capital gains distributions
consist of the Fund's gain on transactions in securities and futures and options
hedging transactions, 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 or redemption.

Distribution checks may be sent to parties other than the shareholder in whose
name the account is registered. Shareholders wishing to utilize this service
should complete the appropriate section of the account application accompanying
this Prospectus or available from Van Kampen 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.

27
<PAGE> 67

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 source 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
(including taxable 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 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 will first 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. Some portion of the
distributions made by the Fund generally will be eligible for the dividends
received deduction for corporations if the Fund receives qualifying dividends
during the year and if certain other requirements of the Code are satisfied.

If the Fund failed to qualify as a regulated investment company or failed to
satisfy the 90% distribution requirement in any taxable year, the Fund would be
taxed as an ordinary corporation on its taxable income (even if such income were
distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. To qualify again as a
regulated investment company in a subsequent year, the Fund may be required to
pay an interest charge on 50% of its earnings and profits attributable to
non-regulated investment company years and would be required to distribute such
earnings and profits to shareholders (less any interest charge). In addition, if
the Fund failed to qualify as a regulated investment company for its first
taxable year or, if immediately after qualifying as a regulated investment
company for any taxable year, it failed to qualify for a period greater than one
taxable year, the Fund would be required to recognize any net built-in gains
(the excess of aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.

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 recognize gain or loss in an amount equal to
the difference between their basis in such sold shares of the Fund 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 applicable to net capital gains recognized by individuals
and other non-corporate taxpayers is (i) the same as ordinary income tax rate
for capital assets held for one year or less or (ii) 20% for capital assets held
for

28
<PAGE> 68

more than one year. A special 28% tax rate may apply to a portion of the capital
gain dividends paid by the Fund with respect to its taxable year ended June 30,
1998.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," 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 securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving 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.

Income from investments in foreign securities may be subject to foreign
income, withholding or other 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 taxes.

The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (i) at least 75% of its gross income is passive income or (ii)
an average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a regulated investment company
that holds stock of a PFIC will be subject to federal income tax on (i) a
portion of any "excess distribution" received on such stock or (ii) any gain
from a sale or disposition of such stock (collectively, "PFIC income"), plus
interest on such amounts, even if the regulated investment company distributes
the PFIC income as a taxable dividend to its shareholders. The balance of the
PFIC income will be included in the regulated investment company's investment
company taxable income and, accordingly, will not be taxable to it to the extent
that income is distributed to its shareholders. If the Fund invests in a PFIC
and elects to treat the PFIC as a "qualified electing fund," then in lieu of the
foregoing tax and interest obligation, the Fund would be required to include in
income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain, which most likely would have to be
distributed to satisfy the 90% distribution requirement and the distribution
requirement for avoiding income and excise taxes. In most instances it will be
very difficult to make this election due to certain requirements imposed with
respect to the election.

As an alternative to making the above-described election to treat the PFIC as
a qualified electing fund, the Fund may make an election to annually
mark-to-market certain publicly traded PFIC stock that it owns (a "PFIC
Mark-to-Market Election"). "Marking-to-market," in this context, means
recognizing as ordinary income or loss each year an amount equal to the
difference between the Fund's adjusted tax basis in such PFIC stock and its fair
market value. Losses will be allowed only to the extent of net mark-to-market
gain previously included by the Fund pursuant to the election for prior taxable
years. The Fund may be required to include in its taxable income for the first
taxable year in which it makes a PFIC Mark-to-Market Election an amount equal to
the interest charge that would otherwise accrue with respect to distributions
on, or dispositions of, the PFIC stock. This amount would not be deductible from
the Fund's taxable income. The PFIC Mark-to-Market Election applies to the
taxable year for which made and to all subsequent taxable years, unless the
Internal Revenue Service consents to revocation of the election. By making the
PFIC Mark-to-Market Election, the Fund could ameliorate the adverse tax
consequences arising from its ownership of PFIC stock, but in any particular
year may be required to recognize income in excess of the distributions it
receives from the PFIC and proceeds from the dispositions of PFIC stock.

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

29
<PAGE> 69

taxable year. In such case, shareholders will be treated as having received such
dividends in the taxable year in which the distribution is actually made.

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

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

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information will include the average total return of the Fund calculated on a
compounded basis for specified periods of time. Such total return will be
calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. Such calculations are based on
historical information and are not intended to indicate future performance. In
lieu of or in addition to total return 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 commenced investment operations on December 27, 1995. From December
27, 1995 up to February 3, 1997, the Fund operated with a limited amount of
capital being invested by affiliates of the Fund's Adviser. Prior to February 3,
1997, the Fund had not engaged in a broad continuous public offering of its
shares, had sold shares to only a limited number of public investors and had not
been subject to redemption requests. The Fund commenced a broad public offering
of its shares on February 3, 1997. The Fund was offered for a limited time and
then was closed to new investors on March 14, 1997 after raising new assets of
approximately $100,000,000. As discussed herein, the Fund may, from time to
time, reopen and close the offering of its shares to new investors as market
conditions permit. The Fund's Adviser believes that the Fund's portfolio prior
to February 3, 1997 was managed in a manner substantially the same as if the
Fund had been open for a broader distribution to public investors. No assurances
can be given, however, that the Fund's investment performance would have been
the same during such period if the Fund had been broadly distributed. The Fund's
investment results are based on historical performance and are not intended to
indicate future performance.

- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

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 established from time to time
in accordance with provisions of the Fund's Declaration of Trust.

30
<PAGE> 70

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'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
- --------------------------------------------------------------------------------

31
<PAGE> 71

VAN KAMPEN GROWTH FUND

One Parkview Plaza
Oakbrook Terrace, IL 60181

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.

One Parkview Plaza
Oakbrook Terrace, IL 60181

Distributor

EXISTING SHAREHOLDERS-- VAN KAMPEN FUNDS INC.
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE One Parkview Plaza
CALL THE FUND'S TOLL-FREE Oakbrook Terrace, IL 60181
NUMBER (800) 341-2911.

Transfer Agent
PROSPECTIVE INVESTORS--CALL

YOUR BROKER OR (800) 341-2911. VAN KAMPEN INVESTOR

DEALERS--FOR DEALER SERVICES INC.
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS, P.O. Box 418256
OR REDEMPTIONS CALL THE Kansas City, MO 64141-9256
DISTRIBUTOR'S TOLL-FREE
NUMBER (800) 421-5666. Attn: Van Kampen Growth Fund

FOR SHAREHOLDER AND
DEALER INQUIRIES THROUGH Custodian
TELECOMMUNICATIONS
DEVICE FOR THE DEAF (TDD) STATE STREET BANK AND
DIAL (800) 421-2833 TRUST COMPANY
225 West Franklin Street, P.O. Box 1713
FOR AUTOMATED TELEPHONE Boston, MA 02105-1713
SERVICES DIAL (800) 847-2424
Attn: Van Kampen Growth 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> 72

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

GROWTH FUND

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

P R O S P E C T U S
SEPTEMBER 30, 1998

[VAN KAMPEN FUNDS LOGO]

GF PRO 9/98

<PAGE> 73

- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL
VALUE FUND
- --------------------------------------------------------------------------------

Van Kampen American Capital Value Fund (the "Fund") is a diversified,
open-end management investment company, commonly known as a mutual fund. The
Fund's investment objective is to seek long-term growth of capital. The Fund
seeks to achieve its investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of medium and
larger capitalization companies that the Fund's investment adviser believes are
selling below their intrinsic values and offer the opportunity for significant
growth of capital. Any income received on such securities is incidental to the
objective of long-term growth of capital. There is no assurance that the Fund
will achieve its investment objective. The fund is organized as a series of Van
Kampen Equity Trust (the "Trust").

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

A Statement of Additional Information, dated September 30, 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 SEPTEMBER 30, 1998.

<PAGE> 74

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 4
Annual Fund Operating Expenses and Example.................. 5
Financial Highlights........................................ 6
The Fund.................................................... 7
Investment Objective and Policies........................... 7
Portfolio Securities........................................ 7
Investment Practices........................................ 9
Investment Advisory Services................................ 12
Alternative Sales Arrangements.............................. 13
Purchase of Shares.......................................... 14
Shareholder Services........................................ 20
Redemption of Shares........................................ 23
Distribution and Service Plans.............................. 24
Distributions from the Fund................................. 26
Tax Status.................................................. 26
Fund Performance............................................ 28
Description of Shares of the Fund........................... 29
Additional Information...................................... 29
</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> 75

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

THE FUND. Van Kampen American Capital Value Fund (the "Fund") is a separate,
diversified series of Van Kampen Equity 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 investment objective of the Fund is to seek long-term
growth of capital. There is no assurance that the Fund will achieve its
investment objective. See "Investment Objective and Policies."

INVESTMENT POLICY. The Fund seeks to achieve its investment objective by
investing primarily in a diversified portfolio of common stocks and other equity
securities of medium and larger capitalization companies that the Fund's
investment adviser believes are selling below their intrinsic values and offer
the opportunity for significant growth of capital. The net asset value per share
of the Fund may increase or decrease depending on changes in the securities
markets and other factors affecting the issuers of securities in which the Fund
may invest. See "Investment Objective and Policies."

INVESTMENT PRACTICES. The Fund may invest up to 25% of its assets in foreign
securities. Subject to certain limitations, the Fund may enter into strategic
transactions, lend its portfolio securities, and enter into repurchase
agreements with selected commercial banks and broker-dealers. 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."

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. Distributions from net investment income and
realized capital gains, if any, are made 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 the 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.

3
<PAGE> 76

- --------------------------------------------------------------------------------
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 a percentage
of the offering price).................................... 5.75%(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--5.00% Year 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None

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

- --------------------------------------------------------------------------------
(1) Reduced on investments of $50,000 or more. See "Purchase of Shares -- Class
A Shares."

4
<PAGE> 77

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees(1) (as a percentage of average daily net
assets; after fee waiver)................................. 0.00% 0.00% 0.00%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.00% 0.00%(3) 0.00%(3)
Other Expenses (as a percentage of average daily net assets;
after expense reimbursement).............................. 1.30% 1.30% 1.30%
Total Expenses(1) (as a percentage of average daily net
assets; after fee waiver and expense reimbursement)....... 1.30% 1.30% 1.30%
</TABLE>

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

(1) Absent the Adviser's waiver of its fee or reimbursement of expenses,
"Management Fees" would have been 0.75% for each of the class of shares,
"Other Expenses" would have been 6.87% for each class of shares and "Total
Expenses" would have been 7.62% for each class of shares.

(2) No 12b-1 or service fees were accrued by the Fund for the period ended June
30, 1998 because the Fund was not actively distributing its shares during
such period. If the Fund had been actively distributing its shares during
the period ended June 30, 1998, 12b-1 and service fees would have been
0.25%, 1.00% and 1.00% for Class A Shares, Class B Shares and Class C
Shares, respectively. Such amounts include 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 charges with
resect to Class C Shares includes 0.75% (as a percentage of net assets) paid
to investors' broker-dealers as sales compensation. See "Distribution and
Service Plans."

(3) 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 1.30% for Class
A Shares, 1.30% for Class B Shares and 1.30% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at
the end of each time period:
Class A Shares............................................ $70 $96 $125 $205
Class B Shares............................................ $53 $76 $ 86 $157*
Class C Shares............................................ $23 $41 $ 71 $157
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of
each period:
Class A Shares............................................ $70 $96 $125 $205
Class B Shares............................................ $13 $41 $ 71 $157*
Class C Shares............................................ $13 $41 $ 71 $157
</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 reflects
the lower aggregate 12b-1 and service fee applicable to such shares after
conversion to Class A Shares. As the Fund's assets increase, the fees waived or
expenses reimbursed by the Adviser are expected to decrease. Accordingly, it is
unlikely that future expenses as projected will remain consistent with those
determined based on the "Annual Fund Operating Expense" table. Class B Shares
acquired through the exchange privileges 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 of the investors' 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."

5
<PAGE> 78

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 the
periods indicated. The financial highlights have been audited by KPMG Peat
Marwick LLP, independent accountants, for 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 audited financial statements
and related notes thereto included in the Statement of Additional Information.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
---------------------------------------------- ---------------------------------------------
DECEMBER 27, 1995 DECEMBER 27, 1995
(COMMENCEMENT OF (COMMENCEMENT OF
YEARS ENDED JUNE 30, INVESTMENT YEARS ENDED JUNE 30, INVESTMENT
--------------------- OPERATIONS) -------------------- OPERATIONS)
1998 1997(A) TO JUNE 30, 1996 1998 1997(A) TO JUNE 30, 1996
--------- --------- ---------------------- ------- ------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 14.321 $ 11.409 $10.000 $14.327 $11.410 $10.000
-------- -------- ------- ------- ------- -------
Net Investment Income/Loss........ (0.032) (0.014) 0.018 (0.027) (0.017) 0.024
Net Realized and Unrealized
Gain............................ 1.633 3.559 1.391 1.626 3.567 1.386
-------- -------- ------- ------- ------- -------
Total from Investment Operations... 1.601 3.545 1.409 1.599 3.550 1.410
-------- -------- ------- ------- ------- -------
Less:
Distributions from Net Investment
Income.......................... 0.103 0.017 -0- 0.102 0.017 -0-
Distributions from Net Realized
Gain............................ 2.100 0.616 -0- 2.100 0.616 -0-
-------- -------- ------- ------- ------- -------
Total Distributions................ 2.203 0.633 -0- 2.202 0.633 -0-
-------- -------- ------- ------- ------- -------
Net Asset Value, End of the
Period............................ $ 13.719 $ 14.321 $11.409 $13.724 $14.327 $11.410
======== ======== ======= ======= ======= =======
Total Return*(a)................... 13.06% 32.39% 14.00%** 12.98% 32.48% 14.00%**
Net Assets at End of the Period (In
thousands)........................ $1,430.7 $1,315.0 $ 117.2 $ 105.3 $ 93.1 $ 74.2
Ratio of Expenses to Average Net
Assets*(b)........................ 1.44% 1.48% 1.38% 1.44% 1.48% 1.38%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.36)% (.31)% 0.38% (0.36)% (.14)% 0.44%
Portfolio Turnover................. 109% 85% 41%** 109% 85% 41%**
- ----------------
* If certain expenses had not been assumed by the Adviser, total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets(b)....................... 7.76% 17.19% 17.51% 7.76% 17.19% 17.57%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (6.69)% (16.01)% (15.81)% (6.69)% (15.79)% (15.75)%
** Non-Annualized.
(a) Total return is based upon net asset value which does not include payment of the maximum sales charge or contingent deferred
sales charge.
(b) The Ratios of Expenses to Average Net Assets do not reflect credits earned on overnight cash balances. If these credits were
reflected as a reduction of expenses, the ratios would decrease by 0.14%, 0.18% and 0.08% for the periods ended on June 30,
1998, June 30, 1997 and June 30, 1996, respectively.

<CAPTION>
CLASS C SHARES
---------------------------------------------
DECEMBER 27, 1995
(COMMENCEMENT OF
YEARS ENDED JUNE 30, INVESTMENT
-------------------- OPERATIONS)
1998 1997(A) TO JUNE 30, 1996
------- ------- ----------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $14.327 $11.410 $10.000
------- ------- -------
Net Investment Income/Loss........ (0.026) (0.017) 0.024
Net Realized and Unrealized
Gain............................ 1.627 3.567 1.386
------- ------- -------
Total from Investment Operations... 1.601 3.550 1.410
------- ------- -------
Less:
Distributions from Net Investment
Income.......................... 0.102 0.017 -0-
Distributions from Net Realized
Gain............................ 2.100 0.616 -0-
------- ------- -------
Total Distributions................ 2.202 0.633 -0-
------- ------- -------
Net Asset Value, End of the
Period............................ 13.726 $14.327 $11.410
======= ======= =======
Total Return*(a)................... 13.06% 32.48% 14.00%**
Net Assets at End of the Period (In
thousands)........................ $ 105.3 $ 93.1 $ 74.2
Ratio of Expenses to Average Net
Assets*(b)........................ 1.44% 1.48% 1.38%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.36)% (.14)% 0.44%
Portfolio Turnover................. 109% 85% 41%**
- ----------------
* If certain expenses had not been assumed by the Adviser, total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets(b)....................... 7.76% 17.19% 17.57%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (6.68)% (15.79)% (15.75)%
** Non-Annualized.
(a) Total return is based upon net asset value which does not include payment of the maximum sales charge or contingent deferred
sales charge.
(b) The Ratios of Expenses to Average Net Assets do not reflect credits earned on overnight cash balances. If these credits were
reflected as a reduction of expenses, the ratios would decrease by 0.14%, 0.18% and 0.08% for the periods ended on June 30,
1998, June 30, 1997 and June 30, 1996, respectively.
</TABLE>

See Notes to Financial Statements

6
<PAGE> 79

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

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

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of the Fund is to seek long-term growth of capital.
This objective is fundamental and cannot be changed without approval of the
shareholders of the Fund. Any income received by the Fund is incidental to the
objective of long-term growth of capital. There can be no assurance that the
Fund will achieve its investment objective.

The Fund seeks to achieve its investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of medium and
larger capitalization companies that the Fund's Adviser believes are selling
below their intrinsic values and offer the opportunity for significant growth of
capital. Medium and larger capitalization companies are those companies that at
the time of investment have a market capitalization at least as large as that of
the company having the smallest market capitalization of those companies then
included in the S&P MidCap 400 Index. The Adviser believes that a company's
equity securities have unrecognized intrinsic value when they sell at a
substantial discount to liquidation value, private market value, or going
concern value. Liquidation value is based on the sum of the company's assets,
less the present value of all liabilities. Private market value is determined by
the price at which comparable securities have been sold in arm's length
transactions. Going concern value is determined by the present value of all cash
inflows and outflows, discounted at a rate that reflects the expected interest
rate environment and risk profile of the firm. In determining the intrinsic
value and investment suitability of particular issuers, the Adviser may consider
factors such as historical and expected growth rates of earnings, economic
earnings, expected levels of free cash flow, evidence of financial strength,
predictability of future prospects, and quality of management.

The Fund may also invest in investment grade income securities for purposes of
long-term growth of capital, cash management or as a temporary defensive
measure. See "Portfolio Securities -- Income Securities." The Fund may also
invest in other investment companies that pursue investment objectives
consistent with that of the Fund, to the extent permitted by applicable law. The
Fund may invest up to 25% of its total assets in securities of foreign issuers.
See "Portfolio Securities -- Foreign Securities."

DEFENSIVE STRATEGIES. When, in the judgment of the Fund's Adviser, economic
and market conditions warrant, the Fund may invest temporarily for defensive
purposes up to 100% of its total assets in U.S. Government securities of various
maturities, investment grade corporate debt securities, preferred stocks,
convertible bonds, banker's acceptances and certificates of deposit.
- --------------------------------------------------------------------------------
PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other class of securities, including such
entity's debt securities, preferred stock and other senior equity securities.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. In selecting common stocks for investment, the Fund
will focus primarily on the security's potential for capital growth.

7
<PAGE> 80

OTHER EQUITY SECURITIES. The Fund may invest in other equity securities,
including convertible securities or preferred stocks. A convertible security is
a bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or a different issuer within a particular period of time at
a specified price or formula. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, convertible securities have characteristics similar to
nonconvertible income securities in that they ordinarily provide a stream of
income with generally higher yields than those of common stocks of the same or
similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to comparable
nonconvertible securities. The Fund may invest in adjustable or fixed rate
preferred stock. Preferred stock generally has a preference as to dividends and
liquidation over an issuer's common stock but ranks junior to debt securities in
an issuer's capital structure. Unlike interest payments on debt securities,
preferred stock dividends are payable only if declared by the issuer's board of
directors. Preferred stock also may be subject to optional or mandatory
redemption provisions.

INCOME SECURITIES. The Fund may invest in income securities, which include
primarily debt securities of various maturities. The Fund will invest only in
income securities that are investment grade at the time of investment.
Investment grade securities are securities that are rated at least BBB by
Standard & Poor's Ratings Group ("S&P"), Baa by Moody's Investors Services, Inc.
("Moody's") or comparably rated by any other nationally recognized rating
organization, or, if unrated, considered by the Adviser to be of comparable
quality to securities so rated. Income securities rated A or higher by S&P or A
or higher by Moody's generally are regarded as high grade and as having a strong
to outstanding capacity to pay interest or dividends and repay principal or
capital. Medium grade securities (i.e., securities rated BBB by S&P or Baa by
Moody's) are regarded as having an adequate capacity to pay interest or
dividends, and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make such
payments. Securities rated Baa are regarded by Moody's as having some
speculative characteristics. For a description of such ratings see the Statement
of Additional Information.

The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
rating organization) or, in the case of unrated income securities, the Adviser,
downgrades its assessment of the credit characteristics of a particular issuer.
In determining whether the Fund will retain or sell such a security the Adviser
may consider such factors as the Adviser's assessment of the credit quality of
the issuer of such security, the price at which such security could be sold and
the rating, if any, assigned to such security by other nationally recognized
statistical rating organizations.

FOREIGN SECURITIES. The Fund may invest up to 25% of the value of its total
assets in securities of foreign issuers. Investments in securities of foreign
entities and securities denominated in foreign currencies involve risks not
typically involved in domestic investment, including fluctuations in foreign
exchange rates, future foreign political and economic developments, and the
possible imposition of exchange controls or other foreign or United States
governmental laws or restrictions applicable to such investments. Since the Fund
may invest in securities denominated or quoted in currencies other than the
United States dollar, changes in foreign currency exchange rates may affect the
value of investments in the portfolio and the accrued income and unrealized
appreciation or depreciation of investments. Changes in foreign currency
exchange rates relative to the U.S. dollar will affect the U.S. dollar value of
the Fund's assets denominated in that currency and the Fund's yield on such
assets. With respect to certain foreign countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or social instability
or diplomatic developments which could affect investment in those countries.
There may be less publicly available information about a foreign security than
about a United States security, and foreign entities may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to those of United States entities. In addition, certain foreign
investments made by the Fund may be subject to foreign income, withholding or
other taxes, which would reduce the Fund's total return on such investments and
the amounts available for distributions by the Fund to its shareholders. See
"Tax Status."
8
<PAGE> 81

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

LOANS OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to selected commercial
banks or broker-dealers up to a maximum of 50% of the assets of the Fund. Such
loans must be callable at any time and be continuously secured by collateral
deposited by the borrower in a segregated account with the Fund's custodian
consisting of cash or liquid securities, which collateral is equal at all times
to at least 100% of the value of the securities loaned, including accrued
interest. The Fund will receive amounts equal to earned income for having made
the loan. Any cash collateral pursuant to these loans will be invested in
short-term instruments. The Fund is the beneficial owner of the loaned
securities in that any gain or loss in the market price during the loan inures
to the Fund and its shareholders. Thus, when the loan is terminated, the value
of the securities may be more or less than their value at the beginning of the
loan. In determining whether to lend its portfolio securities to a bank or
broker-dealer, the Fund will take into account the credit-worthiness of such
borrower and will monitor such credit-worthiness on an ongoing basis in as much
as default by the other party may cause delays or other collection difficulties.
The Fund may pay finders' fees in connection with loans of its portfolio
securities.

9
<PAGE> 82

Fund will take into account the credit-worthiness of such party and will monitor
its credit-worthiness on an ongoing basis. In the event of default by such
party, the delays and expenses potentially involved in establishing the Fund's
rights to, and in liquidating, the security may result in loss to the Fund.
Repurchase agreements that mature in more than seven days are treated by the
Fund as illiquid and are subject to the Fund's limitation 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 or is earned by the Fund on portfolio 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 such securities at delivery may be more or less than
their purchase price and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage. 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.

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 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 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 securities by the Fund for purposes of the
investment limitations set forth above.

BORROWINGS. The Fund is authorized to borrow money from banks (including
entering into reverse repurchase agreements) in an amount up to 33 1/3% of the
Fund's total assets (after giving effect to any such borrowing) which amount
excludes up to 5% in borrowings and reverse repurchase agreements from any
entity for temporary purposes, such as clearances of portfolio transactions,
share repurchases and payment of dividends and distributions. If the Fund is
otherwise fully invested and the Adviser believes market conditions exist with
additional investment opportunities for long-term growth of capital, the Fund
may use borrowings to acquire additional portfolio securities. Utilization of
such investment leverage may result in higher returns but also may increase the
volatility of the Fund's net asset value and the effects of leverage in a
declining market would result in a greater decrease in net asset value than if
the Fund were not leveraged. The Fund has no current intention to borrow money
other than for such temporary purposes. See the Fund's Statement of Additional
Information for a more complete discussion of borrowings and certain of the
associated risks.

10
<PAGE> 83

contracts, currency future contracts, currency swaps or options on currencies or
currency futures. Collectively, all of the above are referred to as "Strategic
Transactions." The Fund may also invest in income securities the terms of which
include the elements of or are similar in effect to Strategic Transactions in
which it may engage. 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, 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 protect
against changes in currency exchange rates, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Any or all of these investment techniques may be used at
any time and there is no particular strategy that dictates the use of one
technique rather than another, as use of any Strategic Transaction is a function
of numerous variables including market conditions. The ability of the Fund to
utilize these Strategic Transactions successfully will depend on the Adviser's
ability to predict pertinent market movements, which cannot be assured. The Fund
will comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.

Strategic Transactions 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 specific 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. To the extent that a futures contract or
an option thereon is used to protect against possible changes in the market
value of securities that the Fund anticipates acquiring and the Fund
subsequently does not acquire such securities, the Fund will have incurred the
transactional expenses associated with entering into such transaction and will
be subject to the risks inherent in an unhedged purchase of such futures
contract or option. 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. Income earned or deemed to be earned, if
any, by the Fund from its Strategic Transactions will generally be taxable
income of the Fund. See "Tax Status."

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 Investment Company Act of 1940
(the "1940 Act"). See "Investment Policies and Restrictions" in the Statement of
Additional Information.

Fund, the Adviser may place portfolio transactions with brokers who provide
research or other services, even if the Fund will have to pay a higher
commission than would be the case if no weight were given to the broker's
furnishing of such 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 and this will be done only when, in the opinion of the
Adviser, the amount of additional commission or increased costs is reasonable in
relation to the value of such services to the Fund.

The Adviser may place portfolio transactions, to the extent permitted by law,
with brokerage firms affiliated with the Fund, the Adviser or the Distributor
and with firms participating in the distribution of the Fund's shares if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. See "Portfolio
Transactions and Brokerage Allocation" in the Statement of Additional
Information for more information.

PORTFOLIO TURNOVER. The Fund purchases securities which are believed by the
Adviser to have potential for long-term growth of capital. Securities are
disposed of in situations where it is believed that potential for such growth
has lessened or that other securities have a greater potential. Therefore, the
Fund may purchase and sell securities without regard to the length of time the
security is to be, or has been held. The rate may exceed 100%, which is higher
than that of many other investment companies. A 100% turnover rate occurs, for
example, if all the Fund's portfolio securities are replaced during one year.
High portfolio activity increases the Fund's transaction costs, including
brokerage commissions, and may result in the realization of more short-term
capital gains than if the Fund had low portfolio turnover. The Fund's annual
portfolio turnover rate is shown in the table of "Financial Highlights."

- --------------------------------------------------------------------------------
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 $65
billion under management or supervision. Van Kampen's more than 50 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 sponsor of the funds mentioned
above, is a wholly-owned subsidiary of Van Kampen. Van Kampen is an indirect
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's
principal office is located at One Parkview Plaza, Oakbrook Terrace, Illinois
60181.

12
<PAGE> 85

subsidiary of Van Kampen), dividend disbursing agent and the custodian
(including fees for safekeeping of securities), costs of calculating net asset
value, costs of acquiring and disposing of portfolio securities, interest (if
any) on obligations incurred by the Fund, costs of share certificates,
membership dues in the Investment Company Institute or any similar organization,
reports and notices to shareholders, costs of registering shares of the Fund
under 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. ("Asset Management").

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by James
Gilligan. Mr. Gilligan has been primarily responsible for managing the Fund's
investment portfolio since its inception. Mr. Gilligan has been Senior Vice
President and Portfolio Manager of the Adviser since June 1995 and of Asset
Management since September 1995. Prior to that time, Mr. Gilligan was Vice
President and Portfolio Manager of Asset Management. Scott Carroll has been the
co-manager for the day-to-day management of the Fund's investment portfolio
since July 1997. Mr. Carroll has been Associate Portfolio Manager of the Adviser
and Asset Management since December 1996. Prior to that time, Mr. Carroll was an
Equity Analyst with Lincoln Capital Management Company. Prior to September 1992,
Mr. Carroll was a Senior Internal Auditor with Pittway Corporation.

- --------------------------------------------------------------------------------
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 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
Shares 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."

13
<PAGE> 86

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 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 have different shareholder service
options available. Generally, a class of shares subject to a higher ongoing
distribution fee and service 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 fee and service fee or not subject to the
conversion feature. The per share net asset values of the different classes of
shares are expected to be substantially the same; from time to time, however,
the per share net asset values of the classes may differ. The net asset value
per share of each class of shares of the Fund will be determined as described in
this Prospectus under "Purchase of Shares -- Net Asset Value."

- --------------------------------------------------------------------------------
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 also are offered
through members of the National Association of Securities Dealers, Inc. ("NASD")
acting as securities dealers ("dealers") and through NASD members acting as
brokers for investors ("brokers") or eligible non-NASD members acting as agents
for investors ("financial intermediaries"). The Fund reserves the right to
suspend or terminate the continuous public offering at any time and without
prior notice.

14
<PAGE> 87

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 intermediaries 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 pays 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 or agency
commissions paid to brokers with respect to sales of Class A Shares. The sales
charge is allocated between an investor's broker, dealer or financial
intermediary and the Distributor. As indicated previously, at the discretion of
the Distributor, the entire sales charge may be reallowed to such broker, dealer
or financial intermediary. The staff of the SEC has taken the position that
brokers, dealers and 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.

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 $50,000........................................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............................. 4.75 4.99 4.00
$100,000 but less than $250,000............................. 3.75 3.90 3.00
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
</TABLE>

- --------------------------------------------------------------------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, although 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

15
<PAGE> 88

OTHER PURCHASE PROGRAMS

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.

16
<PAGE> 89

(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.

(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.

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

(7) Accounts as to which a 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

17
<PAGE> 90

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.

DEFERRED SALES CHARGE ALTERNATIVES

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.

18
<PAGE> 91

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 4.00% (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 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
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------- -------------------
<S> <C>
First....................................................... 5.00%
Second...................................................... 4.00%
Third....................................................... 3.00%
Fourth...................................................... 2.50%
Fifth....................................................... 1.50%
Sixth 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."

19
<PAGE> 92

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 securities of the Fund that are listed on a securities exchange are valued
at their closing sales price on the day of the valuation. Price valuations for
listed securities are based on market quotations where the security is primarily
traded or, if actual trade information is not available on any valuation date,
are valued at the mean of the bid and asked prices. Unlisted securities in the
portfolio are valued by using market quotations, prices provided by market
makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics in accordance with
procedures established in good faith by the Board of Trustees of the Trust, of
which the Fund is a series. Securities with remaining maturities of 60 days or
less 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. Any securities or other assets for which current market quotations are
not readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Board
of Trustees.

- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

INVESTMENT ACCOUNT. Each shareholder has an investment account under which the
investor's shares of the Fund are held by Investor Services, the Fund's,
transfer agent and a wholly-owned subsidiary of Van Kampen. Investor Services
performs bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. 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

20
<PAGE> 93

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.

21
<PAGE> 94

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 by 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.

22
<PAGE> 95

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

23
<PAGE> 96

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 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. The Fund reserves
the right at any time to terminate, limit or otherwise modify this telephone
redemption privilege.

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

24
<PAGE> 97

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

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.

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 no unreimbursed distribution-related expenses with respect to Class B
Shares and Class C Shares. 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

25
<PAGE> 98

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

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.

PURCHASE OF ADDITIONAL SHARES WITH DISTRIBUTIONS. The Fund automatically will
credit distributions to a shareholder's account in additional shares of the Fund
valued at net asset value per share, without a sales charge. Unless the
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
- --------------------------------------------------------------------------------

26
<PAGE> 99

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 will first 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. Some portion of the
distributions made by the Fund generally will be eligible for the dividends
received deduction for corporations if the Fund receives qualifying dividends
during the year and if certain other requirements of the Code are satisfied.

The maximum tax rate applicable to net capital gains recognized by individuals
and other non-corporate taxpayers is (i) the same as the maximum ordinary income
tax rate for capital assets held for one year or less or (ii) 20% for capital
assets held for more than one year. A special 28% tax rate may apply to a
portion of the capital gain dividends paid by the Fund with respect to its
taxable year ended June 30, 1998.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," 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 securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving 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.

income is distributed to its shareholders. If the Fund invests in a PFIC and
elects to treat the PFIC as a "qualified electing fund," then in lieu of the
foregoing tax and interest obligation, the Fund would be required to include in
income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain, which most likely would have to be
distributed to satisfy the 90% distribution requirement and the distribution
requirement for avoiding income and excise taxes. In most instances it will be
very difficult to make this election due to certain requirements imposed with
respect to the election.

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

28
<PAGE> 101

compare its performance to certain securities and unmanaged indices which may
have different risk/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.

Further information about the Fund's performance is contained in its Annual
Report, Semi-Annual Report and Statement of Additional Information, each of
which can be obtained without charge by calling (800) 421-2833 ((800) 772-8889
for the hearing impaired).
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

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 established from time to time
in accordance with provisions of the Fund's Declaration of Trust.

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

29
<PAGE> 102

VAN KAMPEN AMERICAN CAPITAL
VALUE 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

EXISTING SHAREHOLDERS-- SERVICES INC.
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE P.O. Box 418256
CALL THE FUND'S TOLL-FREE Kansas City, MO 64141-9256
NUMBER (800) 341-2911. Attn: Van Kampen American Capital
Value Fund
PROSPECTIVE INVESTORS--CALL
Custodian
YOUR BROKER OR (800) 341-2911. STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street, P.O. Box 1713
DEALERS--FOR DEALER Boston, MA 02105-1713
INFORMATION, SELLING Attn: Van Kampen American Capital
AGREEMENTS, WIRE ORDERS, Value Fund
OR REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE Legal Counsel
NUMBER (800) 421-5666. SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
FOR SHAREHOLDER AND 333 West Wacker Drive
DEALER INQUIRIES THROUGH Chicago, IL 60606
TELECOMMUNICATIONS
DEVICE FOR THE DEAF (TDD) Independent Accountants
DIAL (800) 421-2833 KPMG PEAT MARWICK LLP
Peat Marwick Plaza
FOR AUTOMATED TELEPHONE 303 East Wacker Drive
SERVICES DIAL (800) 847-2424 Chicago, IL 60601

<PAGE> 103

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VALUE FUND

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P R O S P E C T U S
SEPTEMBER 30, 1998

[VAN KAMPEN FUNDS LOGO]

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VAN KAMPEN GREAT AMERICAN COMPANIES FUND

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Van Kampen Great American Companies Fund (the "Fund") is a diversified,
open-end management investment company, commonly known as a mutual fund. The
Fund's investment objective is to seek long-term growth of capital. The Fund
seeks to achieve its investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of U.S.
companies that, in the investment adviser's view, have achieved leading and
sustainable positions within their U.S. industrial sectors. Any income received
on such securities is incidental to the objective of long-term growth of
capital. There is no assurance that the Fund will achieve its investment
objective. The Fund is organized as a series of Van Kampen Equity Trust (the
"Trust").

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

A Statement of Additional Information, dated September 30, 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 SEPTEMBER 30, 1998.

<PAGE> 105

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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 4
Annual Fund Operating Expenses and Example.................. 5
Financial Highlights........................................ 6
The Fund.................................................... 7
Investment Objective and Policies........................... 7
Portfolio Securities........................................ 7
Investment Practices........................................ 8
Investment Advisory Services................................ 11
Alternative Sales Arrangements.............................. 12
Purchase of Shares.......................................... 14
Shareholder Services........................................ 20
Redemption of Shares........................................ 22
Distribution and Service Plans.............................. 24
Distributions from the Fund................................. 25
Tax Status.................................................. 26
Fund Performance............................................ 27
Description of Shares of the Fund........................... 28
Additional Information...................................... 28
</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> 106

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PROSPECTUS SUMMARY
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THE FUND. Van Kampen Great American Companies Fund (the "Fund") is a separate,
diversified series of Van Kampen Equity 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 POLICY. The Fund seeks to achieve its investment objective by
investing primarily in a diversified portfolio of common stocks and other equity
securities of U.S. companies that, in the investment adviser's view, have
achieved leading and sustainable positions within their U.S. industrial sectors.
The net asset value per share of the Fund may increase or decrease depending on
changes in the securities markets and other factors affecting the issuers of
securities in which the Fund may invest. See "Investment Objective and
Policies."

INVESTMENT PRACTICES. Subject to certain limitations, the Fund may enter into
strategic transactions, lend its portfolio securities, and enter into repurchase
agreements with selected commercial banks and broker-dealers. 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."

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

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

DISTRIBUTIONS FROM THE FUND. Distributions from net investment income and
realized capital gains, if any, are made 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 the 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.

3
<PAGE> 107

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SHAREHOLDER TRANSACTION EXPENSES
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<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases (as a percentage
of the offering price)................................... 5.75%(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--5.00% Year 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage of amount redeemed)....... None None None
Exchange fees.............................................. None None None
</TABLE>

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(1) Reduced on investments of $50,000 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 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."

4
<PAGE> 108
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ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
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<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees(1) (as a percentage of average daily net
assets; after fee waiver)................................. 0.00% 0.00% 0.00%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.00% 0.00%(3) 0.00%(3)
Other Expenses (as a percentage of average daily net assets;
after expense reimbursement).............................. 1.25% 1.25% 1.25%
Total Expenses(1) (as a percentage of average daily net
assets; after fee waiver and expense reimbursement)....... 1.25% 1.25% 1.25%
</TABLE>

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(1) Absent the Adviser's waiver of fees or reimbursement of expenses,
"Management Fees" would have been 0.70% for each class of shares, "Other
Expenses" would have been 7.45% for each class of shares and "Total
Expenses" would have been 8.15% for each class of shares.

(2) No 12b-1 or service fees were accrued by the Fund for the period ended June
30, 1998 because the Fund was not actively distributing its shares during
such period. If the Fund had been actively distributing its shares during
the period ended June 30, 1998, 12b-1 and service fees would have been
0.25%, 1.00% and 1.00% for Class A Shares, Class B Shares and Class C
Shares, respectively. Such amounts include 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 0.75% (as a percentage of net assets)
paid to investors' broker-dealers as sales compensation. See "Distribution
and Service Plans."

(3)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 1.25% for Class
A Shares, 1.25% for Class B Shares and 1.25% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at
the end of each time period:
Class A Shares............................................ $70 $ 95 $122 $200
Class B Shares............................................ $63 $ 70 $ 84 $151*
Class C Shares............................................ $23 $ 40 $ 84 $151
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of
each period:
Class A Shares............................................ $70 $ 95 $122 $200
Class B Shares............................................ $13 $ 40 $ 69 $151*
Class C Shares............................................ $13 $ 40 $ 84 $151
</TABLE>

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* 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 reflects
the lower aggregate 12b-1 and service fees applicable to such shares after
conversion to Class A Shares. As the Fund's assets increase, the fees waived or
expenses reimbursed by the Adviser are expected to decrease. Accordingly, it is
unlikely that future expenses as projected will remain consistent with those
determined based on the "Annual Fund Operating Expense" table. Class B Shares
acquired through the exchange privileges 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".

5
<PAGE> 109

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 the
periods indicated. The financial highlights have been audited by KPMG Peat
Marwick LLP, independent accountants, for 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 audited financial statements
and related notes thereto included in the Statement of Additional Information.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
------------------------------------------- -------------------------------------------
DECEMBER 27, 1995 DECEMBER 27, 1995
(COMMENCEMENT OF (COMMENCEMENT OF
YEAR ENDED JUNE 30, INVESTMENT YEAR ENDED JUNE 30, INVESTMENT
------------------- OPERATIONS) ------------------- OPERATIONS)
1998 1997 TO JUNE 30, 1996 1998 1997 TO JUNE 30, 1996
-------- -------- --------------------- -------- -------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 14.235 $ 11.622 $10.000 $ 14.237 $ 11.622 $10.000
-------- -------- ------- -------- -------- -------
Net Investment Income/Loss........ (0.009) (0.003) 0.019 (0.004) (0.007) 0.019
Net Realized and Unrealized
Gain............................ 3.784 3.535 1.603 3.778 3.541 1.603
-------- -------- ------- -------- -------- -------
Total from Investment Operations... 3.775 3.532 1.622 3.774 3.534 1.622
-------- -------- ------- -------- -------- -------
Less:
Distributions from and in Excess
of Net Investment Income........ 0.142 0.019 -- 0.142 0.019 --
Distributions from Net Realized
Gain............................ 1.740 0.900 -- 1.740 0.900 --
-------- -------- ------- -------- -------- -------
Total Distributions................ 1.882 0.919 -- 1.882 0.919 --
-------- -------- ------- -------- -------- -------
Net Asset Value, End of the
Period............................ $ 16.128 $ 14.235 $11.622 $ 16.129 $ 14.237 $11.622
======== ======== ======= ======== ======== =======
Total Return* (a).................. 29.08% 32.29% 16.10%** 29.08% 32.29% 16.10%**
Net Assets at End of the Period (In
thousands)........................ $1,627.7 $1,260.8 $ 81.4 $ 119.5 $ 92.5 $ 75.5
Ratio of Expenses to Average Net
Assets* (b)....................... 1.51% 1.59% 1.37% 1.51% 1.59% 1.37%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.21)% (0.08)% 0.33% (0.21)% (0.05)% 0.33%
Portfolio Turnover................. 150% 100% 48%** 150% 100% 48%**
- ----------------
* If certain expenses had not been assumed by the Adviser, total return would have been lower and the ratios would have been
as follows:
Ratio of Expenses to Average Net
Assets(b)....................... 8.41% 17.82% 18.46% 8.41% 17.82% 18.46%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (7.11)% (16.31)% (16.76)% (7.11)% (16.28)% (16.76)%

<CAPTION>
CLASS C SHARES
-------------------------------------------
DECEMBER 27, 1995
(COMMENCEMENT OF
YEAR ENDED JUNE 30, INVESTMENT
------------------- OPERATIONS)
1998 1997 TO JUNE 30, 1996
-------- -------- ---------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 14.237 $ 11.622 $10.000
-------- -------- -------
Net Investment Income/Loss........ (0.008) (0.007) 0.019
Net Realized and Unrealized
Gain............................ 3.784 3.541 1.603
-------- -------- -------
Total from Investment Operations... 3.776 3.534 1.622
-------- -------- -------
Less:
Distributions from and in Excess
of Net Investment Income........ 0.142 0.019 --
Distributions from Net Realized
Gain............................ 1.740 0.900 --
-------- -------- -------
Total Distributions................ 1.882 0.919 --
-------- -------- -------
Net Asset Value, End of the
Period............................ $ 16.131 $ 14.237 $11.622
======== ======== =======
Total Return* (a).................. 29.08% 32.29% 16.10%**
Net Assets at End of the Period (In
thousands)........................ $ 119.5 $ 98.2 $ 75.5
Ratio of Expenses to Average Net
Assets* (b)....................... 1.51% 1.59% 1.37%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.21)% (0.05)% 0.33%
Portfolio Turnover................. 150% 100% 48%**
- ----------------
* If certain expenses had not been
assusmed by the Adviser, total
return would have been lower
and the ratios would have been
as follows:
Ratio of Expenses to Average Net
Assets(b)....................... 8.41% 17.82% 18.46%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (7.11)% (16.28)% (16.76)%
</TABLE>

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

(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by 0.26%, 0.34% and 0.13% for the
periods ended June 30, 1998, 1997 and 1996, respectively.

See Notes to Financial Statements

6
<PAGE> 110

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

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INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of the Fund is to seek long-term growth of capital.
This objective is fundamental and cannot be changed without approval of the
shareholders of the Fund. Any income received on such securities is incidental
to the objective of long-term growth of capital. There can be no assurance that
the Fund will achieve its investment objective.

The Fund seeks to achieve its investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of U.S.
companies that, in the Adviser's view, have achieved leading and sustainable
market positions within their U.S. industrial sectors. The Adviser believes that
leading U.S. companies are those companies who exhibit competitive and financial
superiority. Competitive superiority may be based on factors such as
manufacturing excellence, product innovation, marketing strength, or other
factors. Financial superiority may be seen in superior returns on equity and
other return measures, or in superior balance sheet measures, and other
financial flexibility measures. There ordinarily is more than one leading
company in an industrial sector. In selecting portfolio investments, the Adviser
will employ traditional valuation measures, such as price or earnings and price
or cash flow ratios to determine whether the common stock or other equity
securities of those companies with competitive and financial strength have
reasonable valuations relative to the overall market. The Fund ordinarily will
not invest in common stocks or other equity securities that the Adviser believes
are overvalued.

The Fund may also invest in investment grade income securities for purposes of
growth of capital and cash management or as a temporary defensive measure. See
"Portfolio Securities -- Income Securities". The Fund may invest up to 5% of its
total assets in securities of foreign issuers. See "Additional Investment
Considerations" in the Statement of Additional Information.

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PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other class of securities, including such
entity's debt securities, preferred stock and other senior equity securities.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. In selecting common stocks for investment, the Fund
will focus primarily on the security's potential for appreciation.

OTHER EQUITY SECURITIES. The Fund may invest in other equity securities,
including convertible securities or preferred stock. A convertible security is a
bond debenture, note, preferred stock or other security that may be converted
into or

7
<PAGE> 111

exchanged for a prescribed amount of common stock or other equity security of
the same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive interest
paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities have characteristics similar to
nonconvertible income securities in that they ordinarily provide a stream of
income with generally higher yields than those of common stocks of the same or
similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to comparable
nonconvertible securities. The Fund may invest in adjustable or fixed rate
preferred stock. Preferred stock generally has a preference as to dividends and
liquidation over an issuer's common stock but ranks junior to debt securities in
an issuer's capital structure. Unlike interest payments on debt securities,
preferred stock dividends are payable only if declared by the issuer's board of
directors. Preferred stock also may be subject to optional or mandatory
redemption provisions.

The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
rating organization) or, in the case of unrated income securities, the Adviser,
downgrades its assessment of the credit characteristics of a particular issuer.
In determining whether the Fund will retain or sell such a security, the Adviser
may consider such factors as the Adviser's assessment of the credit quality of
the issuer of such security, the price at which such security could be sold and
the rating, if any, assigned to such security by other nationally recognized
statistical rating organizations.

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

In connection with the investment policies described above, the Fund may also
engage in the investment practices described below. These purchases entail
risks. The investment practices described below are not fundamental and can be
changed without a vote of the shareholders of the Fund.

8
<PAGE> 112

must be callable at any time and be continuously secured by collateral deposited
by the borrower in a segregated account with the Fund's custodian consisting of
cash or liquid securities, which collateral is equal at all times to at least
100% of the value of the securities loaned, including accrued interest. The Fund
will receive amounts equal to earned income for having made the loan. Any cash
collateral pursuant to these loans will be invested in short-term instruments.
The Fund is the beneficial owner of the loaned securities in that any gain or
loss in the market price during the loan inures to the Fund and its
shareholders. Thus, when the loan is terminated, the value of the securities may
be more or less than their value at the beginning of the loan. In determining
whether to lend its portfolio securities to a bank or broker-dealer, the Fund
will take into account the credit-worthiness of such borrower and will monitor
such credit-worthiness on an ongoing basis in as much as default by the other
party may cause delays or other collection difficulties. The Fund may pay
finders' fees in connection with loans of its portfolio securities.

"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 or is earned by the Fund on portfolio 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 such securities at delivery may be more or less than
their purchase price and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage. 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.

9
<PAGE> 113

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 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 securities by the Fund for purposes of the
investment limitations set forth above.

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 current market values, limit the amount of appreciation the Fund can
realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between price
movements of futures contracts and price movements in the related portfolio
position of the Fund creates the possibility that losses on the hedging
instrument may be greater than gains in the value of the Fund's position. In
addition, futures and options markets may not be liquid in all circumstances and
certain over-the-counter options may have no markets. As a result, in certain
markets, the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the 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. To the extent that a futures contract or an option thereon is used to
protect against possible changes in the market value of securities that the Fund
anticipates acquiring and the Fund subsequently does not acquire such
securities, the Fund will have incurred the transactional expenses associated
with entering into such transaction and will be subject to the risks inherent in
an unhedged purchase of such futures contract or option. Finally, the daily
variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would

10
<PAGE> 114

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. Income earned or deemed to be earned, if
any, by the Fund from its Strategic Transactions will generally be taxable
income of the Fund. See "Tax Status."

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 is given to those firms which supply research and other services
in addition to execution services. If it is believed in the best interests of
the Fund, the Adviser may place portfolio transactions with brokers who provide
research or other services, even if the Fund will have to pay a higher
commission than would be the case if no weight were given to the broker's
furnishing of such 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 and this will be done only when, in the opinion of the
Adviser, the amount of additional commission or increased costs is reasonable in
relation to the value of such services to the Fund.

The Adviser may place portfolio transactions, to the extent permitted by law,
with brokerage firms which are affiliated with the Fund, the Adviser or the
Distributor and with firms participating in the distribution of the Fund if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. See "Portfolio
Transactions and Brokerage Allocation" in the Statement of Additional
Information for more information.

PORTFOLIO TURNOVER. The Fund purchases securities which are believed by the
Adviser to have potential for long-term growth of capital. Securities are
disposed of in situations where it is believed that potential for such capital
growth has lessened or that other securities have a greater potential.
Therefore, the Fund may purchase and sell securities without regard to the
length of time the security is to be, or has been held. The rate may exceed
100%, which is higher than that of many other investment companies. A 100%
turnover rate occurs, for example, if all the Fund's portfolio securities are
replaced during one year. High portfolio activity increases the Fund's
transaction costs, including brokerage commissions and may result in the
realization of more short-term capital gains than if the Fund had low portfolio
turnover. The Fund's annual portfolio turnover rate is shown in the table of
"Financial Highlights."

- --------------------------------------------------------------------------------
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 $65
billion under management or supervision. Van Kampen's more than 50 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 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
Adviser's principal office is located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.

11
<PAGE> 115

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 global custody, securities clearance services and securities
lending.

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS PERCENTAGE PER ANNUM
- ------------------------ --------------------
<S> <C>
First $500 million.......................................... 0.70 of 1.00%
Next $500 million........................................... 0.65 of 1.00%
Over $1 billion............................................. 0.60 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), 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.

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by Jeff
New. Mr. New has assisted in managing the Fund since its inception and has been
primarily responsible for managing the Fund's investment portfolio since May
1998. Mr. New has been Senior Vice President and Portfolio Manager of the
Adviser and Van Kampen Asset Management Inc. ("Asset Management") since December
1997. Prior to December 1997, Mr. New was Vice President and Portfolio Manager
of the Adviser and Asset Management. Prior to June 1994, Mr. New was Associate
Portfolio Manager of Asset Management. Michael Davis, who acts as the Fund's
co-manager, has been responsible for the day-to-day management of the Fund's
investment portfolio since March, 1998. Mr. Davis has been Vice President and
Portfolio Manager of the Adviser and Asset Management since March 1998. Mr.
Davis has been an investment professional since 1983 and prior to March 1998 was
the owner of Davis Equity, a stock research company.

- --------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- --------------------------------------------------------------------------------

12
<PAGE> 116

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
Shares accounts under $1 million) or (b) on a contingent deferred basis (Class A
Share purchases 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."

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
purchases 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
charges 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 service 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 service fee or not subject to the
conversion feature. The per share net asset values of the different classes of
shares are expected to be substantially the same; from time to time, however,
the per share net asset values of the classes may differ. The net asset value
per share of each class of shares of the Fund will be determined as described in
this Prospectus under "Purchase of Shares -- Net Asset Value."

13
<PAGE> 117

- --------------------------------------------------------------------------------
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 also are offered
through members of the National Association of Securities Dealers, Inc. ("NASD")
acting as securities dealers ("dealers") and through NASD members acting as
brokers for investors ("brokers") or eligible non-NASD members acting as agents
for investors ("financial intermediaries"). The Fund reserves the right to
suspend or terminate the continuous public offering at any time and without
prior notice.

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 intermediaries 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 pays 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 or agency
commissions paid to brokers with respect to sales of Class A Shares. The sales
charge is allocated between an investor's broker, dealer or financial
intermediary and the Distributor. As indicated previously, at the discretion of
the Distributor, the entire sales charge may be reallowed to such broker, dealer
or financial intermediary. The staff of the SEC has taken the position that
brokers, dealers and financial intermediaries who

14
<PAGE> 118

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.

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 $50,000........................................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............................. 4.75 4.99 4.00
$100,000 but less than $250,000............................. 3.75 3.90 3.00
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
</TABLE>

- --------------------------------------------------------------------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, although 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

15
<PAGE> 119

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 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

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.

(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.

16
<PAGE> 120

(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.

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

(7) Accounts as to which a 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 purchases 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.

17
<PAGE> 121

DEFERRED SALES CHARGE ALTERNATIVES

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 4.00% (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.

18
<PAGE> 122

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:

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

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

19
<PAGE> 123

to be substantially the same; from time to time, however, the per share net
asset value of the different classes of shares may differ.

- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

INVESTMENT ACCOUNT. Each shareholder has an investment account under which the
investor's shares of the Fund are held by Investor Services, the Fund's transfer
agent and a wholly-owned subsidiary of Van Kampen. Investor Services performs
bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. 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.

20
<PAGE> 124

pension and 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.
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 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.

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 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 or Class C Shares are subject to the CDSC Schedule imposed by
the Participating Fund from which such Shares were originally purchased.

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 by 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.

21
<PAGE> 125

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."

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

22
<PAGE> 126

administrator, and the name and title of the individual(s) authorizing such
redemption is not shown in the account registration, a copy of the corporate
resolution or other legal documentation appointing the authorized signer and
certified within the prior 60 days must accompany the redemption request. The
redemption price is the net asset value per share next determined after the
request is received by 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.

23
<PAGE> 127

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 Privileges") 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
- --------------------------------------------------------------------------------

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

24
<PAGE> 128

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.

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 no unreimbursed distribution-related expenses with respect to Class B
Shares and Class C Shares. 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
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
- --------------------------------------------------------------------------------

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.

25
<PAGE> 129

the shares either through a fed wire or NSCC settlement. Shares remain entitled
to dividends through the day such shares are processed for payment or
redemption.

- --------------------------------------------------------------------------------
TAX STATUS
- --------------------------------------------------------------------------------

26
<PAGE> 130

difference between their basis in such sold shares of the Fund 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.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," 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 securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving 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.

Income from investments in foreign securities may be subject to foreign
income, withholding or other 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 the United States and certain countries may reduce or
eliminate such taxes.

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
non-resident aliens, may be subject to U.S. withholding tax on certain
distributions (whether received in cash or in shares) at a rate of 30% or such
lower rate as prescribed by an applicable 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
- --------------------------------------------------------------------------------

27
<PAGE> 131

information and are not intended to indicate future performance. In lieu of or
in addition to total return 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/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.

Further information about the Fund's performance is contained in its 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 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 established from time to time
in accordance with provisions of the Fund's Declaration of Trust.

The Trust does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of a 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.

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

28
<PAGE> 132

VAN KAMPEN GREAT AMERICAN
COMPANIES 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.
EXISTING SHAREHOLDERS-- P.O. Box 418256
FOR INFORMATION ON YOUR Kansas City, MO 64141-9256
EXISTING ACCOUNT PLEASE
CALL THE FUND'S TOLL-FREE Attn: Van Kampen Great American
NUMBER (800) 341-2911. Companies Fund
PROSPECTIVE INVESTORS--CALL
Custodian
YOUR BROKER OR (800) 341-2911. STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street, P.O. Box 1713
DEALERS--FOR DEALER Boston, MA 02105-1713
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS, Attn: Van Kampen Great American
OR REDEMPTIONS CALL THE Companies Fund
DISTRIBUTOR'S TOLL-FREE
NUMBER (800) 421-5666.
Legal Counsel
FOR SHAREHOLDER AND SKADDEN, ARPS, SLATE,
DEALER INQUIRIES THROUGH MEAGHER & FLOM (ILLINOIS)
TELECOMMUNICATIONS 333 West Wacker Drive
DEVICE FOR THE DEAF (TDD) Chicago, IL 60606
DIAL (800) 421-2833
Independent Accountants
FOR AUTOMATED TELEPHONE KPMG PEAT MARWICK LLP
SERVICES DIAL (800) 847-2424 Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601

<PAGE> 133

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

GREAT AMERICAN
COMPANIES FUND

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

P R O S P E C T U S
SEPTEMBER 30, 1998

[VAN KAMPEN FUNDS LOGO]
<PAGE> 134

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

VAN KAMPEN

PROSPECTOR FUND
- --------------------------------------------------------------------------------

Van Kampen Prospector Fund (the "Fund") is a diversified, open-end
management investment company, commonly known as a mutual fund. The Fund's
investment objective is to seek capital growth and income. The Fund will seek to
achieve its investment objective by investing primarily in a diversified
portfolio of income producing equity securities, including dividend paying
common and preferred stocks and income securities convertible into common or
preferred stocks. There is no assurance that the Fund will achieve its
investment objective. The Fund is organized as a separate series of Van Kampen
Equity Trust (the "Trust").

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

A Statement of Additional Information, dated September 30, 1998, containing
additional information about the Fund is hereby incorporated by reference 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 SEPTEMBER 30, 1998.

<PAGE> 135

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 4
Annual Fund Operating Expenses and Example.................. 5
Financial Highlights........................................ 7
The Fund.................................................... 8
Investment Objective and Policies........................... 8
Portfolio Securities........................................ 8
Investment Practices........................................ 10
Investment Advisory Services................................ 13
Alternative Sales Arrangements.............................. 14
Purchase of Shares.......................................... 15
Shareholder Services........................................ 21
Redemption of Shares........................................ 24
Distribution and Service Plans.............................. 25
Distributions from the Fund................................. 26
Tax Status.................................................. 27
Fund Performance............................................ 29
Description of Shares of the Fund........................... 30
Additional Information...................................... 30
</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> 136

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

THE FUND. Van Kampen Prospector Fund (the "Fund") is a separate, diversified
series of Van Kampen Equity 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 investment objective of the Fund is to seek capital
growth and income. There is no assurance that the Fund will achieve its
investment objective. See "Investment Objective and Policies."

INVESTMENT POLICY. The Fund will seek to achieve its investment objective by
investing primarily in a diversified portfolio of income producing equity
securities, including dividend paying common and preferred stocks and income
securities convertible into common or preferred stock. The net asset value per
share of the Fund may increase or decrease depending on changes in the
securities markets and other factors affecting the issuers of securities in
which the Fund may invest. See "Investment Objective and Policies."

INVESTMENT PRACTICES. The Fund may invest up to 25% of its assets in foreign
securities. Subject to certain limitations, the Fund may enter into strategic
transactions, lend its portfolio securities, and enter into repurchase
agreements with selected commercial banks and broker-dealers. 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."

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. Dividends from net investment income are
distributed quarterly. Realized capital gains, if any, are made 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 the
different distribution and service fees and administrative expenses relating to
each class of shares will be borne exclusively by the respective class of shares
and may cause the distributions relating to the different classes of shares to
differ. See "Distributions from the Fund."

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

3
<PAGE> 137

- --------------------------------------------------------------------------------
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 a
percentage of the offering price)...................... 5.75%(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--5.00% Year
Year 2--4.00% 1--1.00%
Year 3--3.00% After--None
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage of amount redeemed)..... None None None
Exchange fees............................................ None None None
</TABLE>

- --------------------------------------------------------------------------------
(1) Reduced on investments of $50,000 or more. See "Purchase of Shares -- Class
A Shares."

4
<PAGE> 138

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees(1) (as a percentage of average daily net
assets; after fee waiver)................................. 0.00% 0.00% 0.00%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.00% 0.00%(3) 0.00%(3)
Other Expenses(1) (as a percentage of average daily net
assets; after expense reimbursement)...................... 1.25% 1.25% 1.25%
Total Expenses(1) (as a percentage of average daily net
assets; after fee waiver and expense reimbursement)....... 1.25% 1.25% 1.25%
</TABLE>

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

(1) If the Adviser did not waive its fees for the period ended June 30, 1998,
"Management Fees" would have been 0.70% for each class of shares, "Other
Expenses" would have been 6.67% for each class of shares and "Total
Expenses" would have been 7.37% for each class of shares.

(2) No 12b-1 fees or service fees were accrued by the Fund for the period ended
June 30, 1998 because the Fund was not actively distributing its shares
during such period. If the Fund had been actively distributing its shares
during the period ended June 30, 1998, 12b-1 and service fees would have
been 0.25%, 1.00% and 1.00% for Class A Shares, Class B Shares and Class C
Shares, respectively. Such amounts include 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
charges for distribution-related expenses. The asset based sales charge with
respect to Class C Shares includes 0.75% (as a percentage of net assets)
paid to investors' brokers-dealers as sales compensation. See "Distribution
and Service Plans."

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

5
<PAGE> 139

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 1.25% for Class
A Shares, 1.25% for Class B Shares and 1.25% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at
the end of each time period:
Class A Shares............................................ $70 $ 95 $122 $200
Class B Shares............................................ $63 $ 70 $ 84 $151*
Class C Shares............................................ $23 $ 40 $ 69 $151
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of
each period:
Class A Shares............................................ $70 $ 95 $122 $200
Class B Shares............................................ $13 $ 40 $ 69 $151*
Class C Shares............................................ $13 $ 40 $ 69 $151
</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 reflects
the lower aggregate 12b-1 and service fees applicable to such shares after
conversion to Class A Shares. As the Fund's assets increase, the fees waived or
expenses reimbursed by the Adviser are expected to decrease. Accordingly, it is
unlikely that future expenses as projected will remain consistent with those
determined based on the "Annual Fund Operating Expense" table. 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,"
"Investment Advisory Services," "Distribution and Service Plans" and "Redemption
of Shares."

6
<PAGE> 140

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 the
periods indicated. The financial highlights have been audited by KPMG Peat
Marwick LLP, independent accountants, for 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 CLASS B SHARES
------------------------------------------------- -----------------------
DECEMBER 27, 1995
YEAR ENDED JUNE 30, (COMMENCEMENT OF YEAR ENDED JUNE 30,
------------------------ INVESTMENT OPERATIONS) -----------------------
1998 1997(A) TO JUNE 30, 1996 1998 1997(A)
------------- -------- ---------------------- ------------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $ 13.473 $ 11.285 $ 10.000 $13.473 $11.285
-------- -------- -------- ------- -------
Net Investment Income........................... 0.131 0.115 0.072 0.131 0.113
Net Realized and Unrealized Gain................ 3.924 2.996 1.239 3.923 3.020
-------- -------- -------- ------- -------
Total from Investment Operations................. 4.055 3.111 1.311 4.054 3.133
-------- -------- -------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income............................. 0.275 0.143 0.026 0.275 0.165
Distributions from Net Realized Gain............ 1.279 0.780 0.000 1.279 0.780
-------- -------- -------- ------- -------
Total Distributions.............................. 1.554 0.923 0.026 1.554 0.945
-------- -------- -------- ------- -------
Net Asset Value, End of the Period............... $ 15.974 $ 13.473 $ 11.285 $15.973 $13.473
======== ======== ======== ======= =======
Total Return*(b)................................. 31.65% 29.11% 13.10%** 31.65% 29.11%
Net Assets at End of the Period (In thousands)... $1,619.1 $1,229.0 $ 78.9 $ 116.0 $ 88.0
Ratio of Expenses to Average Net Assets*(c)...... 1.28% 1.55% 1.33% 1.28% 1.55%
Ratio of Net Investment Income to Average Net
Assets*......................................... 0.74% 1.19% 1.34% 0.74% 0.86%
Portfolio Turnover............................... 132% 104% 69%** 132% 104%
- ----------------
* If certain expenses had not been assumed by the Adviser, total return would have been lower and the ratios would have been
as follows:
Ratio of Expenses to Average Net Assets......... 7.40% 18.41% 20.75% 7.40% 18.41%
Ratio of Net Investment Income to Average Net
Assets......................................... (5.38)% (15.97)% (18.07)% (5.38)% (16.30)%
**Non-Annualized

<CAPTION>
CLASS B SHARES CLASS C SHARES
---------------------- ------------------------------------------------
DECEMBER 27, 1995 DECEMBER 27, 1995
(COMMENCEMENT OF YEAR ENDED JUNE 30, (COMMENCEMENT OF
INVESTMENT OPERATIONS) ----------------------- INVESTMENT OPERATIONS)
TO JUNE 30, 1996 1998 1997(A) TO JUNE 30, 1996
---------------------- ------------- ------- ----------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $10.000 $13.473 $11.285 $10.000
------- ------- ------- -------
Net Investment Income........................... 0.072 0.131 0.113 0.072
Net Realized and Unrealized Gain................ 1.239 3.923 3.020 1.239
------- ------- ------- -------
Total from Investment Operations................. 1.311 4.054 3.133 1.311
------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income............................. 0.026 0.275 0.165 0.026
Distributions from Net Realized Gain............ 0.000 1.279 0.780 0.000
------- ------- ------- -------
Total Distributions.............................. 0.026 1.554 0.945 0.026
------- ------- ------- -------
Net Asset Value, End of the Period............... $11.285 $15.973 $13.473 $11.285
======= ======= ======= =======
Total Return*(b)................................. 13.19%** 31.65% 29.11% 13.19%**
Net Assets at End of the Period (In thousands)... $ 73.4 $ 116.0 $ 88.0 $ 73.4
Ratio of Expenses to Average Net Assets*(c)...... 1.33% 1.28% 1.55% 1.33%
Ratio of Net Investment Income to Average Net
Assets*......................................... 1.34% 0.74% 0.86% 1.34%
Portfolio Turnover............................... 69%** 132% 104% 69%**
- ----------------
* If certain expenses had not been assumed by the
as follows:
Ratio of Expenses to Average Net Assets......... 20.75% 7.40% 18.41% 20.75%
Ratio of Net Investment Income to Average Net
Assets......................................... (18.07)% (5.38)% (16.30)% (18.07)%
**Non-Annualized
</TABLE>

- ----------------
(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.

(c) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by 0.03%, 0.30% and 0.04% for the
years ended June 30, 1998 and 1997, and for the period ending June 30, 1996,
respectively.

See Financial Statements and Notes Thereto

7
<PAGE> 141

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

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

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of the Fund is to seek capital growth and income.
This objective is fundamental and cannot be changed without approval of the
shareholders of the Fund. There can be no assurance that the Fund will achieve
its investment objective.

The Fund will seek to achieve its investment objective by investing primarily
in a diversified portfolio of income producing equity securities, including
dividend paying common and preferred stocks and income securities convertible
into common or preferred stock. The Fund generally invests in dividend paying
equity securities of larger capitalization companies that are believed by the
Adviser to be selling at low valuations relative to historical norms and to
future earnings prospects. Larger capitalization companies generally are those
companies consisting of the approximately 500 largest capitalization companies
listed on national securities exchanges and automated trading systems.

The Fund may invest in investment grade income securities for purposes of
growth or income, cash management or as a temporary defensive measure. The Fund
may invest in shares of other investment companies that pursue investment
objectives consistent with that of the Fund, to the extent permitted by
applicable law. The Fund may invest up to 25% of its total assets in securities
of foreign issuers.

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other class of securities, including such
entity's debt securities, preferred stock and other senior equity securities.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. In selecting common stocks for investment, the Fund
will focus primarily on the security's potential for appreciation and on its
dividend paying capacity.

OTHER EQUITY SECURITIES. The Fund may invest in other equity securities,
including convertible securities and preferred stocks. A convertible security is
a bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or a different issuer within a particular period of time at
a specified price or formula. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, convertible securities have characteristics similar to
nonconvertible income securities in that they ordinarily provide a stable stream
of income with generally higher yields than those of common stocks of the

8
<PAGE> 142

same or similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to comparable
nonconvertible securities. The Fund may invest in adjustable or fixed rate
preferred stock. Preferred stock generally has a preference as to dividends and
liquidation over an issuer's common stock but ranks junior to debt securities in
an issuer's capital structure. Unlike interest payments on debt securities,
preferred stock dividends are payable only if declared by the issuer's board of
directors. Preferred stock also may be subject to optional or mandatory
redemption provisions.

INCOME SECURITIES. The Fund may invest in fixed-income securities which, at
the time of purchase, are rated at least BBB by Standard & Poor's Ratings Group
("S&P"), Baa by Moody's Investors Services, Inc. ("Moody's") or comparably rated
by a nationally recognized statistical rating organization, or if unrated, are
considered by the Adviser to be of comparable quality to securities so rated.
Income securities rated A by S&P or A by Moody's or higher generally are
regarded as high grade and as having a strong to outstanding capacity to pay
interest or dividends and repay principal or capital. Medium grade securities
(i.e., securities rated BBB by S&P or Baa by Moody's) are regarded as having an
adequate capacity to pay interest or dividends, and repay principal, although
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make such payments. Securities rated Baa are regarded by
Moody's as having some speculative characteristics. For a description of such
ratings, see the Statement of Additional Information.

The net asset value of the Fund will change with changes in the value of its
portfolio securities. The values of income securities may change as interest
rate levels fluctuate. To the extent that the Fund invests in income securities,
the net asset value of the Fund can be expected to change as general levels of
interest rates fluctuate. When interest rates decline, the value of a portfolio
invested in income securities generally can be expected to rise. Conversely,
when interest rates rise, the value of a portfolio invested in income securities
can be expected to decline. Volatility may be greater during periods of general
economic uncertainty.

The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
rating organization) or, in the case of unrated income securities, the Adviser,
downgrades its assessment of the credit characteristics of a particular issuer.
In determining whether the Fund will retain or sell such a security the Adviser
may consider such factors as the Adviser's assessment of the credit quality of
the issuer of such security, the price at which such security could be sold and
the rating, if any, assigned to such security by other nationally recognized
statistical rating organizations.

9
<PAGE> 143

purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. The inability to dispose of portfolio securities due
to settlement problems could result either in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. Costs associated with transactions in foreign securities,
including custodial costs and foreign brokerage commissions, are generally
higher than with transactions in United States securities. In addition, the Fund
will incur costs in connection with conversions between various currencies.
There is generally less government supervision and regulation of exchanges,
financial institutions and issuers in foreign countries than there is in the
United States.

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

In connection with the investment policies described above, the Fund may
engage in the investment practices described below. These practices entail
risks. The investment practices described below are not fundamental and can be
changed without a vote of the shareholders of the Fund.

10
<PAGE> 144

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.

"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 or is earned by the Fund on portfolio 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 such securities at delivery may be more or less than
their purchase price and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage. 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.

11
<PAGE> 145

exchange rates for investment purposes, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Any or all of these investment techniques may be used at
any time and there is no particular strategy that dictates the use of one
technique rather than another, as use of any Strategic Transaction is a function
of numerous variables including market conditions. The ability of the Fund to
utilize these Strategic Transactions successfully will depend on the Adviser's
ability to predict pertinent market movements, which cannot be assured. The Fund
will comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.

Strategic Transactions 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 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 a
specific 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. To the extent that a futures contract or an option thereon is used to
protect against possible changes in the market value of securities that the Fund
anticipates acquiring and the Fund subsequently does not acquire such
securities, the Fund will have incurred the transactional expenses associated
with entering into such transaction and will be subject to the risks inherent in
an unhedged purchase of such futures contract or option. 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. Income earned or deemed to be earned, if any, by the Fund from its
Strategic Transactions will generally be taxable income of the Fund. See "Tax
Status."

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 is given to those firms which supply research and other services
in addition to execution services. If it is believed in the best interests of
the Fund, the Adviser may place portfolio transactions with brokers who provide
research or other services, even if the Fund will have to pay a higher
commission than would be the case if no weight were given to the brokers
furnishing of such 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 and this will be done only when, in the opinion of the
Adviser, the amount of additional commission or increased costs is reasonable in
relation to the value of such services to the Fund.
12
<PAGE> 146

The Adviser may place portfolio transactions, to the extent permitted by law,
with brokerage firms which are affiliated with the Fund, the Adviser or the
Distributor and with firms participating in the distribution of the Fund if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. See "Portfolio
Transactions and Brokerage Allocation" in the Statement of Additional
Information for more information.

PORTFOLIO TURNOVER. The Fund purchases securities which are believed by the
Adviser to have potential for capital growth and income. Securities are disposed
of in situations where it is believed that potential for such capital growth has
lessened or that other securities have a greater potential. Therefore, the Fund
may purchase and sell securities without regard to the length of time the
security is to be, or has been held. The rate may exceed 100%, which is higher
than that of many other investment companies. A 100% turnover rate occurs, for
example, if all the Fund's portfolio securities are replaced during one year.
High portfolio activity increases the Fund's transaction costs, including
brokerage commissions and may result in the realization of more short-term
capital gains than if the Fund had low portfolio turnover. The Fund's annual
portfolio turnover rate is shown in the table of "Financial Highlights."
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS PERCENTAGE PER ANNUM
------------------------ --------------------
<S> <C>
First $500 million.......................................... 0.70 of 1%
Next $500 million........................................... 0.65 of 1%
Over $1 billion............................................. 0.60 of 1%
</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), 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.

13
<PAGE> 147

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

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by B.
Robert Baker. Mr. Baker has been primarily responsible for managing the Fund's
investment portfolio since its inception. Mr. Baker has been Vice President and
Portfolio Manager of the Adviser and Van Kampen Asset Management Inc. ("Asset
Management") since 1995. Prior to that time, Mr. Baker was an Associate
Portfolio Manager of Asset Management. Jason Leder and Edie Terreson are
responsible as co-managers for the day-to-day management of the Fund's
investment portfolio. Mr. Leder has been an Associate Portfolio Manager of the
Adviser and Asset Management since October 1996. Prior to that time, Mr. Leder
was Associate Portfolio Manager of Asset Management. Prior to February 1995, Mr.
Leder was a Securities Analyst with Salomon Brothers, Inc. Prior to August 1992,
Mr. Leder was a Securities Analyst with Fidelity Management and Research. Mr.
Leder has been a co-manager of the Fund since inception. Ms. Terreson has been
Assistant Vice President of the Adviser and Asset Management since December
1997. Prior to that time, Ms. Terreson was Associate Portfolio Manager of Asset
Management. Prior to March 1997, Ms. Terreson was a Securities Analyst and
Associate Portfolio Manager with Delaware Investment Advisers. Prior to May
1996, Ms. Terreson was a Securities Analyst and Associate Portfolio Manager with
J.W. Seligman & Co. Mr. Terreson has been a co-manager of the Fund since May
1997.

- --------------------------------------------------------------------------------
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 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
Shares accounts under $1 million) or (b) on a contingent deferred basis (Class A
Share purchases 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."

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
purchases 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

14
<PAGE> 148

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 fee 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 fee 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."

- --------------------------------------------------------------------------------
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 also are offered
through members of the National Association of Securities Dealers, Inc. ("NASD")
acting as securities dealers ("dealers") and through NASD members acting as
brokers for investors ("brokers") or eligible non-NASD members acting as agents
for investors ("financial intermediaries"). The Fund reserves the right to
suspend or terminate the continuous public offering at any time and without
prior notice.

15
<PAGE> 149

financial intermediaries 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
pays 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 or agency
commissions paid to brokers with respect to sales of Class A Shares. The sales
charge is allocated between an investor's broker, dealer or financial
intermediary and the Distributor. As indicated previously, at the discretion of
the Distributor, the entire sales charge may be reallowed to such broker, dealer
or financial intermediary. The staff of the SEC has taken the position that
brokers, dealers and 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.

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 $50,000........................................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............................. 4.75 4.99 4.00
$100,000 but less than $250,000............................. 3.75 3.90 3.00
$250,000 but less than $500,000............................. 2.75 2.83 2.25
$500,000 but less than $1,000,000........................... 2.00 2.04 1.75
$1,000,000 or more*......................................... * * *
</TABLE>

- --------------------------------------------------------------------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, although 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

16
<PAGE> 150

OTHER PURCHASE PROGRAMS

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.

17
<PAGE> 151

(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.

(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.

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

(7) Accounts as to which a 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.

18
<PAGE> 152

sole organization 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.

DEFERRED SALES CHARGE ALTERNATIVES

In determining whether a CDSC is applicable to a redemption of CDSC Shares, it
is 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 4.00% (the
applicable rate in the second year after purchase).

19
<PAGE> 153

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 will not change the price an investor will pay for CDSC Shares
or the amount that the Fund will receive 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 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
DOLLAR AMOUNT SUBJECT TO CHARGE
YEAR SINCE PURCHASE --------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C>
First....................................................... 5.00%
Second...................................................... 4.00%
Third....................................................... 3.00%
Fourth...................................................... 2.50%
Fifth....................................................... 1.50%
Sixth 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."

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

20
<PAGE> 154

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

- --------------------------------------------------------------------------------
SHAREHOLDER 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.

21
<PAGE> 155

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.
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
exists for such shareholder. Both accounts must be of the same type, either
non-retirement or retirement. If the accounts are retirement accounts, they must
both be for the same class and of the same type of retirement plan (e.g. IRA,
403(b)(7), 401(k) 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.

22
<PAGE> 156

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.

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 the redemption of shares is a taxable
event.

23
<PAGE> 157

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

24
<PAGE> 158

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.

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 Privileges") 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
- --------------------------------------------------------------------------------

25
<PAGE> 159

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 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.

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 no unreimbursed distribution-related expenses with respect to Class B
Shares and Class C Shares. 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
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 dividends quarterly to holders of each class of shares
from net investment income and net short-term capital gains attributable to each
respective class. The Fund also presently intends to make distributions of net
long-term capital gains, if any, annually. Dividends are composed of all or a
portion of investment income earned by each class of shares of the Fund plus all
or a portion of net short-term capital gains by the Fund on transactions in
securities and futures and options hedging

26
<PAGE> 160

transactions, less the expenses attributable to the respective class. Long-term
capital gains distributions consist of the Fund's gain on transactions in
securities and futures and options hedging transactions, 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.

- --------------------------------------------------------------------------------
TAX STATUS
- --------------------------------------------------------------------------------

27
<PAGE> 161

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

The maximum tax rate applicable to net capital gains recognized by individuals
and other noncorporate 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. A special 28% tax rate may apply to a
portion of the capital gain dividends paid by the Fund with respect to its
taxable year ended June 30, 1998.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," 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 securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving 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.

28
<PAGE> 162

extent of net mark-to-market gain previously included by the Fund pursuant to
the election for prior taxable years. The Fund may be required to include in its
taxable income for the first taxable year in which it makes a PFIC
Mark-to-Market Election an amount equal to the interest charge that would
otherwise accrue with respect to distributions on, or dispositions of, the PFIC
stock. This amount would not be deductible from the Fund's taxable income. The
PFIC Mark-to-Market Election applies to the taxable year for which made and to
all subsequent taxable years, unless the Internal Revenue Service consents to
revocation of the election. By making the PFIC Mark-to-Market Election, the Fund
could ameliorate the adverse tax consequences arising from its ownership of PFIC
stock, but in any particular year may be required to recognize income in excess
of the distributions it receives from the PFIC and proceeds from the
dispositions of PFIC stock.

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information will include the average total return of the Fund calculated on a
compounded basis for specified periods of time. Such total return will be
calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. Such calculations are based on
historical information and are not intended to indicate future performance. In
lieu of or in addition to total return calculations, such information may
include performance rankings and similar information from independent
organizations such as Lipper Analytical Services, Inc. or other 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/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.

29
<PAGE> 163

- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

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 established from time to time
in accordance with provisions of the Fund's Declaration of Trust.

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

30
<PAGE> 164

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

PROSPECTOR 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 Prospector Fund

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

Attn: Van Kampen Prospector 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> 165

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

PROSPECTOR FUND

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

P R O S P E C T U S

SEPTEMBER 30, 1998

VAN KAMPEN LOGO

<PAGE> 166

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

VAN KAMPEN AGGRESSIVE GROWTH FUND

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

Van Kampen Aggressive Growth Fund (the "Fund") is a diversified, open-end
management investment company, commonly known as a mutual fund. The Fund's
investment objective is to seek capital growth. The Fund will seek to achieve
its investment objective by investing primarily in a diversified portfolio of
common stocks and other equity securities. The Fund expects to often have a
substantial portion of its assets invested in small and medium sized companies.
There can be no assurance that the Fund will achieve its investment objective.
The Fund is a separate series of Van Kampen Equity Trust (the "Trust").

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

A Statement of Additional Information, dated September 30, 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
Telecommunications 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 SEPTEMBER 30, 1998.

<PAGE> 167

- --------------------------------------------------------------------------------
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.................................................... 8
Investment Objective and Policies........................... 8
Portfolio Securities........................................ 9
Investment Practices........................................ 11
Investment Advisory Services................................ 14
Alternative Sales Arrangements.............................. 15
Purchase of Shares.......................................... 16
Shareholder Services........................................ 22
Redemption of Shares........................................ 25
Distribution and Service Plans.............................. 26
Distributions from the Fund................................. 28
Tax Status.................................................. 28
Fund Performance............................................ 31
Description of Shares of the Fund........................... 31
Additional Information...................................... 32
</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> 168

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

THE FUND. Van Kampen Aggressive Growth Fund (the "Fund") is a separate,
diversified series of Van Kampen Equity 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 investment objective is to seek capital
growth. There is no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."

INVESTMENT POLICIES AND RISKS. The Fund will seek to achieve its investment
objective by investing in a diversified portfolio of common stocks and, when
viewed appropriate, in other securities such as debt securities, preferred
stocks, convertible securities and warrants. Under normal market conditions, the
Fund will invest at least 65% of its total assets in common stock or other
equity securities believed by the Adviser at the time of investment to have an
above average potential for capital growth. The Fund expects that it often will
have a substantial portion of its assets invested in equity securities of small
and medium size companies, although the Fund is free to invest any portion of
its assets in securities of larger companies that the Adviser believes have an
above average potential for capital growth. Small and medium size companies are
companies that have a total market capitalization not greater than that of any
of the 500 largest companies whose securities are listed or admitted for trading
on a national securities exchange or market system.

Such companies often have limited or cyclical product lines, markets, or
financial resources, and may be dependent upon one or a few key people for
management. Common stock of such companies may trade at high price to earnings
ratios relative to more established companies, and rates of earnings growth may
be volatile. The securities of such companies may be subject to more abrupt or
erratic market movements than securities of more established companies or the
market averages in general.

Although the Fund will not make any investment if as a result more than 25% of
its total assets will be invested in any single industry, a significant portion
of the Fund's assets may from time to time be invested in securities of
companies in the same sector of the market. To the extent that the Fund invests
a significant portion of its assets in a limited number of market sectors, the
Fund will be more susceptible to economic, political, regulatory and other
factors influencing such sectors.

The Fund's net asset value per share will fluctuate depending on market
conditions and other factors. See "Investment Objective and Policies."

INVESTMENT PRACTICES AND RISKS. The Fund may invest up to 20% of its assets in
securities issued by non-U.S. issuers. Investments in foreign securities involve
certain risks not ordinarily associated with investments in securities of
domestic issuers, including fluctuations in foreign exchange rates, future
political and economic developments, confiscatory taxation and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions.

Subject to certain limitations, the Fund also may use various investment
techniques including options, futures and other derivatives, entering into
when-issued or delayed delivery transactions, lending portfolio securities and
entering into repurchase agreements. Such transactions entail certain risks. See
"Investment Practices."

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

3
<PAGE> 169

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. Distributions from net investment income and net
realized 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 the 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> 170

- --------------------------------------------------------------------------------
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 a percentage
of the offering price)................................... 5.75%(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--5.00% Year 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage of amount redeemed)....... None None None
Exchange fees.............................................. None None None
</TABLE>

- --------------------------------------------------------------------------------
(1) Reduced on investments of $50,000 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 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."

5
<PAGE> 171

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average daily net
assets)................................................... 0.75% 0.75% 0.75%
12b-1 Fees(1) (as a percentage of average daily net
assets)................................................... 0.25% 1.00%(2) 1.00%(2)
Other Expenses (as a percentage of average daily net
assets)................................................... 0.61% 0.62% 0.62%
Total Expenses (as a percentage of average daily net
assets)................................................... 1.61% 2.37% 2.37%
</TABLE>

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

(2) 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 1.61% for Class
A Shares, 2.37% for Class B Shares and 2.37% for Class C
Shares, (ii) 5.00% annual return and (iii) redemption at
the end of each time period:
Class A Shares............................................ $73 $105 $140 $238
Class B Shares............................................ $74 $104 $142 $252*
Class C Shares............................................ $34 $ 74 $127 $271
You would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each
period:
Class A Shares............................................ $73 $105 $140 $238
Class B Shares............................................ $24 $ 74 $127 $252*
Class C Shares............................................ $24 $ 74 $127 $271
</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. During the Fund's last fiscal year, the Adviser discontinued the
voluntary fee waivers and expense reimbursements for the Fund thus increasing
the expected total annual Fund operating expenses for future periods compared to
the historical expense ratios shown in the Fund's "Financial Highlights." 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. 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> 172

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

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------------------------------- --------------------------------------
MAY 29, 1996 MAY 29, 1996
(COMMENCEMENT OF (COMMENCEMENT OF
INVESTMENT INVESTMENT
YEAR ENDED JUNE 30, OPERATIONS) YEAR ENDED JUNE 30, OPERATIONS)
------------------- TO JUNE 30, ------------------- TO JUNE 30,
1998 1997 1996 1998 1997 1996
---------- ------ ---------------- ---------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period...... $ 9.948 $9.118 $9.430 $ 9.867 $9.112 $9.430
------- ------ ------ ------- ------ ------
Net Investment Loss.......................... (.135) (.065) (.002) (.204) (.105) (.006)
Net Realized and Unrealized Gain/Loss........ 3.863 .895 (.310) 3.798 .860 (.312)
------- ------ ------ ------- ------ ------
Total from Investment Operations.............. 3.728 .830 (.312) 3.594 .755 (.318)
------- ------ ------ ------- ------ ------
Net Asset Value, End of the Period............ $13.676 $9.948 $9.118 $13.461 $9.867 $9.112
------- ------ ------ ------- ------ ------
Total Return(a)............................... 37.49 % 9.10 % (3.29)%** 36.37 % 8.34 % (3.39)%**
======= ====== ====== ======= ====== ======
Net Assets at End of the Period (In
millions).................................... $ 117.5 $ 84.0 $ 30.3 $ 148.4 $ 94.2 $ 25.5
Ratio of Expenses to Average Net Assets*...... 1.44 % 1.30 % 1.29 % 2.20 % 2.05 % 2.06 %
Ratio of Net Investment Loss to Average Net
Assets*...................................... (1.09)% (.81)% (.50)% (1.85)% (1.55)% (1.28)%
Portfolio Turnover............................ 185 % 186 % 4 %** 185 % 186 % 4 %**

<CAPTION>
CLASS C
--------------------------------------
MAY 29, 1996
(COMMENCEMENT OF
INVESTMENT
YEAR ENDED JUNE 30, OPERATIONS)
------------------- TO JUNE 30,
1998 1997 1995
---------- ------ ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period...... $ 9.869 $9.113 $9.430
------- ------ ------
Net Investment Loss.......................... (.203) (.103) (.006)
Net Realized and Unrealized Gain/Loss........ 3.804 .859 (.311)
------- ------ ------
Total from Investment Operations.............. 3.601 .756 (.317)
------- ------ ------
Net Asset Value, End of the Period............ $13.470 $9.869 $9.113
------- ------ ------
Total Return(a)............................... 36.47 % 8.34 % (3.39)%**
======= ====== ======
Net Assets at End of the Period (In
millions).................................... $ 16.4 $ 10.8 $ 3.9
Ratio of Expenses to Average Net Assets*...... 2.20 % 2.05 % 2.05 %
Ratio of Net Investment Loss to Average Net
Assets*...................................... (1.85)% (1.54)% (1.28)%
Portfolio Turnover............................ 185 % 186 % 4 %**
</TABLE>

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

* If certain expenses had not been assumed by the Adviser, Total Return would
have been lower and the ratios would have been as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio of Expenses to Average Net Assets
(Annualized)............................. 1.61% 1.61% 2.05% 2.37% 2.35% 2.81%
Ratio of Net Investment Loss to Average Net
Assets (Annualized)...................... (1.26)% (1.12)% (1.25)% (2.02)% (1.86)% (2.04)%

<CAPTION>
<S> <C> <C> <C>
Ratio of Expenses to Average Net Assets
(Annualized)............................. 2.36% 2.35% 2.81%
Ratio of Net Investment Loss to Average Net
Assets (Annualized)...................... (2.02)% (1.85)% (2.04)%
</TABLE>

** Non-Annualized.

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

See Notes to Financial Statements.

7
<PAGE> 173

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

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

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to seek capital growth. This objective is
fundamental and cannot be changed without approval of the shareholders of the
Fund. Any income received on investments is incidental to the objective of
capital growth. There can be no assurance that the Fund will achieve its
investment objective and full consideration should be given to the risks
inherent in the investment techniques that the Fund may use.

Under normal market conditions, the Fund will invest at least 65% of its total
assets in common stock or other equity securities believed by the Adviser at the
time of investment to have an above average potential for capital growth. The
Fund expects that it often will have a substantial portion of its assets
invested in equity securities of small and medium size companies, although the
Fund is free to invest any portion of its assets in securities of larger
companies that the Adviser believes have an above average potential for capital
growth. Small and medium size companies are companies that have a total market
capitalization not greater than that of any of the 500 largest companies whose
securities are listed or admitted for trading on a national securities exchange
or market system. The Fund may invest up to 20% of its total assets (measured at
the time of investment) in securities of foreign issuers. While the Fund will
invest primarily in common stocks, it also may invest in other securities such
as debt securities, preferred stocks, convertible securities and warrants.

The Fund's primary approach is to seek what the Adviser believes to be
unusually attractive growth opportunities on an individual company basis. The
Adviser will utilize a bottom-up, disciplined approach in selecting companies
for investment. The Fund generally will seek companies that appear to be
positioned to produce an attractive level of future earnings through the
development of new products, services or markets or as a result of changing
market or industry conditions. The Adviser expects that many of the companies in
the Fund's portfolio will at the time of investment be experiencing high rates
of earnings growth. Investments in such companies may offer greater
opportunities for growth of capital than do companies having more established
products, services or markets or in later stages of the growth cycle, but also
involve special risks. Such companies often have limited or cyclical product
lines, markets, or financial resources, and may be dependent upon one or a few
key people for management. Common stock of such companies may trade at high
price to earnings ratios relative to more established companies, and rates of
earnings growth may be volatile. The securities of such companies may be subject
to more abrupt or erratic market movements than securities of more established
companies or the market averages in general. In addition, securities of small
capitalization companies generally are traded in lower volume than those issued
by larger companies.

The companies and industries in which the Fund invests will change over time
depending on the Adviser's analyses of growth opportunities. Although the Fund
will not make any investment if as a result more than 25% of its total assets
will be invested in any single industry, a significant portion of the Fund's
assets may from time to time be invested in securities of companies in the same
sector of the market. This may occur, for example, when the Adviser believes
that several companies in the same sector each offer unusually attractive growth
opportunities. To the extent that the Fund invests a significant portion of its
assets in a limited number of market sectors, the Fund will be more susceptible
to economic, political, regulatory and other factors influencing such sectors.

The Fund may also invest in special situations. Special situations typically
involve new management, special products and techniques, unusual developments,
mergers or liquidations. Investments in unseasoned companies and special
situations often involve much greater risks than are inherent in ordinary
investments, because securities of such companies may be more likely to
experience unexpected fluctuations in price. There is no direct limitation on
the Fund's ability to invest in special situations as a class. The Fund's
investments in special situations will be subject to the Fund's investment
policies and restrictions, including its fundamental investment restrictions.
These policies and restrictions may restrict the

8
<PAGE> 174

Fund's ability to make particular special situation investments. See "Investment
Policies and Restrictions" in the Statement of Additional Information. Because
prices of common stocks and other securities fluctuate, the value of an
investment in the Fund will vary based upon the Fund's investment performance.

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 the Fund should not be used as a
trading vehicle.
- --------------------------------------------------------------------------------
PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------

COMMON STOCK. Common stocks are shares of a corporation or other entity that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without preference over any other security holder or class of shareholders,
including holders of such entity's debt securities, preferred stock and other
senior equity securities. Common stock usually carries with it the right to vote
and frequently an exclusive right to do so. In selecting common stocks for
investment, the Fund will focus primarily on the security's potential for
capital growth.

INCOME SECURITIES. The Fund may invest in income securities, which include
primarily debt securities of various maturities. The Fund will only invest in
income securities that are investment grade at the time of investment.
Investment grade securities are securities that are rated as least BBB by
Standard & Poor's Ratings Group ("S&P"), Baa by Moody's Investors Service, Inc.
("Moody's") or comparably rated by any nationally recognized rating
organization, or, if unrated, are considered by the Adviser to be of comparable
quality to securities so rated. Income securities A or higher by S&P or A or
higher by Moody's generally are regarded as high grade and as having a strong to
outstanding capacity to pay interest or dividends and repay principal or
capital. Medium grade securities (i.e. securities rated BBB by S&P or Baa by
Moody's) are regarded as having an adequate capacity to pay interest or
dividends, and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make such
payments. Securities rated Baa are regarded by Moody's as having some
speculative characteristics. For a description of such ratings see the Statement
of Additional Information incorporated by reference into this Prospectus.

The net asset value of the Fund will change with changes in the value of the
portfolio securities. The values of income securities may change as interest
rate levels fluctuate. When interest rates decline, the value of a portfolio
invested in income securities generally can be expected to rise. Conversely,
when interest rates rise, the value of a portfolio invested in income securities
can be expected to decline. Volatility may be greater during periods of general
economic uncertainty.

The foregoing policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
rating organization) or, in the case of unrated income securities, the Adviser,
downgrades its assessment of the credit characteristics of a particular issuer.
In determining whether the Fund will retain or sell such a security the Adviser
may consider such factors as the Adviser's assessment of the credit quality of
the issuer of such security, the price at which such

9
<PAGE> 175

security could be sold and the rating, if any, assigned to such security by
other nationally recognized statistical rating organizations.

WARRANTS. The Fund may invest up to 5% of its assets in warrants (measured at
the time of investment), which are securities permitting, but not obligating,
their holders to subscribe for other securities. Warrants do not carry with them
the right to dividends or voting rights with respect to the securities that they
entitle their holder to purchase, and they do not represent any rights in the
assets of the issuer. As a result, an investment in warrants may be considered
to be more speculative than most other types of equity investment. In addition,
the value of a warrant does not necessarily change with the value of the
underlying securities and a warrant ceases to have value if it is not exercised
prior to its expiration date. The Fund may retain in its portfolio any
securities received upon the exercise of a warrant.

FOREIGN SECURITIES. The Fund may invest up to 20% of the value of its total
assets in securities of foreign issuers (measured at the time of investment).
Investments in securities of foreign entities and securities denominated in
foreign currencies involve risks not typically involved in domestic investment,
including fluctuations in foreign exchange rates, future foreign political and
economic developments, and the possible imposition of exchange controls or other
foreign or United States governmental laws or restrictions applicable to such
investments. Since the Fund may invest in securities denominated or quoted in
currencies other than the United States dollar, changes in foreign currency
exchange rates may affect the value of investments in the portfolio and the
accrued income and unrealized appreciation or depreciation of investments.
Changes in foreign currency exchange rates relative to the U.S. dollar will
affect the U.S. dollar value of the Fund's assets denominated in that currency
and the Fund's yield on such assets.

10
<PAGE> 176

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

In connection with the investment policies described above, the Fund also may
engage in strategic transactions, enter into currency transactions, purchase and
sell securities on a "when issued" and "delayed delivery" basis, enter into
repurchase and reverse repurchase agreements and lend its portfolio securities,
in each case, subject to the limitations set forth below. These investments
entail risks.

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, equity and fixed-income indices and other financial
instruments, purchase and sell financial futures contracts and options thereon,
enter into 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 currencies or currency
futures. Collectively, all of 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, 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 interest rate exposure of the
Fund's portfolio, to protect against changes in currency exchange rates, or to
establish a position in the derivatives markets as a temporary substitute for
purchasing or selling particular securities.

The Fund expects to utilize options, futures contracts and options thereon in
several different ways, depending upon the status of the Fund's portfolio and
the Adviser's expectations concerning the securities markets. In times of stable
or rising stock prices, the Fund generally seeks to obtain maximum exposure to
the stock market, i.e., to be "fully invested." Nevertheless, even when the Fund
is fully invested, prudent management requires that at least a small portion of
assets be available as cash to honor redemption requests and for other
short-term needs. The Fund may also have cash on hand that has not yet been
invested. The portion of the Fund's assets that is invested in cash equivalents
does not fluctuate with stock market prices, so that, in times of rising market
prices, the Fund may underperform the market in proportion to the amount of cash
equivalents in its portfolio. By purchasing stock index futures contracts,
however, the Fund can "equitize" the cash portion of its assets and obtain
equivalent performance to investing 100% of its assets in equity securities.

If the Adviser forecasts a market decline, the Fund may take a defensive
position, reducing its exposure to the stock market by increasing its cash
position. By selling stock index futures contracts instead of portfolio
securities, a similar result can be achieved to the extent that the performance
of the stock index futures contracts correlates to the performance of the Fund's
portfolio securities. Sale of futures contracts could frequently be accomplished
more rapidly and at less cost than the sale of actual securities in the Fund's
portfolio. Once the desired hedged position has been effected, the Fund could
then liquidate securities in a more deliberate manner, reducing its futures
position simultaneously to maintain the desired balance, or it could maintain
the hedged position.

As an alternative to selling stock index futures contracts, the Fund can
purchase stock index puts (or stock index futures puts) to hedge the portfolio's
risk in a declining market. Since the value of a put increases as the index
declines below a specified level, the portfolio's value is protected against a
market decline to the degree the performance of the index correlates with the
performance of the Fund's investment portfolio. If the market remains stable or
advances, the Fund can refrain from exercising the put and its portfolio will
participate in the advance, having incurred only the premium cost for the put.

11
<PAGE> 177

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. Certain Strategic Transactions may provide the
opportunity for increased income, but may have characteristics similar to
leverage. As a result, increases and decreases in the net asset value of the
Fund may be larger than comparable changes in the net asset value of the Fund if
the Fund did not engage in such Strategic Transactions. 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. Income earned or deemed to be earned, if any, by the Fund from its
Strategic Transactions will generally be taxable income of the Fund. See "Tax
Status."

REPURCHASE AGREEMENTS. The Fund may use up to 25% of its assets to enter into
repurchase agreements with selected banks and broker-dealers under which the
Fund acquires securities and agrees to resell the securities at an agreed upon
time and at an agreed upon price. The Fund accrues as interest the difference
between the amount it pays for the securities and the amount it receives upon
resale. 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. The Adviser will monitor the value of the
underlying security in this regard. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund will enter into 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 repurchase agreement with a bank or broker-dealer, the Fund will take
into account the credit-worthiness of such party and will monitor its
credit-worthiness on an ongoing basis. In the event of default by such party,
the delays and expenses potentially involved in establishing the Fund's rights
to, and in liquidating, the security may result in loss to the Fund. Repurchase
agreements that mature in more than seven days are treated by the Fund as
illiquid securities and are subject to 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 or is earned by the Fund on portfolio 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 such securities at delivery may be more or less than
their purchase price, and yields generally available on such securities when
delivery occurs may be higher or lower than yields on such 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. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objectives and policies and not for the
purposes of

12
<PAGE> 178

investment leverage. 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.

LOANS OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to selected commercial
banks or broker-dealers up to a maximum of 50% of the assets of the Fund. Such
loans must be callable at any time and be continuously secured by collateral
deposited by the borrower in a segregated account with the Fund's custodian
consisting of cash or liquid securities, which collateral is equal at all times
to at least 100% of the value of the securities loaned, including accrued
interest. The Fund will receive amounts equal to earned income for having made
the loan. Any cash collateral pursuant to these loans will be invested in
short-term instruments. The Fund is the beneficial owner of the loaned
securities in that any gain or loss in the market price during the loan inures
to the Fund and its shareholders. Thus, when the loan is terminated, the value
of the securities may be more or less than their value at the beginning of the
loan. In determining whether to lend its portfolio securities to a bank or
broker-dealer, the Fund will take into account the credit-worthiness of such
borrower and will monitor such credit-worthiness on an ongoing basis in as much
as default by the other party may cause delays or other collection difficulties.
The Fund may pay finders' fees in connection with loans of its portfolio
securities.

BORROWINGS. The Fund is authorized to borrow money (including entering into
reverse repurchase agreements) to the full extent permitted under the Investment
Company Act of 1940, as amended (the "1940 Act"), although it has no intention
to do so in an amount exceeding 5% of the Fund's total assets or for other than
temporary purposes, such as clearances of portfolio transactions, share
repurchase and payment of dividends and distributions. Accordingly, the Fund
will not acquire additional securities during any period in which its borrowings
exceed 5% of the Fund's total assets. Borrowing by the Fund creates an
opportunity for increased net income but, at the same time, creates special risk
considerations. See the Fund's Statement of Additional Information for a more
complete discussion of borrowings and certain of the associated risks.

SHORT-TERM TRADING. Under certain market conditions, the Fund may seek
profits by engaging in short-term trading. The length of time the Fund has held
a particular security is not generally a consideration in investment decisions.
A change in the securities owned by the Fund is known as "portfolio turnover."
The Fund anticipates that the annual portfolio turnover rate of the Fund's
portfolio may exceed 100% but should generally be less than 200%. Portfolio
turnover generally involves expense to the Fund, including brokerage commissions
or dealer mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities. To the extent short-term trading strategies
are used, the Fund's portfolio turnover rate and expenses may be higher than
that of other mutual funds. Such transactions may also result in realization of
taxable capital gains. See "Tax Status."

SHORT SALES. The Fund may engage in "short-sales against the box." A short
sale is a transaction in which the Fund would sell securities it does not own
(but has borrowed) in anticipation of a decline in the market price of
securities. A short-sale against the box is a transaction where at all times
when the short position is open the Fund owns an equal amount of such securities
or securities convertible or exchangeable into such securities without payment
of additional consideration. The Fund will not engage in short sales other than
against the box.

13
<PAGE> 179

RISKS. The Fund's investment in certain portfolio securities and other
investment practices entail certain risks. Please see the discussion of such
risks contained under "Investment Objective and Policies", "Portfolio
Securities" and "Investment Practices."

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.

The Adviser is also 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 is 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 which are affiliated with the Fund, the Adviser or the
Distributor or with firms participating in the distribution of the Fund if it
reasonably believes that the quality of execution and the Commission are
comparable to that available from other qualified firms. 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 $65
billion under management or supervision. Van Kampen's more than 50 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 sponsor of the funds mentioned
above, is a wholly-owned subsidiary of Van Kampen. Van Kampen is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co. The address of the Adviser is One
Parkview Plaza, Oakbrook Terrace, Illinois 60181.

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 follows:

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS % PER ANNUM
------------------------ -----------
<S> <C>
First $500 million.......................................... 0.75 of 1.00%
Next $500 million........................................... 0.70 of 1.00%
Over $1 billion............................................. 0.65 of 1.00%
</TABLE>

14
<PAGE> 180

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), 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 charge 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.

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by Gary
M. Lewis. Mr. Lewis has been primarily responsible for managing the Fund's
investment portfolio since its inception. Mr. Lewis has been Senior Vice
President and Portfolio Manager of the Adviser since June 1995 and of Van Kampen
Asset Management Inc. ("Asset Management") since October 1995. Prior to that
time, Mr. Lewis was Vice President and Portfolio Manager of Asset Management.
Dudley Brickhouse, David Walker and Janet Willis are responsible as co-managers
for the day-to-day management of the Fund's investment portfolio. Mr. Brickhouse
has been an Associate Portfolio Manager of the Adviser and Asset Management
since September 1997. Prior to that time, Mr. Brickhouse was with NationsBank
Investment Management. Mr. Brickhouse has been a co-manager of the Fund since
September, 1997. Mr. Walker has been Assistant Vice President of the Adviser and
Asset Management since June 1995. Prior to that time, Mr. Walker was a
Quantitative Analyst of Asset Management. Mr. Walker has been a co-manager of
the Fund since May, 1996. Ms. Willis has been Assistant Vice President of the
Adviser and Asset Management since December 1997. Prior to that time, Ms. Willis
was Associate Portfolio Manager of Asset Management. Prior to July 1995, Ms.
Willis was with AIM Capital Management, Inc. Ms. Willis has been a co-manager of
the Fund since May, 1996.

- --------------------------------------------------------------------------------
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 the 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."

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<PAGE> 181

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 expenses incurred as a
result of issues relating to one class of shares; and (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
Internal Revenue Code of 1986, as amended (the "Code").

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

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<PAGE> 182

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 intermediaries 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 pays 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 more than 90% or
more of the sales charge may be deemed to be "underwriters" as that term is
defined in the Securities Act of 1933, as amended.

SALES CHARGE TABLE

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* 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 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".

17
<PAGE> 183

QUANTITY DISCOUNTS

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

OTHER PURCHASE PROGRAMS

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.

18
<PAGE> 184

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.

(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.

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

(7) Accounts as to which a 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 serves as custodian will not
be eligible for net asset value purchases based on the aggregate
investment made by the plan or the number of eligible employees, except
under certain uniform criteria established by the Distributor from time to
time. Prior to February 1, 1997, a commission will be paid to authorized
dealers who initiate and are responsible for such

19
<PAGE> 185

purchases within a rolling twelve-month period as follows: 1.00% on sales
to $5 million, plus 0.50% on the next $5 million, plus 0.25% on the excess
over $10 million. 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.

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 receive 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, dealer or financial intermediary 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

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.

20
<PAGE> 186

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 the 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
4.00% (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 B SHARES. Class B Shares redeemed within five 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
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------- -------------------
<S> <C>
First........................................................................ 5.00%
Second....................................................................... 4.00%
Third........................................................................ 3.00%
Fourth....................................................................... 2.50%
Fifth........................................................................ 1.50%
Sixth 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."

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 a CDSC share acquired through the
exchange privilege is determined by reference to the Participating Fund from
which such share was originally purchased.

21
<PAGE> 187

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 outstanding. Such computation is made by using prices as of
the close of trading on the New York Stock Exchange and (i) valuing securities
listed or traded on a national securities exchange at the last reported sale
price, or if there has been no sale that day at the mean between the last
reported bid and asked prices, (ii) valuing over-the-counter securities for
which the last sale price is available from the National Association of
Securities Dealers Automated Quotations ("NASDAQ") at that price and (iii)
valuing any securities for which market quotations are not readily available and
any other assets at fair value as determined in good faith by the Trustees of
the Fund. The net asset value for the Fund is computed once daily as of the
close of the daily trading session of the New York Stock Exchange, Monday
through Friday, except on customary business holidays, or except on any day on
which no purchase or redemption orders are received, or there is not a
sufficient degree of trading in the Fund's portfolio securities such that the
Fund's net asset value per share might be materially affected. The Fund reserves
the right to calculate the net asset value 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.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

INVESTMENT ACCOUNT. Each shareholder has an investment account under which
the investor's shares of the Fund are held by Van Kampen Investor Services Inc.
("Investor Services"), transfer agent for the Fund and a wholly-owned subsidiary
of Van Kampen. Investor Services performs bookkeeping, data processing and
administration services related to the maintenance of shareholder accounts.
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.

22
<PAGE> 188

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.

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.
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 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 suspensions 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.

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 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 or Class C Shares are subject to the CDSC schedule imposed by
the Participating Fund from which such shares were originally purchased.

23
<PAGE> 189

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.

24
<PAGE> 190

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

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 60 days must accompany the redemption
request. The redemption price is the net asset value per share next determined
after the request is received by 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.

25
<PAGE> 191

GENERAL REDEMPTION INFORMATION. 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. An 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
- --------------------------------------------------------------------------------

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.

26
<PAGE> 192

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 brokers, dealers 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.

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 $4,460,907 and $68,149 of unreimbursed distribution-related expenses with
respect to Class B Shares and Class C Shares, respectively, representing 3.01%
and 0.42% 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
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.

27
<PAGE> 193

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

The Fund's present policy, which may be changed at any time by the Board of
Trustees, is to declare annually dividends to holders of each class of shares of
all or substantially all net investment income attributable to the respective
class. Net investment income consists of all interest income, dividends, other
ordinary income earned by the Fund on its portfolio assets and net short-term
capital gains, less all expenses of the Fund attributable to the class of shares
in question. Expenses of the Fund are accrued each day. Net realized long-term
capital gains, if any, are expected to be distributed, to the extent permitted
by applicable law, to shareholders annually. Distributions cannot be assured,
and the amount of each distribution may vary.

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 receive payments for such shares. However,
shares become entitled to dividends on the day Investor Services receive 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 or
redemption.

PURCHASE OF ADDITIONAL SHARES WITH DISTRIBUTIONS. The Fund automatically will
credit 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
- --------------------------------------------------------------------------------

If the Fund so qualifies and distributes each year to its Shareholders at
least 90% of its net investment income (including taxable income and net
short-term capital gain, but not net capital 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 necessary to satisfy the 90% distribution requirement. The Fund will not
be subject to federal income tax on any net capital gains distributed to
Shareholders.

28
<PAGE> 194

If the Fund failed to qualify as a regulated investment company or failed to
satisfy the 90% distribution requirement in any taxable year, the Fund would be
taxed as an ordinary corporation on its taxable income (even if such income were
distributed to its Shareholders) and all distributions out of earnings and
profits would be taxed to Shareholders as ordinary income. To qualify again as a
regulated investment company in a subsequent year, the Fund may be required to
pay an interest charge on 50% of its earnings and profits attributable to
non-regulated investment company years and would be required to distribute such
earnings and profits to Shareholders (less any interest charge). In addition, if
the Fund failed to qualify as a regulated investment company for its first
taxable year or, if immediately after qualifying as a regulated investment
company for any taxable year, it failed to qualify for a period greater than one
taxable year, the Fund would be required to recognize any net built-in gains
(the excess of aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.

Some of the Fund's investment practices, including those described under
"Investment Practices -- Strategic Transactions," are subject to special
provisions of the Code that, among other things, may defer the use of certain
losses of the Fund and affect the holding period of the securities held by the
Fund and the character of the gains or losses realized by the Fund. These
provisions may also require the Fund recognize income or gain without receiving
cash with which to make distributions in the amounts necessary to satisfy the
90% distribution requirement and the distribution requirements for avoiding
income and excise taxes. The Fund will monitor its transactions and may make
certain tax elections in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.

29
<PAGE> 195

required to recognize income in excess of the distributions it receives from the
PFIC and proceeds from the dispositions of PFIC stock.

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

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

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

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

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

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

CAPITAL GAINS RATES. The maximum tax rate applicable to net capital gains
recognized by individuals and other non-corporate taxpayers is (i) the same as
the maximum ordinary income tax rate for capital assets held for one year or
less or, (ii) 20% for capital assets held for more than one year. A special 28%
tax rate may apply to a portion of the capital gain dividends paid by the Fund
with respect to its taxable year ended June 30, 1998.

30
<PAGE> 196

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

From time to time advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Fund. Any such
information will include the average total return of the Fund calculated on a
compounded basis for specified periods of time. Such total return will be
calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. In lieu of or in addition to
total return 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.

- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------

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, designated Class A Shares, Class B
Shares and Class C Shares. The Fund is permitted to issue an unlimited number of
class of shares. Other classes of shares may be established from time to time in
accordance with the Fund's Declaration of Trust.

31
<PAGE> 197

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

32
<PAGE> 198

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 AGGRESSIVE

GROWTH 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 Aggressive

Growth Fund

Custodian

STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street, P.O. Box 1713
Boston, MA 02105-1713

Attn: Van Kampen Aggressive

Growth 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> 199

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

AGGRESSIVE GROWTH
FUND

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

P R O S P E C T U S
SEPTEMBER 30, 1998

[VAN KAMPEN FUNDS LOGO]

AGG PRO 9/98

<PAGE> 200

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN UTILITY FUND

Van Kampen Utility Fund (the "Fund") is a separate, diversified series of Van
Kampen Equity Trust (the "Trust"), an open-end investment company. The Fund
seeks to provide its shareholders with capital appreciation and current income.
The Fund seeks to achieve its investment objective by investing in a diversified
portfolio of common stocks and income securities issued by companies engaged in
the utilities industry ("Utility Securities"). Companies engaged in the
utilities industry include those involved in the production, transmission, or
distribution of electric energy, gas, telecommunications services or the
provision of other utility or utility related goods and services. Under normal
market conditions, at least 80% of the Fund's total assets will be invested in
Utility Securities. The Fund may invest up to 35% of its assets in foreign
currency denominated securities issued by non-U.S. issuers. There can be 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 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
Description of Securities Ratings........................... B-14
Trustees and Officers....................................... B-20
Investment Advisory and Other Services...................... B-29
Custodian and Independent Accountants....................... B-30
Portfolio Transactions and Brokerage Allocation............. B-30
Tax Status of the Fund...................................... B-31
The Distributor............................................. B-31
Distribution and Service Plans.............................. B-32
Legal Counsel............................................... B-33
Transfer Agency............................................. B-33
Performance Information..................................... B-33
Report of Independent Accountants........................... B-36
Financial Statements........................................ B-37
Notes to Financial Statements............................... B-46
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 30, 1998.

<PAGE> 201

THE FUND AND THE TRUST

The Fund is a separate, diversified series of Van Kampen Equity Trust (the
"Trust"), an open-end management investment company. The Trust is a Delaware
business trust established under the laws of the State of Delaware by a
Declaration of Trust dated May 10, 1995 (the "Declaration of Trust"). At
present, the Fund, Van Kampen Growth Fund, Van Kampen American Capital Value
Fund, Van Kampen Prospector Fund, Van Kampen Great American Companies Fund and
Van Kampen Aggressive Growth 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 Declaration of Trust permits the Trustees to create one or more separate
investment portfolios and issue a series of shares for each portfolio. The
Trustee can further sub-divide each series of shares into one or more classes of
shares for each portfolio. The Trust can issue an unlimited number of shares
with $0.01 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 a 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 Equity Trust, a
Massachusetts business trust, created by a Declaration of Trust dated March 26,
1987 (the "Massachusetts Trust"). The Massachusetts Trust was reorganized into
the Trust under the name Van Kampen American Capital Equity 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 and
the Fund adopted their current names.

The Fund originally was organized 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 adopted
its present name.

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

INVESTMENT POLICIES AND RESTRICTIONS

The investment objective of the Fund is set forth in the Prospectus under the
caption "Investment Objective and Policies." There can be no assurance that the
Fund will achieve its investment objective.

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

1. With respect to 75% of its total assets, purchase any securities (other
than obligations guaranteed by the United States Government or by its
agencies or instrumentalities), if, as a result, more than 5% of the
Fund's total assets (determined at the time of investment) 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 the Fund may purchase securities of other investment
companies without regard to such limitation to the extent permitted by (i)
the 1940 Act, as amended from time to time, (ii) the rules and regulations
promulgated by the SEC under the 1940 Act, as amended from time to time,
or (iii) an exemption or other relief from the provisions of the 1940 Act.

2. Issue senior securities, borrow money from banks or enter into reverse
repurchase agreements with banks in the aggregate in excess of 33 1/3% of
the Fund's total assets (after giving effect to any such borrowing); which
amount includes no more than 5% in borrowings and reverse repurchase
agreements with any entity for temporary purposes. The Fund will not
mortgage, pledge or hypothecate any assets other than in connection with
issuances, borrowings, hedging transactions and risk management
techniques.

3. Make loans of money or property to any person, except (i) to the extent
the securities in which the Fund may invest are considered to be loans,
(ii) through the loan of portfolio securities, and (iii) to the extent
that the Fund may lend money or property in connection with maintenance of
the value of, or the Fund's interest with respect to, the securities owned
by the Fund.

4. Buy any securities "on margin." Neither the deposit of initial or
maintenance margin in connection with Strategic Transactions nor short
term credits as may be necessary for the clearance of transactions is
considered the purchase of a security on margin.

5. Sell any securities "short," write, purchase or sell puts, calls or
combinations thereof, or purchase or sell interest rate or other financial
futures or index contracts or related options, except in connection with
Strategic Transactions.

6. 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.

7. Make investments for the purpose of exercising control or participation in
management, except to the extent that exercise by the Fund of its rights
under agreements related to portfolio securities would be deemed to
constitute such control or participation and 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.

8. Investment 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 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 oil, gas or mineral leases or in equity interests in oil, gas,
or other mineral exploration or development programs except pursuant to
the exercise by the Fund of its rights under agreements relating to
portfolio securities.

B-3
<PAGE> 203

10. Purchase or sell real estate, commodities or commodity contracts, except
to the extent that the securities that the Fund may invest in are
considered to be interests in real estate, commodities or commodity
contracts or to the extent the Fund exercises its rights under agreements
relating to portfolio securities (in which case the Fund may liquidate
real estate acquired as a result of a default on a mortgage), and except
to the extent that Strategic Transactions the Fund may engage in are
considered to be commodities or commodities contracts.

The Fund may not change any of these investment restrictions as they apply to
the Fund without the approval of the lesser of (i) more than 50% of the Fund's
outstanding shares or (ii) 67% of the Fund's outstanding 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 generally will not engage in the trading of securities for the
purpose of realizing short-term profits, but it will adjust its portfolio as
deemed advisable in view of prevailing or anticipated market conditions to
accomplish the Fund's investment objectives. For example, the Fund may sell
portfolio securities in anticipation of a movement in interest rates. Frequency
of portfolio turnover will not be a limiting factor if the Fund considers it
advantageous to purchase or sell securities. Portfolio turnover will be
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 will be excluded from such calculation.

ADDITIONAL INVESTMENT CONSIDERATIONS

UTILITY SECURITIES

Entities that issue Utility Securities may be subject to a variety of risks
depending, in part, on such factors as the type of utility involved and its
geographic location. Such risks may include potential increases in operating
costs, increases in interest expenses for capital construction programs,
government regulation of rates charged to customers, costs associated with
compliance with environmental and other regulations, service interruption due to
environmental, operational or other mishaps, the effects of economic slowdowns,
surplus capacity and increased competition from other providers of utility
services. Issuers of Utility Securities generally have their rates determined by
state utility commissions or other governmental authorities or, depending on the
jurisdiction and the nature of the issuer, such issuers may set their own rates.
Changes in service rates generally lag changes in financing costs, and thus can
favorably or unfavorably affect the ability of issuers of Utility Securities to
maintain or increase dividend rates on such securities, depending upon whether
such rates and costs are declining or rising. To the extent that rates are
established or reviewed by governmental authorities, the utility is subject to
the risk that such authority will not authorize increased rates. Issuers of
Utility Securities are subject to regulation by various authorities and may be
affected by the imposition of special tariffs and charges. There can be no
assurance that regulatory policies or accounting standard changes will not
negatively affect the ability of issuers of Utility Securities to service
principal, interest and dividend payments. Because of the Trust's policy of
investing at least 80% of its total assets in Utility Securities, the Trust is
more susceptible than an investment company without such a policy to economic,
political, environmental or regulatory occurrences affecting issuers of Utility
Securities. See "Investment Objective and Policies" in the Prospectus.

Electric Utilities. Certain electric utilities ("Electric Utilities") with
uncompleted nuclear power facilities may have problems completing and licensing
such facilities, and there is public, regulatory and governmental concern with
the cost and safety of nuclear power facilities in general. Regulatory changes
with respect to nuclear and conventionally fueled generating facilities could
increase costs or impair the ability of such Electric Utilities to operate such
facilities, thus reducing their ability to service dividend payments with
respect to Utility Securities. Electric Utilities that utilize nuclear power
facilities must apply for recommissioning from the Nuclear Regulatory Commission
after 40 years. Failure to obtain recommissioning could result in an
interruption of service or the need to purchase more expensive power from other
entities and could

B-4
<PAGE> 204

subject the utility to significant capital construction costs in connection with
building new nuclear or alternative-fuel power facilities, upgrading existing
facilities or converting such facilities to alternative fuels. Electric
Utilities that utilize coal in connection with the production of electric power
are particularly susceptible to environmental regulation, including the
requirements of the federal Clean Air Act and of similar state laws. Such
regulation may necessitate large capital expenditures in order for the utility
to achieve compliance.

Gas Utilities. Many gas utilities ("Gas Utilities") generally have been
adversely affected by oversupply conditions, and by increased competition from
other providers of utility services. In addition, some Gas Utilities entered
into long-term contracts with respect to the purchase or sale of gas at fixed
prices, which prices have since changed significantly in the open market. In
many cases, such price changes have been to the disadvantage of the Gas Utility.
Gas Utilities are particularly susceptible to supply and demand imbalances due
to unpredictable climate conditions and other factors and are subject to
regulatory risks as well.

Telecommunications Utilities. Telecommunications regulation typically limits
rates charged, returns earned, providers of services, types of services,
ownership, areas served and terms for dealing with competitors and customers.
Telecommunications regulation generally has tended to be less stringent for
newer services, such as mobile services, than for traditional telephone service,
although there can be no assurances that such newer services will not be heavily
regulated in the future. Regulation may limit rates based on an authorized level
of earnings, a price index, or another formula. Telephone rate regulation may
include government-mandated cross-subsidies that limit the flexibility of
existing service providers to respond to competition. Regulation may also limit
the use of new technologies and hamper efficient depreciation of existing
assets. If regulation limits the use of new technologies by established carriers
or forces cross-subsidies, large private networks may emerge.

LOWER GRADE SECURITIES

The Fund may invest up to 20% of its assets in lower-grade income securities,
including lower-grade fixed-income Utility Securities. Such lower grade
securities are rated BB or B by S&P or Ba or B by Moody's. Investment in such
securities involves special risks, as described herein. Liquidity relates to the
ability of a Fund to sell a security in a timely manner at a price which
reflects the value of that security. As discussed below, the market for lower
grade securities is considered generally to be less liquid than the market for
investment grade securities. The relative illiquidity of some of the Fund's
portfolio securities may adversely affect the ability of the Fund to dispose of
such securities in a timely manner and at a price which reflects the value of
such security in the Adviser's judgment. The market for less liquid securities
tends to be more volatile than the market for more liquid securities and market
values of relatively illiquid securities may be more susceptible to change as a
result of adverse publicity and investor perceptions than are the market values
of higher grade, more liquid securities.

The Fund's net asset value will change with changes in the value of its
portfolio securities. Because the Fund will invest in fixed income securities,
the Fund's net asset value can be expected to change as general levels of
interest rates fluctuate. When interest rates decline, the value of a portfolio
invested in fixed income securities can be expected to rise. Conversely, when
interest rates rise, the value of a portfolio invested in fixed income
securities can be expected to decline. Net asset value and market value may be
volatile due to the Fund's investment in lower grade and less liquid securities.
Volatility may be greater during periods of general economic uncertainty.

The Adviser values the Fund's investments pursuant to guidelines adopted and
periodically reviewed by the Board of Trustees. To the extent that there is no
established retail market for some of the securities in which the Fund may
invest, there may be relatively inactive trading in such securities and the
ability of the Adviser to accurately value such securities may be adversely
affected. During periods of reduced market liquidity and in the absence of
readily available market quotations for securities held in the Fund's portfolio,
the responsibility of the Adviser to value the Fund's securities becomes more
difficult and the Adviser's judgment may play a greater role in the valuation of
the Fund's securities due to the reduced availability of reliable objective
data. To the extent that the Fund invests in illiquid securities and securities
which are restricted as to

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resale, the Fund may incur additional risks and costs. Illiquid and restricted
securities are particularly difficult to dispose of.

Lower grade securities generally involve greater credit risk than higher grade
securities. A general economic downturn or a significant increase in interest
rates could severely disrupt the market for lower grade securities and adversely
affect the market value of such securities. In addition, in such circumstances,
the ability of issuers of lower grade securities to repay principal and to pay
interest, to meet projected financial goals and to obtain additional financing
may be adversely affected. Such consequences could lead to an increased
incidence of default for such securities and adversely affect the value of the
lower grade securities in the Fund's portfolio and thus the Fund's net asset
value. The secondary market prices of lower grade securities are less sensitive
to changes in interest rates than are those for higher rated securities, but are
more sensitive to adverse economic changes or individual issuer developments.
Adverse publicity and investor perceptions, whether or not based on rational
analysis, may also affect the value and liquidity of lower grade securities.

Yields on the Fund's portfolio securities can be expected to fluctuate over
time. In addition, periods of economic uncertainty and changes in interest rates
can be expected to result in increased volatility of the market prices of the
lower grade securities in the Fund's portfolio and thus in the net asset value
of the Fund. Net asset value and market value may be volatile due to the Fund's
investment in lower grade and less liquid securities. Volatility may be greater
during periods of general economic uncertainty. The Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of interest or a repayment of principal on its portfolio holdings, and
the Fund may be unable to obtain full recovery thereof. 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 capital with respect to such issuer or the project or projects
to which the Fund's portfolio securities relate.

The Fund will rely on the Adviser's judgment, analysis and experience in
evaluating the creditworthiness of an issue. In this evaluation, 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 also may consider, although it does not rely primarily on, the credit
ratings of S&P and Moody's in evaluating fixed-income securities. 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 such securities held in the Fund's
portfolio. The Fund may, if deemed appropriate by the Adviser, retain a security
whose rating has been downgraded below B by S&P or below B by Moody's, or whose
rating has been withdrawn.

MONEY MARKET INSTRUMENTS

Money market instruments include (a) obligations of or guaranteed by the U.S.
government, its agencies or instrumentalities ("Government Money Market
Securities"), (b) obligations of banks subject to U.S. government regulation as
well as such other bank obligations as are insured by a U.S. government agency
("Bank Obligations"), (c) commercial paper (including variable amount master
demand notes) rated at least A-3 by S&P or Prime-3 by Moody's or, if not so
rated, issued by a corporation which has outstanding debt obligations rated at
least AA by S&P or Aa by Moody's and (d) debt obligations (other than commercial
paper) of corporate issuers which obligations are rated at least AA by S&P or Aa
by Moody's. Money market securities are subject, however, to the limitation that
they mature within one year of the date of their purchase or are subject to
repurchase agreements maturing within one year. Government Money Market
Securities include treasury bills, notes and bonds issued by the U.S. government
and backed by the full faith and credit of the United States, as well as
securities issued or guaranteed as to principal and interest by agencies and
instrumentalities of the U.S. government. Bank Obligations include certificates
of deposit and banker's acceptances of domestic banks (or Euro-dollar
obligations of foreign branches of such domestic banks) subject to U.S.
government regulation and time deposits of federal and state banks whose
accounts are insured by a government agency as well as such accounts themselves.

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The Fund's policies with respect to credit quality of portfolio investments
will apply only at the time of purchase of a security, and the Fund will not be
required to dispose of a security in the event that S&P or Moody's (or any other
NRSRO) or, in the case of unrated income securities, the Adviser, downgrades its
assessment of the credit characteristics of a particular issuer. In determining
whether the Fund will retain or sell such a security, in addition to the factors
described in the Prospectus under the heading "Investment Objective and
Policies," the Adviser may consider such factors as the Adviser's assessment of
the credit quality of the issuer of such security, the price at which such
security could be sold and the rating, if any, assigned to such security by any
other NRSRO.

STRATEGIC TRANSACTIONS.

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

In the course of pursuing these investment strategies, the Fund may purchase
and sell derivative instruments such as exchange-listed and over-the-counter put
and call options on securities, equity and income indices and other financial
instruments, purchase and sell financial futures contracts and options thereon,
enter into various interest rate transactions such as swaps, caps, floors or
collars and enter into various currency transactions such as currency forward
contracts, currency futures contracts, currency swaps or options on currencies
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 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.

exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had
not been utilized. Income earned or deemed to be earned, if any, by the Fund
from its Strategic Transactions will generally be taxable income of the Fund.
See "Tax Status" in the Prospectus.

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, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

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

by negotiation of the parties. The Fund will only sell OTC options (other than
OTC currency options) that are subject to a buy-back provision permitting the
Fund to require the Counterparty to sell the option back to the Fund at a
formula price within seven days. The Fund expects generally to enter into OTC
options that have cash settlement provisions, although it is not required to do
so.

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

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

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

The Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, municipal
obligations corporate debt securities, equity securities (including convertible
securities) and Eurodollar instruments (whether or not it holds the above
securities in its portfolio) and on securities indices, currencies and futures
contracts other than futures on individual corporate debt and individual equity
securities. The Fund will not sell put options if, as a result, more than 50% of
the Fund's assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a price above the market price.

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

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(or, with respect to index futures and Eurodollar instruments, the net cash
amount). Options on futures contracts are similar to options on securities
except that an option on a futures contract gives the purchaser the right in
return for the premium paid to assume a position in a futures contract and
obligates the seller to deliver such 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 Commission. 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 marked to market value of the
contract fluctuates. The purchase of options on financial futures involves
payment of a premium for the option without any further obligation on the part
of the Fund. If the Fund exercises an option on a futures contract it will be
obligated to post initial margin (and potential subsequent variation margin) for
the resulting futures position just as it would for any position. Futures
contracts and options thereon are generally settled by entering into an
offsetting transaction but there can be no assurance that the position can be
offset prior to settlement at an advantageous price nor that delivery will not
occur.

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

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

CURRENCY TRANSACTIONS. The Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holding denominated in
particular 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 a 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 which have received (or the guarantors of the obligations of such
Counterparties have received) a credit rating of 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
currency options) are determined to be of equivalent credit quality by the
Adviser.

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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 or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

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 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 the 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. For example, if the Adviser
considers the Austrian schilling is linked to the German deutschemark (the
"D-mark"), the Fund holds securities denominated in 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. Currency
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.

Currency transactions are subject to risks different from those of other
portfolio 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), multiple interest
rate transactions and any combination of futures, options, currency and interest
rate transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Adviser, it is in the best interest 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.

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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 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 cashflows on a notional amount of two or more currencies based on
the relative value differential among them. An index swap is an agreement to
swap cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of a floor entitles the purchaser to receive payments on a notional
principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates or values.

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

EURODOLLAR INSTRUMENTS. The Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. The Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and income
instruments are linked.

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 guarantee, 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.

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

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 Subchapter M of the Internal Revenue Code for qualification as a
regulated investment company. See "Tax Status" in the Prospectus.

B-13
<PAGE> 213

DESCRIPTION OF SECURITIES RATINGS

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 Standard & Poor's Ratings Group) 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 financial 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 creditor's 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, B, CCC, CC, C: Debt rated "BB", "B", "CCC", "CC" and "C" is regarded as
having significantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation and
"C" the 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.

B-14
<PAGE> 214

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" 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
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

A 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
overwhelming as for issues designated "A-1".

A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.

B-15
<PAGE> 215

B Issues rated "B" are regarded as having significant speculative
characteristics.

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 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 option 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 debt 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;

B-16
<PAGE> 216

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.

<TABLE>
<S> <C>
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 a
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.
</TABLE>

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 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.

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

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 fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than AAA securities.

B-17
<PAGE> 217

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 payment and
principal security appear adequate for the present but certain protective
elements may by lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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

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

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

CA: Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other 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 reason may be one of the following:

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

2. The issue or issuer belongs to a group of securities 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.

B-18
<PAGE> 218

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

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

-- Leading market positions in well-established industries.

-- High rates of return on funds employed.

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

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

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

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

Issuers rated Prime-3 (or supporting institutions) have an acceptable ability
for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternative 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 a reasonable assurance the earnings and
asset protection will remain relatively well maintained in the foreseeable
future.

A: An issue which is rated "A" is considered to be an upper-medium-grade
preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection 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
payments.

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.

B-19
<PAGE> 219

Moody's applies numerical modifiers 1, 2 and 3 in each 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.

TRUSTEES AND OFFICERS

The tables below list the trustees and officers of the Fund and executive
officers of the Fund's investment adviser and their principal occupations for
the last five years and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen"), 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
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.
</TABLE>

B-20
<PAGE> 220

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
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.
Don G. Powell*............................ Chairman and a Director of Van Kampen. Chairman and a
2800 Post Oak Blvd. Director of the Advisers and the Distributor. Chairman
Houston, TX 77056 and a Director of Investor Services. Director or officer
Date of Birth: 10/19/39 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.

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.

B-21
<PAGE> 221

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.

<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, Mr.
McDonnell 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/Managing
General Partner 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.
</TABLE>

B-22
<PAGE> 222

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

Paul R. Wolkenberg................... Executive Vice President and Director of Van Kampen.
Date of Birth: 11/10/44 Executive Vice President of the AC Adviser 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 and Chief Financial Operating Officer of the Distributor. Vice President and
Officer Chief Financial Officer 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 of each of the funds in the Fund Complex and
Treasurer certain other 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.
</TABLE>

B-23
<PAGE> 223

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

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

B-24
<PAGE> 224

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
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

B-25
<PAGE> 225

the same economic effect as if such Non-Affiliated Trustee had invested in one
or more funds in the Fund Complex. To the extent permitted by the 1940 Act, the
Fund may invest in securities of those funds selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The deferred
compensation plan is not funded and obligations thereunder represent general
unsecured claims against the general assets of the Fund.

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

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

COMPENSATION TABLE

<TABLE>
<CAPTION>
FUND COMPLEX
----------------------------------------------------------
AGGREGATE TOTAL
PENSION OR AGGREGATE COMPENSATION
AGGREGATE COMPENSATION RETIREMENT BENEFITS ESTIMATED MAXIMUM BEFORE DEFERRAL
BEFORE DEFERRAL FROM THE ACCRUED AS PART OF ANNUAL BENEFITS FROM FUND
NAME(1) TRUST(2) EXPENSES(3) UPON RETIREMENT(4) COMPLEX(5)
------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
J. Miles Branagan* $10,531 $30,328 $60,000 $111,197
Linda Hutton Heagy* 9,331 3,141 60,000 111,197
R. Craig Kennedy* 10,531 2,229 60,000 111,197
Jack E. Nelson* 10,531 15,820 60,000 104,322
Jerome L. Robinson 6,500 32,020 15,750 107,947
Phillip B. Rooney* 10,531 0 60,000 74,697
Dr. Fernando Sisto* 10,531 60,208 60,000 111,197
Wayne W. Whalen* 10,531 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. Trustees not eligible for compensation are
not included in the compensation table.

(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral from all six 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 six series of the Trust, including the Fund, during
the fiscal year ended June 30, 1998 as follows: Mr. Branagan, $10,531; Ms.
Heagy, $9,331; Mr. Kennedy, $5,267; Mr. Nelson, $10,531; Mr. Robinson,
$6,500; Mr. Rooney, $10,531; Dr. Sisto, $5,267; and Mr. Whalen, $10,531. The
details of amounts deferred for each series of the Trust, including the
Fund, are 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 six series of the Trust, including the
Fund, as of the Trust's fiscal year ended June 30, 1998, is as follows: Mr.
Branagan, $25,360; Dr. Caruso, $914; Mr. Gaughan, $3,142; Ms. Heagy,
$23,596; Mr. Kennedy,

B-26
<PAGE> 226

$24,373; Mr. Miller, $18,899; Mr. Nelson, $45,456; Mr. Rees, $4,591; Mr.
Robinson, $36,433; Mr. Rooney, $12,011; Dr. Sisto, $10,902; and Mr. Whalen,
$41,217. The details of cumulative deferred compensation (including
interest) for each series, including the Fund, are shown in Table C below.
The deferred compensation plan is described above the Compensation Table.

(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 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>
Aggressive Growth Fund................ 06/30 $ 2,547 $2,347 $ 2,547 $ 2,547 $1,750 $ 2,547 $ 2,547 $ 2,547
Great American Companies Fund......... 06/30 1,102 902 1,102 1,102 500 1,102 1,102 1,102
Growth Fund........................... 06/30 2,457 2,257 2,457 2,457 1,750 2,457 2,457 2,457
Prospector Fund....................... 06/30 1,102 902 1,102 1,102 500 1,102 1,102 1,102
Utility Fund.......................... 06/30 2,221 2,021 2,221 2,221 1,500 2,221 2,221 2,221
Value Fund............................ 06/30 1,102 902 1,102 1,102 500 1,102 1,102 1,102
Trust Total......................... 10,531 9,331 10,531 10,531 6,500 10,531 10,531 10,531
</TABLE>

B-27
<PAGE> 227

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>
Aggressive Growth Fund................. 06/30 $ 2,547 $2,347 $1,274 $ 2,547 $1,750 $ 2,547 $1,274 $ 2,547
Great American Companies Fund.......... 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Growth Fund............................ 06/30 2,457 2,257 1,229 2,457 1,750 2,457 1,229 2,457
Prospector Fund........................ 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Utility Fund........................... 06/30 2,221 2,021 1,111 2,221 1,500 2,221 1,111 2,221
Value Fund............................. 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Trust Total.......................... 10,531 9,331 5,267 10,531 6,500 10,531 5,267 10,531
</TABLE>

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>
Aggressive Growth Fund........... 06/30 $ 6,815 $ 6,708 $ 2,668 $ 8,614 $ 2,925 $ 2,472 $ 8,129
Great American Companies Fund.... 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Growth Fund...................... 06/30 5,014 4,016 3,003 6,534 2,827 2,034 6,176
Prospector Fund.................. 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Utility Fund..................... 06/30 5,758 7,907 13,389 18,494 2,548 3,705 15,620
Value Fund....................... 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Trust Total.................... 25,360 23,596 24,373 45,456 12,011 10,902 41,217

<CAPTION>
TRUSTEE
----------------------------------------------
FORMER TRUSTEES
----------------------------------------------
FUND NAME CARUSO GAUGHAN MILLER REES ROBINSON
--------- ------ ------- ------ ---- --------
<S> <C> <C> <C> <C> <C>
Aggressive Growth Fund........... $ 0 $ 0 $ 2,389 $ 0 $ 6,919
Great American Companies Fund.... 0 0 1,525 360 2,941
Growth Fund...................... 0 0 1,525 359 5,138
Prospector Fund.................. 0 0 1,525 360 2,942
Utility Fund..................... 914 3,142 10,410 3,152 15,552
Value Fund....................... 0 0 1,525 360 2,941
Trust Total.................... 914 3,142 18,899 4,591 36,433
</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>
Aggressive Growth Fund................................. 1996 1996 1996 1996 1996 1997 1996 1996
Great American Companies Fund.......................... 1995 1995 1995 1995 1995 1997 1995 1995
Growth Fund............................................ 1995 1995 1995 1995 1995 1997 1995 1995
Prospector Fund........................................ 1995 1995 1995 1995 1995 1997 1995 1995
Utility Fund........................................... 1995 1995 1993 1993 1993 1997 1995 1993
Value Fund............................................. 1995 1995 1995 1995 1995 1997 1995 1995
</TABLE>

As of September 3, 1998, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

As of September 3, 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.................... 348,796 A 10.32%
2800 Post Oak Blvd. 433,588 B 8.98%
Houston, TX 77056 18,480 C 6.08%
Smith Barney Inc. .......................... 20,491 C 6.74%
00144318447
388 Greenwich Street
New York, NY 10013-2339
</TABLE>

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

B-28
<PAGE> 228

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 wholly-owned subsidiary of
Van Kampen Investments Inc., 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. The Adviser also administers the business
affairs of the Fund, furnishes offices, necessary facilities and equipment,
provides administrative services, and permits its officers and employees to
serve without compensation as officers of the Fund and trustees of the Trust if
duly elected to such positions.

The investment advisory agreement between the Adviser and the Fund provides
that the Adviser will supply investment research and portfolio management,
including the selection of securities for the Fund to purchase, hold or sell and
the selection of brokers through whom the Fund's portfolio transactions are
executed. The Adviser also administers the business affairs of the Fund,
furnishes offices, necessary facilities and equipment, provides administrative
services, and permits its officers and employees to serve without compensation
as trustees of the Trust 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
Board of Trustees of the Trust, of which the Fund is a series, to whom the
Adviser renders periodic reports of the Fund's investment activities.

The investment advisory agreement for the Fund will continue in effect from
year to year if specifically approved by the trustees of the Trust, of which the
Fund is a separate series (or by the Fund's shareholders), and by the
disinterested 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 thereto and will automatically terminate in the event of
assignment.

The investment advisory agreement specifies that the Adviser will 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 $939,137, $937,503 and $1,009,003, 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 equally, together with the other funds advised by the Adviser or
its affiliates and distributed by the Distributor, in 25% of the cost of
providing such services, with the remaining 75% of such cost being paid by the
Fund and such other funds based proportionally on their respective net assets.

For the years ended June 30, 1998, 1997 and 1996, the Fund recognized expenses
of approximately $54,100, $30,200 and $12,300, respectively, representing the
Adviser's cost of providing accounting services.

LEGAL SERVICES AGREEMENT. The Fund and other funds advised by the Adviser and
distributed by the Distributor have entered into Legal Services Agreement
pursuant to which Van Kampen provides legal services, including without
limitation: 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
fund's. Payment by the Fund for such services is made

B-29
<PAGE> 229

on a cost basis for the salary and salary related benefits, including but not
limited to bonuses, group insurances and other regular wages for the employment
of personnel, as well as overhead and the expenses related to the office space
and the equipment necessary to render the legal services. Other funds
distributed by the Distributor also receive legal services from Van Kampen. 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 $10,700, $9,800 and $10,100, respectively, representing Van
Kampen Investments Inc.'s cost of providing legal services.

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

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 Fund's Adviser, the amount
of additional commission or increased cost is reasonable in relation to the
value of such services.

In selecting among the firms believed to meet the criteria for handling a
particular transaction, the Adviser may take into consideration that certain
firms (i) provide market, statistical or other research information such as that
set forth above to the Fund and the Adviser, (ii) have sold or are selling
shares of the Fund and (iii) may select firms that are affiliated with the Fund,
its investment adviser or its distributor and other principal underwriters. If
purchases or sales of securities of the Fund and of one or more other investment
companies or clients supervised by the Adviser are considered at or about the
same time, transactions in such securities will be allocated among the several
investment companies and clients in a manner deemed equitable to all by the
Adviser, taking into account the respective sizes of the Fund and other
investment companies and clients 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 Trust, of which the Fund is a separate series.

B-30
<PAGE> 230

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

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

During the year ended June 30, 1998, the Fund paid no brokerage commissions to
brokers selected primarily on the basis of 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.

The Fund paid the following commissions to these brokers during the periods
shown:

<TABLE>
<CAPTION>
AFFILIATED BROKERS
----------------------------
BROKERS MORGAN STANLEY DEAN WITTER
-------- -------------- -----------
<S> <C> <C> <C>
Commissions paid:
Fiscal year 1996....................................... $630,128 N/A N/A
Fiscal year 1997....................................... $ 85,572 $ 0 $ 0
Fiscal year 1998....................................... $108,173 $ 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 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 offers one of the industry's broadest lines of
investments -- encompassing mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to Van Kampen in more than 2 million
investor accounts. Van Kampen has one of the largest research teams (outside of
the rating agencies) in the country.

The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution 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

B-31
<PAGE> 231

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 by 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............................. $100,135 $15,982
Fiscal Year Ended June 30, 1997............................. $ 57,814 $10,057
Fiscal Year Ended June 30, 1996............................. $108,745 $20,800
</TABLE>

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.

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

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 Distribution Plan provides
that it 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. 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 of the
Plans must be approved by the Trustees and also by the disinterested Trustees.
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.

B-32
<PAGE> 232

For the fiscal year ended June 30, 1998, the Fund's aggregate expenses under
the Plans for Class A Plan were $139,079, 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 $835,313 or 1.00% of the Class B
shares' average net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $626,962 for commissions and transaction fees paid
to financial intermediaries in respect of sales of Class B shares of the Fund
and $208,351 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
$52,485 or 1.00% of the Class C shares' average net assets. Such expenses were
paid to reimburse the Distributor for the following payments: $10,151 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C shares of the Fund and $42,334 for fees paid to financial
intermediaries for servicing Class C shareholders and administering the Class C
Plan.

LEGAL COUNSEL

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

TRANSFER AGENCY

During the fiscal periods ended June 30, 1998, 1997 and 1996, Investor
Services, shareholder service agent and dividend disbursing agent for the Fund,
received fees aggregating $212,500, $196,000 and $217,100, 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.

PERFORMANCE INFORMATION

The Fund's yield quotation is determined on a daily basis with respect to the
immediately preceding 30 day period, and yield is computed by 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 initial 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 the 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 in a maximum amount equal to
4.00% and 1.00%, respectively, of the lesser of the then current net asset value
of the shares redeemed or their initial purchase price from the Fund. Yield
quotations do not reflect the imposition of a 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.

B-33
<PAGE> 233

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

From time to time marketing materials may provide a portfolio manager update,
an adviser update 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.

CLASS A SHARES

The average total return, including the payment of the maximum front-end sales
charge, with respect to the Class A Shares for (i) the one year period ended
June 30, 1998 was 20.82% and (ii) the period from July 28, 1993 (the
commencement of investment operations of the Fund) through June 30, 1998 was
10.71%.

The Fund's cumulative non-standardized total return, including the payment of
the maximum front-end sales charge, with respect to the Class A Shares from
their inception through June 30, 1998 (as calculated in the Prospectus under the
heading "Fund Performance") was 65.14%.

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
their inception through June 30, 1998 (as calculated in the Prospectus under the
heading "Fund Performance") was 75.18%.

CLASS B SHARES

The average total return, including the payment of the CDSC, with respect to
the Class B Shares for (i) the one year period ended June 30, 1998 was 23.20%
and (ii) the period from July 28, 1993 (the commencement of investment
operations of the Fund) through June 30, 1998 was 10.98%.

The Fund's cumulative non-standardized total return, including the payment of
the CDSC, with respect to the Class B Shares from their inception through June
30, 1998 (as calculated in the Prospectus under the heading "Fund Performance")
was 67.14%.

The Fund's cumulative non-standardized total return, excluding the payment of
the CDSC, with respect to the Class B Shares from their inception through June
30, 1998 (as calculated in the Prospectus under the heading "Fund Performance")
was 68.64%.

B-34
<PAGE> 234

CLASS C SHARES

The average total return, including the payment of the CDSC, with respect to
the Class C Shares for (i) the one year period ended June 30, 1998 was 26.14%
and (ii) the period from August 13, 1993 (the commencement of distribution of
the Class C Shares) through June 30, 1998 was 11.04%.

The Fund's cumulative non-standardized total return, including the payment of
the CDSC, with respect to the Class C Shares from their inception through June
30, 1998 (as calculated in the Prospectus under the heading "Fund Performance")
was 66.72%.

The Fund's cumulative non-standardized total return, excluding the payment of
the CDSC, with respect to the Class C Shares from their inception through June
30, 1998 (as calculated in the Prospectus under the heading "Fund Performance")
was 66.72%.

B-35
<PAGE> 235
REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of

Van Kampen Utility Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Utility 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 broker. 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 Utility 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-36
<PAGE> 236

PORTFOLIO OF INVESTMENTS

June 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------

Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS 89.4%
ELECTRIC UTILITIES 40.9%
BEC Energy ................................................ 120,000 $ 4,980,000
Cinergy Corp. .............................................. 73,000 2,555,000
CMS Energy Group ........................................... 99,800 4,391,200
Consolidated Edison, Inc. .................................. 40,000 1,842,500
DTE Energy Co. ............................................. 50,000 2,018,750
Edison International ....................................... 26,200 774,538
Firstenergy Corp. .......................................... 138,000 4,243,500
Florida Progress Corp. ..................................... 96,000 3,948,000
FPL Group, Inc. ............................................ 36,800 2,318,400
GPU, Inc. .................................................. 85,675 3,239,586
Houston Industries, Inc. ................................... 114,800 3,544,450
Illinova Corp. ............................................. 80,500 2,415,000
New Century Energies, Inc. ................................. 79,000 3,589,562
Niagara Mohawk Power Corp. (a) ............................. 45,700 682,644
OGE Energy Corp. ........................................... 144,000 3,888,000
Pinnacle West Capital Corp. ................................ 111,600 5,022,000
Public Service Co. of New Mexico ........................... 110,000 2,495,625
Sierra Pacific Resources ................................... 100,000 3,631,250
Southern Co. ............................................... 87,100 2,411,581
Texas Utilities Co. ........................................ 73,800 3,071,925
Wisconsin Energy Corp. ..................................... 51,400 1,561,275
------------
62,624,786
------------
NATURAL GAS PIPELINE AND DISTRIBUTION 3.3%
Consolidated Natural Gas Co. ............................... 33,000 1,942,875
National Fuel Gas Co. NJ ................................... 31,000 1,350,438
Wicor, Inc. ................................................ 72,000 1,665,000
------------
4,958,313
------------
OIL, GAS, PIPELINE AND DISTRIBUTION 12.6%
Coastal Corp. .............................................. 54,000 3,769,875
Columbia Energy Corp. ...................................... 55,500 3,087,188
El Paso Energy Capital Trust 1 - Convertible Preferred ..... 41,750 2,212,750
El Paso Natural Gas Co. .................................... 100,000 3,825,000
Enron Corp. ................................................ 36,400 1,967,875
Nicor, Inc. ................................................ 50,000 2,006,250
Southwest Gas Corp. ........................................ 100,000 2,443,750
------------
19,312,688
------------
</TABLE>

See Notes to Financial Statements

B-37
<PAGE> 237
PORTFOLIO OF INVESTMENTS (CONTINUED)

June 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS 32.6%
Airtouch Communications, Inc. (a) .......................... 50,000 $ 2,921,875
Ameritech Corp. ............................................ 96,000 4,308,000
AT&T Corp. ................................................. 38,600 2,205,025
Bell Atlantic Corp. ........................................ 39,936 1,822,080
BellSouth Corp. ............................................ 67,000 4,497,375
Cable & Wireless, PLC - ADR (United Kingdom) ............... 136,000 5,015,000
China Telecom - ADR (China) (a) ............................ 82,000 2,834,125
Cincinnati Bell, Inc. ...................................... 41,000 1,173,625
France Telecom - ADR (France) .............................. 20,000 1,391,250
Nextlink Communications Incorporated - Convertible
Preferred, 144A - Private Placement (b) .................. 26,800 1,393,600
Portugal Telecom SA - ADR (Portugal) ....................... 52,600 2,784,512
SBC Communications, Inc. ................................... 106,000 4,240,000
Sprint Corp. ............................................... 23,400 1,649,700
Tele Denmark A/S - ADR (Denmark) ........................... 50,000 2,356,250
Telecom Italia S.P.A. ...................................... 37,000 2,719,500
Telecomunicacoes Brasileiras - ADR (Brazil) ................ 8,000 873,500
Teleport Communications Group, Class A (a) ................. 62,000 3,363,500
Telestra Corp. - ADR (Australia) (a) ....................... 11,700 593,775
U.S. West, Inc. ............................................ 81,000 3,807,000
------------
49,949,692
------------
TOTAL COMMON AND PREFERRED STOCKS 89.4%............................... 136,845,479
------------
</TABLE>

See Notes to Financial Statements

B-38
<PAGE> 238
PORTFOLIO OF INVESTMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED INCOME SECURITIES 8.1%
CABLE TELEVISION 1.4%
$1,000 Continental Cablevision, Inc. .................. 8.300% 05/15/06 $ 1,118,300
1,000 Cox Communications, Inc. ....................... 6.875 06/15/05 1,037,200
------------
2,155,500
------------
ELECTRIC UTILITIES 1.4%
1,000 Texas Utilities Electric Co. ................... 8.250 04/01/04 1,101,250
1,000 Union Electric Co. ............................. 7.375 12/15/04 1,072,855
------------
2,174,105
------------
OIL, GAS, PIPELINE AND DISTRIBUTION 1.9%
1,000 Enron Corp. .................................... 7.125 05/15/07 1,056,050
500 Panhandle Eastern Pipeline Co. ................. 7.875 08/15/04 545,450
100 Texas Eastern Transmission Corp. ............... 8.000 07/15/02 106,429
1,090 Texas Gas Transmission Corp. ................... 8.625 04/01/04 1,217,159
------------
2,925,088
------------
TELECOMMUNICATIONS 3.4%
1,000 360 Communications ............................. 7.125 03/01/03 1,037,900
1,000 Century Telephone Enterprises Inc. Senior Note
Series F ....................................... 6.300 01/15/08 989,800
900 GTE Corp. ...................................... 9.375 12/01/00 964,539
1,000 Sprint Corp. ................................... 8.125 07/15/02 1,068,320
1,000 Worldcom, Inc. ................................. 7.750 04/01/07 1,084,680
------------
5,145,239
------------
TOTAL FIXED INCOME SECURITIES............................................... 12,399,932
------------
TOTAL LONG-TERM INVESTMENTS 97.5%
(Cost $109,999,512)....................................................... 149,245,411
SHORT-TERM INVESTMENTS 2.6%
(Cost $4,034,383)......................................................... 4,034,383
------------
TOTAL INVESTMENTS 100.1%
(Cost $114,033,895)....................................................... 153,279,794
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%)............................... (229,849)
------------
NET ASSETS 100.0%.......................................................... $153,049,945
============
</TABLE>

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

See Notes to Financial Statements

B-39
<PAGE> 239

STATEMENT OF ASSETS AND LIABILITIES

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

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $114,033,895)....................... $153,279,794
Cash........................................................ 808
Receivables:
Fund Shares Sold.......................................... 579,294
Interest.................................................. 204,653
Dividends................................................. 189,773
Unamortized Organizational Costs............................ 1,663
Other....................................................... 3,705
------------
Total Assets.......................................... 154,259,690
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 460,096
Fund Shares Repurchased................................... 307,442
Distributor and Affiliates................................ 182,341
Investment Advisory Fee................................... 81,787
Trustees' Deferred Compensation and Retirement Plans........ 107,012
Accrued Expenses............................................ 71,067
------------
Total Liabilities..................................... 1,209,745
------------
NET ASSETS.................................................. $153,049,945
============
NET ASSETS CONSIST OF:
Capital..................................................... $113,910,444
Net Unrealized Appreciation................................. 39,245,899
Accumulated Net Realized Loss............................... (48,816)
Accumulated Distributions in Excess of Net Investment
Income.................................................... (57,582)
------------
NET ASSETS.................................................. $153,049,945
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $60,414,092 and 3,421,515 shares of
beneficial interest issued and outstanding)............. $ 17.66
Maximum sales charge (5.75%* of offering price)......... 1.08
------------
Maximum offering price to public........................ $ 18.74
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $86,770,239 and 4,921,099 shares of
beneficial interest issued and outstanding)............. $ 17.63
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $5,865,614 and 332,912 shares of
beneficial interest issued and outstanding)............. $ 17.62
============
</TABLE>

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

See Notes to Financial Statements

B-40
<PAGE> 240

STATEMENT OF OPERATIONS

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

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 4,260,507
Interest.................................................... 1,219,948
-----------
Total Income............................................ 5,480,455
-----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $139,079, $835,949 and $52,350,
respectively)............................................. 1,027,378
Investment Advisory Fee..................................... 939,137
Shareholder Services........................................ 298,606
Trustees' Fees and Expenses................................. 34,021
Custody..................................................... 27,417
Amortization of Organizational Costs........................ 22,995
Legal....................................................... 16,828
Other....................................................... 194,077
-----------
Total Expenses.......................................... 2,560,459
-----------
NET INVESTMENT INCOME....................................... $ 2,919,996
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 5,691,843
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 12,907,034
End of the Period:
Investments............................................. 39,245,899
-----------
Net Unrealized Appreciation During the Period............... 26,338,865
-----------
NET REALIZED AND UNREALIZED GAIN............................ $32,030,708
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $34,950,704
===========
</TABLE>

See Notes to Financial Statements

B-41
<PAGE> 241
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.................................... $ 2,919,996 $ 5,126,338
Net Realized Gain........................................ 5,691,843 10,817,404
Net Unrealized Appreciation
During the Period...................................... 26,338,865 1,002,087
------------ -------------
Change in Net Assets from Operations..................... 34,950,704 16,945,829
------------ -------------
Distributions from Net Investment Income................. (3,302,950) (4,918,449)
Distributions in Excess of Net Investment Income......... (58,293) -0-
------------ -------------
Distributions from and in Excess of Net Investment
Income*................................................ (3,361,243) (4,918,449)
------------ -------------
Distributions from Net Realized Gain..................... (13,156,292) (1,861,394)
Distributions in Excess of Net Realized Gain............. (125,726) -0-
------------ -------------
Distributions from and in Excess of Net Realized Gain*... (13,282,018) (1,861,394)
------------ -------------
Return of Capital Distribution*.......................... (7,471,305) -0-
------------ -------------
Total Distributions...................................... (24,114,566) (6,779,843)
------------ -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... 10,836,138 10,165,986
------------ -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................ 33,570,538 50,324,196
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 21,003,724 5,538,900
Cost of Shares Repurchased............................... (53,035,786) (80,912,740)
------------ -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... 1,538,476 (25,049,644)
------------ -------------
TOTAL INCREASE/DECREASE IN NET ASSETS.................... 12,374,614 (14,883,658)
NET ASSETS:
Beginning of the Period.................................. 140,675,331 155,558,989
------------ -------------
End of the Period (Including accumulated undistributed
net investment income of $(57,582) and $382,954,
respectively).......................................... $153,049,945 $ 140,675,331
============ =============
</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............................. $ (1,538,296) $ (2,064,034)
Class B Shares............................. (1,714,845) (2,700,742)
Class C Shares............................. (108,102) (153,673)
------------ -------------
$ (3,361,243) $ (4,918,449)
============ =============
Distributions from and in Excess of Net
Realized Gain:
Class A Shares............................. $ (5,310,506) $ (683,737)
Class B Shares............................. (7,494,154) (1,114,278)
Class C Shares............................. (477,358) (63,379)
------------ -------------
$(13,282,018) $ (1,861,394)
============ =============
Return of Capital Distribution:
Class A Shares............................. $ (2,987,603) $ -0-
Class B Shares............................. (4,215,072) -0-
Class C Shares............................. (268,630) -0-
------------ -------------
$ (7,471,305) $ -0-
============ =============
</TABLE>

See Notes to Financial Statements

B-42
<PAGE> 242

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
From July 28, 1993
(Commencement
Year Ended June 30, of Investment
------------------------------------- Operations) to
Class A Shares 1998 1997 1996 1995 June 30, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $16.441 $15.298 $13.386 $12.906 $ 14.300
------ ------ ------ ------ ------
Net Investment Income................ .429 .637 .538 .595 .479
Net Realized and Unrealized
Gain/Loss.......................... 3.909 1.317 2.077 .485 (1.513)
------ ------ ------ ------ ------
Total from Investment Operations..... 4.338 1.954 2.615 1.080 (1.034)
------ ------ ------ ------ ------
Less:
Distributions from and in Excess of
Net Investment Income............ .480 .610 .703 .600 .323
Distributions from and in Excess of
Net Realized Gain................ 1.691 .201 -0- -0- .037
Return of Capital Distribution..... .951 -0- -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions.................. 3.122 .811 .703 .600 .360
------ ------ ------ ------ ------
Net Asset Value, End of the Period... $17.657 $16.441 $15.298 $13.386 $ 12.906
------ ------ ------ ------ ------
Total Return (a)..................... 28.17% 13.20% 19.93% 8.70% (7.38%)*
Net Assets at End of the Period
(In millions)...................... $60.4 $52.5 $57.7 $50.4 $51.5
Ratio of Expenses to Average Net
Assets (b)......................... 1.30% 1.41% 1.38% 1.34% 1.34%
Ratio of Net Investment Income to
Average Net Assets (b)............. 2.47% 4.03% 3.61% 4.55% 4.10%
Portfolio Turnover................... 23% 102% 121% 109% 102%*
</TABLE>

*Non-Annualized

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

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

See Notes to Financial Statements

B-43
<PAGE> 243
FINANCIAL HIGHLIGHTS (CONTINUED)

The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
From July 28, 1993
(Commencement
Year Ended June 30, of Investment
------------------------------------- Operations) to
Class B Shares 1998 1997 1996 1995 June 30, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $16.434 $15.296 $13.356 $12.880 $ 14.300
------- ------- ------- ------- ---------
Net Investment Income................... .309 .519 .426 .507 .394
Net Realized and Unrealized Gain/Loss... 3.891 1.314 2.080 .461 (1.519)
------- ------- ------- ------- ---------
Total from Investment Operations........ 4.200 1.833 2.506 .968 (1.125)
------- ------- ------- ------- ---------
Less:
Distributions from and in Excess of
Net Investment Income............... .360 .494 .566 .492 .258
Distributions from and in Excess of
Net Realized Gain................... 1.691 .201 -0- -0- .037
Return of Capital Distribution........ .951 -0- -0- -0- -0-
------- ------- ------- ------- ---------
Total Distributions..................... 3.002 .695 .566 .492 .295
------- ------- ------- ------- ---------
Net Asset Value, End of the Period...... $17.632 $16.434 $15.296 $13.356 $ 12.880
======= ======= ======= ======= =========
Total Return (a)........................ 27.20% 12.30% 19.08% 7.80% (8.02%)*
Net Assets at End of the Period
(In millions)......................... $86.8 $83.3 $92.9 $81.0 $83.7
Ratio of Expenses to Average Net Assets
(b)................................... 2.07% 2.17% 2.13% 2.05% 2.06%
Ratio of Net Investment Income to
Average Net Assets (b)................ 1.74% 3.27% 2.86% 3.84% 3.36%
Portfolio Turnover...................... 23% 102% 121% 109% 102%*
</TABLE>

*Non-Annualized

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

See Notes to Financial Statements

B-44
<PAGE> 244

FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
From August 13, 1993
Year Ended June 30, (Commencement of
------------------------------------- Distribution) to
Class C Shares 1998 1997 1996 1995 June 30, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period.......................... $16.426 $15.290 $13.356 $12.868 $14.460
------- ------- ------- ------- -------
Net Investment Income............. .308 .503 .470 .482 .330
Net Realized and Unrealized
Gain/Loss....................... 3.887 1.328 2.030 .498 (1.627)
------- ------- ------- ------- -------
Total from Investment
Operations...................... 4.195 1.831 2.500 .980 (1.297)
------- ------- ------- ------- -------
Less:
Distributions from and in Excess
of Net Investment Income...... .360 .494 .566 .492 .258
Distributions from and in Excess
of Net Realized Gain.......... 1.691 .201 -0- -0- .037
Return of Capital
Distribution.................. .951 -0- -0- -0- -0-
------- ------- ------- ------- -------
Total Distributions............... 3.002 .695 .566 .492 .295
------- ------- ------- ------- -------
Net Asset Value, End of the
Period.......................... $17.619 $16.426 $15.290 $13.356 $12.868
======= ======= ======= ======= =======
Total Return (a).................. 27.14% 12.37% 19.00% 7.88% (9.11%)*
Net Assets at End of the Period
(In millions)................... $5.9 $4.9 $5.0 $1.3 $1.1
Ratio of Expenses to Average Net
Assets (b)...................... 2.06% 2.17% 2.13% 2.09% 2.05%
Ratio of Net Investment Income to
Average Net Assets (b).......... 1.73% 3.23% 2.78% 3.80% 3.38%
Portfolio Turnover................ 23% 102% 121% 109% 102%*
</TABLE>

*Non-Annualized

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

See Notes to Financial Statements

B-45
<PAGE> 245
NOTES TO FINANCIAL STATEMENTS

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

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Utility Fund, formerly known as Van Kampen American Capital Utility
Fund, (the "Fund") is organized as a series of the Van Kampen Equity Trust, a
Delaware business trust and is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to provide its shareholders with capital
appreciation and current income, through investment in common stocks and income
securities of companies engaged in the utilities industry. The Fund commenced
investment operations on July 28, 1993, with two classes of common shares, Class
A and Class B shares. The distribution of the Fund's Class C shares commenced on
August 13, 1993.

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--Portfolio securities are valued by using market
quotations or prices provided by market makers. Any securities for which current
market quotations are not readily available are valued at their fair value as
determined in good faith using procedures established by the Board of Trustees.
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. At June 30, 1998, there were no when
issued or delayed delivery purchase commitments.

The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account

B-46
<PAGE> 246
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--Dividend income is recorded on the ex-dividend date;
interest income is recorded on an accrual basis. 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. ORGANIZATIONAL COSTS--The Fund has reimbursed Van Kampen Funds Inc. or its
affiliates (collectively "Van Kampen") for costs incurred in connection with the
Fund's organization in the amount of $115,000. These costs are being amortized
on a straight line basis over the 60 month period ending July 28, 1998. The
Adviser has agreed that in the event any of the initial shares of the Fund
originally purchased by Van Kampen are redeemed by the Fund during the
amortization period, the Fund will be reimbursed for any unamortized
organizational costs in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

E. 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.

At June 30, 1998, for federal income tax purposes, cost of long- and
short-term investments is $114,033,895; the aggregate gross unrealized
appreciation is $39,446,984 and the aggregate gross unrealized depreciation is
$201,085, resulting in net unrealized appreciation of $39,245,899.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
quarterly from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on option and futures
transactions. All short-term capital gains and a portion of option and futures
gains are included as ordinary income for tax purposes.

B-47
<PAGE> 247
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and for
federal income tax purposes, permanent book and tax differences totaling $77,621
have been reclassified from capital with $711 posted to accumulated
undistributed net investment income and $76,910 posted to accumulated net
realized gain/loss. These differences relate to the character of gain/loss
recognized on the sale of and distributions received from REIT's and the impact
of the amortization of organizational costs on tax basis earnings and profits.

For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended June
30, 1998. The Fund designated $3,489,274 as a 28% rate capital gain distribution
and $5,162,114 as a 20% rate capital gain distribution. Shareholders were sent a
1997 Form 1099-DIV in January 1998 representing their proportionate share of the
capital gain distribution to be reported on their 1997 income tax returns.

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...................................... .65 of 1%
Next $500 million....................................... .60 of 1%
Over $1 billion......................................... .55 of 1%
</TABLE>

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $5,400 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $64,700 representing Van Kampen's 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 of the Fund. For the year ended June
30, 1998, the Fund recognized expenses of approximately $212,500. 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.

B-48
<PAGE> 248
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

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.

At June 30, 1998, Van Kampen owned 100 shares each of Classes A, B and C,
respectively.

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 $45,755,409, $63,746,069 and $4,408,966
for Classes A, B and C, respectively. For the year ended June 30, 1998,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.......................................... 1,328,514 $ 22,835,462
Class B.......................................... 538,641 9,290,235
Class C.......................................... 83,771 1,444,841
---------- ------------
Total Sales........................................ 1,950,926 $ 33,570,538
========== ============
Dividend Reinvestment:
Class A.......................................... 540,406 $ 8,897,389
Class B.......................................... 703,377 11,560,470
Class C.......................................... 33,229 545,865
---------- ------------
Total Dividend Reinvestment........................ 1,277,012 $ 21,003,724
========== ============
Repurchases:
Class A.......................................... (1,639,476) $(27,743,068)
Class B.......................................... (1,388,187) (23,874,869)
Class C.......................................... (83,492) (1,417,849)
---------- ------------
Total Repurchases.................................. (3,111,155) $(53,035,786)
========== ============
</TABLE>

B-49
<PAGE> 249
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

At June 30, 1997, capital aggregated $44,783,868, $71,029,312 and $4,107,714
for Classes A, B and C, respectively. For the year ended June 30, 1997,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.......................................... 2,620,830 $ 41,844,771
Class B.......................................... 496,213 7,650,734
Class C.......................................... 55,249 828,691
---------- ------------
Total Sales........................................ 3,172,292 $ 50,324,196
========== ============
Dividend Reinvestment:
Class A.......................................... 146,956 $ 2,266,380
Class B.......................................... 203,976 3,135,954
Class C.......................................... 8,882 136,566
---------- ------------
Total Dividend Reinvestment........................ 359,814 $ 5,538,900
========== ============
Repurchases:
Class A.......................................... (3,344,356) $(53,090,333)
Class B.......................................... (1,709,336) (26,459,861)
Class C.......................................... (89,228) (1,362,546)
---------- ------------
Total Repurchases.................................. (5,142,920) $(80,912,740)
========== ============
</TABLE>

B-50
<PAGE> 250
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

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>

For the year ended June 30, 1998, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$16,000 and CDSC on redeemed shares of approximately $181,300. Sales charges do
not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $32,564,835 and $51,249,647,
respectively.

5. 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 $643,300.

B-51
<PAGE> 251

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN GROWTH FUND

Van Kampen Growth Fund (the "Fund") is a separate, diversified series of Van
Kampen Equity Trust (the "Trust"), an open-end investment company. The Fund
seeks capital growth. The Fund seeks to achieve this investment objective by
investing primarily in a diversified portfolio of common stocks and other equity
securities of growth companies. Growth companies generally include companies
with established records of growth in sales or earnings and companies with new
products, services or processes that the Fund's investment adviser believes
offer investors above average potential for capital growth. 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 September 30,
1998, (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 (the "SEC"), Washington, D.C. 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
Description of Securities Ratings........................... B-11
Trustees and Officers....................................... B-17
Legal Counsel............................................... B-26
Transfer Agency............................................. B-26
Investment Advisory and Other Services...................... B-26
Custodian and Independent Accountants....................... B-27
Portfolio Transactions and Brokerage Allocation............. B-27
Tax Status of the Fund...................................... B-29
The Distributor............................................. B-29
Distribution and Service Plans.............................. B-30
Performance Information..................................... B-30
Report of Independent Accountants........................... B-33
Financial Statements........................................ B-34
Notes to Financial Statements............................... B-43
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 30, 1998

<PAGE> 252

THE FUND AND THE TRUST

Van Kampen Growth Fund (the "Fund") is a separate, diversified series of Van
Kampen Equity Trust (the "Trust"), an open-end management investment company.
The Fund was established as the Van Kampen American Capital Growth Fund pursuant
to a Designation of Series dated September 7, 1995. At present, the Fund, Van
Kampen Utility Fund, Van Kampen American Capital Value Fund, Van Kampen Great
American Companies Fund, Van Kampen Prospector Fund and Van Kampen Aggressive
Growth 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.

The Trust is an unincorporated business trust established under the laws of
the State of Delaware by an Agreement and Declaration of Trust dated May 10,
1995 (the "Declaration of Trust"). The Declaration of Trust permits the Trustees
to create one or more separate investment portfolios and issue a series of
shares, par value $0.01 per share, for each portfolio. The Trustees can further
sub-divide each series of shares into one or more classes of shares for each
portfolio. 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 Trust originally was organized as the Van Kampen Merrit Equity Trust, a
Massachusetts business trust created by a Declaration of Trust dated March 26,
1987 (the "Massachusetts Trust"). The Massachusetts Trust was reorganized into
the Trust under the name Van Kampen American Capital Equity 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 and
the Fund adopted their current names.

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

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INVESTMENT POLICIES AND RESTRICTIONS

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

2. Invest more than 25% of its assets in a single industry, provided,
however, that this limitation excludes shares of other open-end investment
companies owned by the Fund but includes the Fund's pro rata portion of
the securities and other assets owned by any such company. (Neither the
U.S. Government nor any of its agencies or instrumentalities will be
considered an industry for purposes of this restriction.)

3. Issue senior securities, borrow money from banks or enter into reverse
repurchase agreements with banks in the aggregate in excess of 33 1/3% of
the Fund's total assets (after giving effect to any such borrowing); which
amount excludes no more than 5% in borrowings and reverse repurchase
agreements with any entity for temporary purposes. The Fund will not
mortgage, pledge or hypothecate any assets other than in connection with
issuances of senior securities, borrowings, delayed delivery and when
issued transactions and strategic transactions.

4. Make loans of money or property to any person, except (i) to the extent
the securities in which the Fund may invest are considered to be loans,
(ii) through the loan of portfolio securities, and (iii) to the extent
that the Fund may lend money or property in connection with maintenance of
the value of, or the Fund's interest with respect to, the securities owned
by the Fund.

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. 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. The Fund may not invest in securities issued by other investment companies
except as part of a merger, reorganization or other acquisition and except
to the extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act.

9. Invest in interests in oil, gas, or other mineral exploration or
development programs, except pursuant to the exercise by the Fund of its
rights under agreements relating to portfolio securities.

securities (in which case the Fund may liquidate real estate acquired as a
result of a default on a mortgage), and except to the extent that
Strategic Transactions the Fund may engage in are considered to be
commodities or commodities contracts.

For purposes of the concentration policy of the Fund contained in limitation
(2) above, the Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any one single
foreign government, or by all supranational organizations in the aggregate, are
considered to be securities of issuers in the same industry.

The Fund may not change any of these investment restrictions nor any other
fundamental policy as they apply to the Fund without the approval of the lesser
of (i) more than 50% of the Fund's outstanding voting shares or (ii) 67% or more
of the Fund's voting shares present at a meeting at which the holders of more
than 50% of the outstanding voting 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 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 securities by the Fund for purposes of the
limitation set forth above. The Fund's policy with respect to investment in
illiquid 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 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, and (iii) an exemption or
other relief from the provisions of the 1940 Act.

From time to time the Fund may commit to more stringent restrictions in order
to be able to offer its shares to residents in particular states.

ADDITIONAL INVESTMENT CONSIDERATIONS

BORROWING

The Fund may borrow up to 33 1/3% of the value of its total assets from banks
(including entering into reverse repurchase agreements) which amount excludes no
more than 5% in borrowings and reverse repurchase agreements with any entity for
temporary purposes. The Fund has no current intention to borrow money other than
for temporary purposes.

Borrowing by the Fund creates an opportunity for increased net income but, at
the same time, creates special risk considerations such as potential changes in
the net asset value of the Shares and in the yield on the Fund's portfolio. To
the extent that the Fund is otherwise fully invested and the Adviser believes
that additional investment opportunities exist with the potential for capital
growth, the Fund may employ leverage for the purpose of acquiring portfolio
securities. Such utilization of leverage is considered speculative, and involves
risks. The assets of the Fund, including any additional assets which may be
purchased with the proceeds of any borrowings, will consist primarily of common
stocks and other equity securities of growth companies, the prices of which are
volatile. In the event that the values of the Fund's portfolio securities do not
appreciate or, in fact, depreciate, the Fund would be forced to liquidate a
portion of its portfolio, which could be significant depending upon the
magnitude of the decline in value of the Fund's assets, to pay interest on, and
repay the principal of, any such borrowings. Even in the event that any assets
purchased with the

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proceeds of such borrowings appreciate as anticipated by the Adviser, a portion
of the Fund's assets may be required to be liquidated to meet scheduled
principal and interest payments with respect to such borrowings. Any such
liquidations may be at inopportune times and prices. Utilization of investment
leverage would result in a higher volatility of the net asset value of the Fund.
The effect of leverage in a declining market would result in a greater decrease
in net asset value to holders of the Fund's shares than if the Fund were not
leveraged.

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, utilize various other investment
strategies as described below. Such strategies are generally accepted by modern
portfolio managers and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Fund may purchase
and sell derivative instruments such as exchange-listed and over-the-counter put
and call options on securities, equity and fixed-income indices and other
financial instruments and purchase and sell financial futures contracts and
options thereon and enter into various currency transactions such as currency
forward contracts, currency futures contracts, currency swaps and options on
currencies 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
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 protect against changes in currency exchange rates, or to establish
a position in the derivatives markets as a temporary substitute for purchasing
or selling particular securities.

Strategic Transactions have risks associated with them including possible
default by the other party to the transaction, illiquidity and, to the extent
the Adviser's view as to certain market movements is incorrect, the risk that
the use of such Strategic Transactions could result in losses greater than if
they had not been used. Use of put and call options may result in losses to the
Fund, force the sale or purchase of portfolio securities at inopportune times or
for prices other than current market values, limit the amount of appreciation
the Fund can realize on its investments or cause the Fund to hold a security it
might otherwise sell. The use of 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 use of
futures and options transactions for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position, at the same time they
tend to limit any potential gain which might result from an increase in value of
such position. Finally, the daily variation margin requirements for futures
contracts would create a greater ongoing potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value, and possibly income, and such losses can be greater than if the
Strategic

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Transactions had not been utilized. Income earned or deemed to be earned, if
any, by the Fund from its Strategic Transactions will generally be taxable
income of the Fund. See "Tax Status" in the Prospectus.

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

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

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

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

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

The Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, municipal
obligations, corporate debt securities, equity securities (including convertible
securities) (whether or not it holds the above securities in its portfolio) and
on securities indices, currencies and futures contracts other than futures on
individual corporate debt and individual equity securities. The Fund will not
sell put options if, as a result, more than 50% of the Fund's assets would be
required to be segregated to cover its potential obligations under such put
options other than those with respect to futures and options thereon. In selling
put options, there is a risk that the Fund may be required to buy the underlying
security at a price above the market price.

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

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contract gives the purchaser the right in return for the premium paid to assume
a position in a futures contract and obligates the seller to deliver such future
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 Commission. Typically,
maintaining a futures contract or selling an option thereon requires the Fund to
deposit with the futures commission merchant or 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 marked to market value of the contract fluctuates. The purchase of
options on financial futures involves payment of a premium for the option
without any further obligation on the part of the Fund. If the Fund exercises an
option on a futures contract it will be obligated to post initial margin (and
potential subsequent variation margin) for the resulting futures position just
as it would for any position. Futures contracts and options thereon are
generally settled by entering into an offsetting transaction but there can be no
assurance that the position can be offset prior to settlement at an advantageous
price nor that delivery will not occur.

The Fund also may invest in foreign stock index futures traded outside the
United States. Foreign stock index futures traded outside the United States
include the Nikkei Index of 225 Japanese stocks traded on the Singapore
International Monetary Exchange ("Nikkei Index"), Osaka Index of 50 Japanese
stocks traded on the Osaka Exchange, Financial Times Stock Exchange Index of the
100 largest stocks on the London Stock Exchange, the All Ordinaries Share Price
Index of 307 stocks on the Sydney, Melbourne Exchanges, Hang Seng Index of 33
stocks on the Hong Kong Stock Exchange, Barclays Share Price Index of 40 stocks
on the New Zealand Stock Exchange and Toronto Index of 35 stocks on the Toronto
Stock Exchange. Futures and futures options on the Nikkei Index are traded on
the Chicago Mercantile Exchange and United States commodity exchanges may
develop futures and futures options on other indices of foreign securities.
Futures and options on United States devised index of foreign stocks are also
being developed. Investments in securities of foreign entities and securities
denominated in foreign currencies involve risks not typically involved in
domestic investment, including fluctuations in foreign exchange rates, future
foreign political and economic developments, and the possible imposition of
exchange controls or other foreign or United States governmental laws or
restrictions applicable to such investments.

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 a 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 which have received (or the guarantors of the
obligations of such Counterparties have received) a credit rating of 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 currency 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 of liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

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

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, subject to any
regulatory restrictions, an amount of cash or liquid securities at least equal
to the current amount of the obligation must be segregated with the custodian.
The segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. 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.

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

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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. To the extent such
assets are other than cash or cash equivalents, such assets will be marked to
market on a daily basis. To the extent that the Fund segregates assets other
than cash or cash equivalents in connection with the purchase or sale of a
futures contract or the sale of an option thereon, the Fund will be subject to
market risks with respect to the open futures or option position as well as with
respect to the portfolio securities segregated against such position. To the
extent that the market value of such position and of such portfolio securities
have a high degree of positive correlation, market fluctuations may adversely
affect both the value of such position and the value of such portfolio
securities, which has the effect of leveraging the Fund's portfolio assets and
increasing the Fund's investment risk.

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

DESCRIPTION OF SECURITIES RATINGS

1. DEBT

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 financial commitment on an obligation and repayment of principal 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 creditor's 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.

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SPECULATIVE GRADE

BB, B, CCC, CC, C: Debt rated "BB", "B", "CCC", "CC", and "C" is regarded as
having significantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation and
"C" the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions.

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.

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" rating.

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
interest terms, such as inverse floaters.

B-12
<PAGE> 263

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

A 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
overwhelming 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.

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.

4. NOTES

-- 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).

B-13
<PAGE> 264

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

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 law of bankruptcy and other laws affecting
creditors' rights.

<TABLE>
<S> <C>
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 a
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.
</TABLE>

B-14
<PAGE> 265

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

1. LONG-TERM DEBT

AA: Bonds which are rated AA are judged to be of high quality by all
standards. Together with the AAA group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than 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 payment and
principal security appear adequate for the present but certain protective
elements may by lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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

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.

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.

B-15
<PAGE> 266

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

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

2. The issue or issuer belongs to a group of securities 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.

2. SHORT-TERM DEBT

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

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

--Leading market positions in well-established industries.

--High rates of return on funds employed.

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

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

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

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

Issuers rated 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 a reasonable assurance the earnings and
asset protection will remain relatively well maintained in the foreseeable
future.

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

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

B-16
<PAGE> 267

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.

Moody's applies numerical modifiers 1, 2 and 3 in each 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.

TRUSTEES AND OFFICERS

TRUSTEES

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.
</TABLE>

B-17
<PAGE> 268

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- --------------------- --------------------------
<S> <C>
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.

Don G. Powell*............................ Chairman and a Director of Van Kampen. Chairman and a
2800 Post Oak Blvd. Director of the Advisers and the Distributor. Chairman
Houston, TX 77056 and a Director of Investor Services. Director or officer
Date of Birth: 10/19/39 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.

B-18
<PAGE> 269

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- --------------------- --------------------------
<S> <C>
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>

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

OFFICERS

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 Complex and certain other investment companies advised by
Accounting Officer the Advisers or their affiliates.
</TABLE>

B-19
<PAGE> 270

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 and Chief Operating Officer of the Distributor. Vice President and
Financial Officer Chief Financial Officer of each of the funds in the Fund
Complex and certain other investment companies advised by
the Advisers or their affiliates.

B-20
<PAGE> 271

B-21
<PAGE> 272

B-22
<PAGE> 273

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

COMPENSATION TABLE

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

* Currently a member of the Board of Trustees.

B-23
<PAGE> 274

Mr. Branagan, $25,360; Dr. Caruso, $914; Mr. Gaughan, $3,142; Ms. Heagy,
$23,596; Mr. Kennedy, $24,373; Mr. Miller, $18,899; Mr. Nelson, $45,456; Mr.
Rees, $4,591; Mr. Robinson, $36,433; Mr. Rooney, $12,011; Dr. Sisto,
$10,902; and Mr. Whalen, $41,217. The details of cumulative deferred
compensation (including interest) for each series, including the Fund, are
shown in Table C below. The deferred compensation 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 such series of the Trust
since he or she was first appointed or elected in the year set forth in
Table D below.

TABLE A

FISCAL YEAR 1998 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

B-24
<PAGE> 275

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>
Aggressive Growth Fund................. 06/30 $ 2,547 $2,347 $1,274 $ 2,547 $1,750 $ 2,547 $1,274 $ 2,547
Great American Companies Fund.......... 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Growth Fund............................ 06/30 2,457 2,257 1,229 2,457 1,750 2,457 1,229 2,457
Prospector Fund........................ 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Utility Fund........................... 06/30 2,221 2,021 1,111 2,221 1,500 2,221 1,111 2,221
Value Fund............................. 06/30 1,102 902 551 1,102 500 1,102 551 1,102
Trust Total.......................... 10,531 9,331 5,267 10,531 6,500 10,531 5,267 10,531
</TABLE>

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>
Aggressive Growth Fund........... 06/30 $ 6,815 $ 6,708 $ 2,668 $ 8,614 $ 2,925 $ 2,472 $ 8,129
Great American Companies Fund.... 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Growth Fund...................... 06/30 5,014 4,016 3,003 6,534 2,827 2,034 6,176
Prospector Fund.................. 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Utility Fund..................... 06/30 5,758 7,907 13,389 18,494 2,548 3,705 15,620
Value Fund....................... 06/30 2,591 1,655 1,771 3,938 1,237 897 3,764
Trust Total.................... 25,360 23,596 24,373 45,456 12,011 10,902 41,217

<CAPTION>
TRUSTEE
----------------------------------------------
FORMER TRUSTEES
----------------------------------------------
FUND NAME CARUSO GAUGHAN MILLER REES ROBINSON
- --------- ------ ------- ------ ---- --------
<S> <C> <C> <C> <C> <C>
Aggressive Growth Fund........... $ 0 $ 0 $ 2,389 $ 0 $ 6,919
Great American Companies Fund.... 0 0 1,525 360 2,941
Growth Fund...................... 0 0 1,525 359 5,138
Prospector Fund.................. 0 0 1,525 360 2,942
Utility Fund..................... 914 3,142 10,410 3,152 15,552
Value Fund....................... 0 0 1,525 360 2,941
Trust Total.................... 914 3,142 18,899 4,591 36,433
</TABLE>

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

As of September 3, 1998, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

B-25
<PAGE> 276

MLPF&S for the Sole Benefit of Its Customers................ 87,107 C 23.18%
Attn: Fund Administration
4800 Deer Lake Dr. E. 3rd Fl.
Jacksonville, FL 32246-6484

Prudential Securities Inc. FBO.............................. 30,921 C 8.23%
Mr. Charles J. Greco
Equity Account
1155 Bodine Rd.
Chester Springs, PA 19425-2006

RECORD HOLDER ONLY:

Van Kampen Trust Company.................................... 597,218 A 21.83%
2800 Post Oak Blvd. 603,636 B 17.85%
Houston, TX 77056
</TABLE>

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

LEGAL COUNSEL

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

TRANSFER AGENCY

During the fiscal periods ended June 30, 1998, 1997 and 1996, Investor
Services, shareholder service agent and dividend disbursing agent for the Fund,
received fees aggregating $412,300, $215,900, and $0, respectively, for these
services. Beginning in 1998, 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 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 between the Adviser and the Fund provides
that the Adviser will administer the business affairs of the Fund, supervise the
Fund's overall investment activities in the context of implementing the Fund's
investment objectives, furnish offices, necessary facilities and equipment,
provide administrative services, and permit its officers and employees to serve
without compensation as Trustees of the Trust and officers of the Fund if duly
elected to such positions.

B-26
<PAGE> 277

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

The investment advisory agreement remains in effect from year to year if
specifically approved by the Trustees (including the independent Trustees) on
behalf of the Fund or the Fund's shareholders in compliance with the
requirements of the 1940 Act. The agreement may be terminated without penalty
upon 60 days written notice by either party thereto 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 year ended June 30, 1998, 1997 and 1996, the Fund recognized advisory
expenses after fee waivers of $628,501, $0 and $0, 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 equally together with the other funds advised by the Adviser or
its affiliates and distributed by the Distributor in 25% of the cost of
providing such services, with the remaining 75% of such cost being paid by the
Fund and such other funds based proportionally on their respective net assets.

For the year ended June 30, 1998, 1997 and 1996, the Fund paid expenses of
approximately $39,500, $19,600 and $0, representing the Adviser's cost of
providing accounting services, respectively.

LEGAL SERVICES AGREEMENT. The Fund and other funds advised by the Advisory
Corp. 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 year ended June 30, 1998, 1997 and 1996, the Fund paid expenses of
approximately $10,600, $0 and $0, representing Van Kampen's cost of providing
legal services, respectively.

CUSTODIAN AND INDEPENDENT ACCOUNTANTS

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-27
<PAGE> 278

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. In selecting among the firms believed to meet the criteria
for handling a particular transaction, the Fund's Adviser may take into
consideration that certain firms have sold or are selling shares of the Fund and
that certain firms provide market, statistical or other research information to
the Fund and the Adviser, and may select firms that are affiliated with the
Fund, its Adviser or its Distributor.

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 Fund's Adviser, the amount of
additional commission or increased cost is reasonable in relation to the value
of such services.

In selecting among the firms believed to meet the criteria for handling a
particular transaction, the Adviser may take into consideration that certain
firms (i) provide market, statistical or other research information such as that
set forth above to the Fund and the Adviser, (ii) have sold or are selling
shares of the Fund and (iii) may select firms that are affiliated with the Fund,
its investment adviser or its distributor and other principal underwriters. If
purchases or sales of securities of the Fund and of one or more other investment
companies or clients supervised by the 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 size of the Fund and other
investment companies and clients 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.

The Trustees have adopted certain policies incorporating the standards of Rule
17e-1 issued by the SEC under the 1940 Act which requires that the commissions
paid to the Distributor and other affiliates of the Fund must be reasonable and
fair compared to the commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time. The rule and procedures
also contain review requirements and require the Adviser to furnish reports to
the Trustees and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Trustees will consider from
time to time whether the advisory fee for the Fund 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 $111,723 in brokerage
commissions on transactions totaling $31,147,195 to brokers selected primarily
on the basis of research services provided to the Adviser.

B-28
<PAGE> 279

The Fund paid the following commissions to these brokers during the periods
shown:

<TABLE>
<CAPTION>
AFFILIATED BROKERS
----------------------------
BROKERS MORGAN STANLEY DEAN WITTER
-------- -------------- -----------
<S> <C> <C> <C>
Commissions paid:
Fiscal year 1996......................................... $ 247 N/A N/A
Fiscal year 1997......................................... $131,274 $6 $ 0
Fiscal year 1998......................................... $259,035 $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 last fiscal periods
indicated are as follows:

<TABLE>
<CAPTION>
AMOUNTS
TOTAL UNDERWRITING RETAINED
COMMISSIONS BY DISTRIBUTOR
------------------ --------------
<S> <C> <C>
Fiscal Year Ended June 30, 1998............................. $ 236,777 $ 38,227
Fiscal Year Ended June 30, 1997............................. $1,336,549 $204,700
Fiscal Year Ended June 30, 1996............................. $ 0 $ 0
</TABLE>

B-29
<PAGE> 280

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

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. 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 Plans for Class A Plan were $142,158, 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 $649,355 or 1.00% of the Class B
shares' average net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $488,457 for commissions and transaction fees paid
to financial intermediaries in respect of sales of Class B shares of the Fund
and $160,898 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
$87,372 or 1.00% of the Class C shares' average net assets. Such expenses were
paid to reimburse the Distributor for the following payments: $68,185 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C shares of the Fund and $19,187 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 initial 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

B-30
<PAGE> 281

first five years after their issuance and Class C Shares redeemed during the
first year after their issuance may be subject to a CDSC of the lesser of the
then current net asset value of the shares redeemed or their initial purchase
price from the Fund. Yield quotations do not reflect the imposition of a CDSC,
and if any such CDSC imposed at the time of redemption were reflected, it would
reduce the performance quoted.

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

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 type 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.

CLASS A SHARES

The Fund's average total return, including payment of the maximum sales
charge, for (i) the one year period ended June 30, 1998 was 30.56% and (ii) the
approximate two year, six month period from

B-31
<PAGE> 282

December 27, 1995, the commencement of investment operations for Class A Shares
of the Fund, through June 30, 1998 was 42.50%.

The Fund's cumulative non-standardized total return, excluding payment of the
maximum front-end sales charge, with respect to the Class A Shares from their
inception through June 30, 1998 (as calculated in the Prospectus under the
heading "Fund Performance") was 158.10%.

CLASS B SHARES

The Fund's average total return, including payment of the maximum sales
charge, for (i) the one year period ended June 30, 1998 was 32.56% and (ii) the
approximate two year, six month period from December 27, 1995, the commencement
of investment operations for Class A Shares of the Fund, through June 30, 1998
was 44.52%.

The Fund's cumulative non-standardized total return, including the payment of
the maximum CDSC, with respect to the Class B Shares from their inception
through June 30, 1998 (as calculated in the Prospectus under the heading "Fund
Performance") was 152.03%.

The Fund's cumulative non-standardized total return, excluding payment of the
maximum CDSC, with respect to Class A Shares from their inception through June
30, 1998 (as calculated in the Prospectus under the heading "Fund Performance")
was 155.03%.

CLASS C SHARES

The Fund's average total return, including payment of the maximum sales
charge, for (i) the one year period ended June 30, 1998 was 36.56% and (ii) the
approximate two year, six month period from December 27, 1995, the commencement
of investment operations for Class A Shares of the Fund, through June 30, 1998
was 45.21%.

The Fund's cumulative non-standardized total return, including the payment of
the maximum CDSC, with respect to the Class C Shares from their inception
through June 30, 1998 (as calculated in the Prospectus under the heading "Fund
Performance") was 155.03%.

The Fund's cumulative non-standardized total return, excluding payment of the
maximum CDSC, with respect to the Class A Shares from their inception through
June 30, 1998 (as calculated in the Prospectus under the heading "Fund
Performance") was 155.03%.

B-32
<PAGE> 283

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of
Van Kampen Growth Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Growth 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. 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 Growth 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-33
<PAGE> 284

PORTFOLIO OF INVESTMENTS

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

<TABLE>
<CAPTION>
Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 99.6%
CONSUMER DISTRIBUTION 17.2%
Brylane, Inc. (a)........................................... 40,000 $ 1,840,000
Chico's Fas, Inc. (a)....................................... 47,000 728,500
Elder-Beerman Stores Corp. (a).............................. 59,000 1,574,563
Goodys Family Clothing, Inc................................. 30,000 1,646,250
Lowe's Cos.................................................. 42,800 1,736,075
Pacific Sunwear of California (a)........................... 67,500 2,362,500
Proffitt's, Inc. (a)........................................ 55,000 2,220,625
Rite Aid Corp............................................... 48,000 1,803,000
Ross Stores, Inc............................................ 39,000 1,677,000
Safeway, Inc. (a)........................................... 72,000 2,929,500
The Finish Line, Class A (a)................................ 80,000 2,250,000
TJX Cos., Inc............................................... 150,000 3,618,750
Trans World Entertainment Corp. (a)......................... 50,000 2,156,250
------------
26,543,013
------------
CONSUMER NON-DURABLES 2.3%
Philip Morris Cos., Inc..................................... 57,800 2,275,875
Tommy Hilfiger Corp. (a).................................... 21,000 1,312,500
------------
3,588,375
------------
CONSUMER SERVICES 13.3%
AccuStaff, Inc. (a)......................................... 63,000 1,968,750
Brinker International, Inc. (a)............................. 100,000 1,925,000
Capstar Broadcasting Corp., Class A (a)..................... 26,300 660,787
Cendant Corp. (a)........................................... 76,000 1,586,500
CKE Restaurants, Inc........................................ 84,000 3,465,000
FIRSTPLUS Financial Group, Inc. (a)......................... 33,000 1,188,000
New York Times Co., Class A................................. 28,000 2,219,000
Showbiz Pizza Time, Inc. (a)................................ 56,000 2,257,500
United Road Services, Inc................................... 140,000 2,677,500
Young & Rubicam, Inc. (a)................................... 80,000 2,560,000
------------
20,508,037
------------
ENERGY 1.0%
J. Ray McDermott SA (a)..................................... 38,000 1,577,000
------------
FINANCE 8.1%
Affiliated Managers Group, Inc. (a)......................... 42,000 1,559,250
Allstate Corp............................................... 18,000 1,648,125
Conseco, Inc................................................ 60,000 2,805,000
Finova Group, Inc........................................... 35,000 1,981,875
</TABLE>

See Notes to Financial Statements

B-34
<PAGE> 285
PORTFOLIO OF INVESTMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
First Union Corp............................................ 25,159 $ 1,465,512
SunAmerica, Inc............................................. 51,000 2,929,312
------------
12,389,074
------------
HEALTHCARE 24.5%
Ameripath, Inc. (a)......................................... 130,000 1,535,625
Bristol-Myers Squibb Co..................................... 24,000 2,758,500
ESC Medical Systems Ltd. (a)................................ 226,000 7,627,500
Guldant Corp................................................ 20,000 1,426,250
HBO & Co.................................................... 72,000 2,538,000
Health Management Assn., Inc., Class A (a).................. 59,000 1,972,812
Healthsouth Corp. (a)....................................... 101,000 2,695,437
Idexx Laboratories, Inc. (a)................................ 72,000 1,791,000
Lincare Holdings, Inc. (a).................................. 64,000 2,692,000
Mylan Laboratories, Inc..................................... 60,000 1,803,750
Schering-Plough Corp........................................ 22,000 2,015,750
Shared Medical Systems...................................... 23,000 1,689,063
Total Renal Care Holdings, Inc. (a)......................... 74,760 2,579,220
Universal Health Services, Inc., Class B (a)................ 52,100 3,041,338
Wellpoint Health Networks, Inc., Class A (a)................ 20,000 1,480,000
------------
37,646,245
------------
PRODUCER MANUFACTURING 2.5%
USA Waste Services, Inc. (a)................................ 77,000 3,801,875
------------
RAW MATERIALS/PROCESSING INDUSTRIES 1.5%
Safeskin Corp. (a).......................................... 56,000 2,303,000
------------
TECHNOLOGY 26.2%
Advanced Fibre Communication (a)............................ 42,000 1,682,625
Applied Voice Technology, Inc. (a).......................... 184,000 4,232,000
Ascend Communications, Inc. (a)............................. 42,000 2,081,625
BMC Software, Inc. (a)...................................... 40,000 2,077,500
Cadence Design Systems, Inc. (a)............................ 42,000 1,312,500
Check Point Software Tech (a)............................... 37,000 1,211,750
Computer Associates Intl, Inc............................... 35,000 1,944,688
Computer Sciences Corp...................................... 38,000 2,432,000
Compuware Corp. (a)......................................... 33,000 1,687,125
EMC Corp. (a)............................................... 78,000 3,495,375
Inktomi Corp................................................ 6,100 242,475
Maxim Integrated Products, Inc. (a)......................... 32,000 1,014,000
Micromuse Inc............................................... 35,000 1,428,437
Networks Associates, Inc. (a)............................... 72,000 3,447,000
</TABLE>

See Notes to Financial Statements

B-35
<PAGE> 286
PORTFOLIO OF INVESTMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
SCI Systems, Inc. (a)....................................... 24,000 $ 903,000
Software Ag Systems, Inc. (a)............................... 92,000 2,691,000
Sterling Software, Inc. (a)................................. 73,000 2,158,063
Veritas DGC, Inc. (a)....................................... 28,000 1,398,250
Walker Interactive Systems (a).............................. 100,000 1,475,000
Waters Corp. (a)............................................ 36,000 2,121,750
World Access, Inc. (a)...................................... 40,000 1,200,000
------------
40,236,163
------------
TRANSPORTATION 2.0%
AMR Corp. (a)............................................... 20,000 1,665,000
Covenant Transport Inc., Class A (a)........................ 70,000 1,365,000
------------
3,030,000
------------
UTILITIES 1.0%
Transwitch Corp. (a)........................................ 115,000 1,581,250
------------
TOTAL LONG-TERM INVESTMENTS 99.6%
(Cost $114,210,888).............................................. 153,204,032
REPURCHASE AGREEMENT 1.0%
DLJ Mortgage Acceptance Corp., ($1,580,000 par collateralized by
U.S. Government obligations in a pooled cash account, dated
6/30/98, to be sold on 7/01/98 at $1,580,241)
(Cost $1,580,000)................................................ 1,580,000
------------
TOTAL INVESTMENTS 100.6%
(Cost $115,790,888).............................................. 154,784,032
LIABILITIES IN EXCESS OF OTHER ASSETS (0.6%)........................ (934,015)
------------
NET ASSETS 100.0%................................................... $153,850,017
============
</TABLE>

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

See Notes to Financial Statements

B-36
<PAGE> 287

STATEMENT OF ASSETS AND LIABILITIES

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

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $115,790,888)....................... $154,784,032
Cash........................................................ 1,184
Receivables:
Fund Shares Sold.......................................... 303,689
Dividends................................................. 67,275
Unamortized Organizational Costs............................ 20,106
Other....................................................... 2,190
------------
Total Assets............................................ 155,178,476
------------
LIABILITIES:
Payables:
Investment Advisory Fee................................... 435,517
Fund Shares Repurchased................................... 273,553
Distributor and Affiliates................................ 195,093
Accrued Expenses............................................ 376,361
Trustees' Deferred Compensation and Retirement Plans........ 47,935
------------
Total Liabilities....................................... 1,328,459
------------
NET ASSETS.................................................. $153,850,017
============

NET ASSETS CONSIST OF:
Capital..................................................... $111,525,820
Net Unrealized Appreciation................................. 38,993,144
Accumulated Net Realized Gain............................... 3,378,184
Accumulated Net Investment Loss............................. (47,131)
------------
NET ASSETS.................................................. $153,850,017
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $64,885,052 and 2,765,431 shares of
beneficial interest issued and outstanding)............. $ 23.46
Maximum sales charge (5.75%* of offering price)......... 1.43
------------
Maximum offering price to public........................ $ 24.89
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $79,731,316 and 3,440,655 shares of
beneficial interest issued and outstanding)............. $ 23.17
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $9,233,649 and 398,471 shares of
beneficial interest issued and outstanding)............. $ 23.17
============
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements

B-37
<PAGE> 288

STATEMENT OF OPERATIONS

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

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 466,773
Interest.................................................... 421,677
-----------
Total Income............................................ 888,450
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,014,540
Distribution (12b-1) and Service Fees (Attributed to Class
A, B, and C of $148,958, $669,433 and $87,301,
respectively)............................................. 905,692
Shareholder Services........................................ 574,734
Trustees' Fees and Expenses................................. 24,916
Legal....................................................... 14,323
Amortization of Organizational Costs........................ 7,997
Custody..................................................... 2,177
Other....................................................... 168,777
-----------
Total Expenses.......................................... 2,713,156
Less Fees Waived........................................ 386,039
-----------
Net Expenses............................................ 2,327,117
-----------
NET INVESTMENT LOSS......................................... $(1,438,667)
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $12,625,540
Futures................................................... 278,325
-----------
Net Realized Gain........................................... 12,903,865
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 7,542,991
End of the Period......................................... 38,993,144
-----------
Net Unrealized Appreciation During the Period............... 31,450,153
-----------
NET REALIZED AND UNREALIZED GAIN............................ $44,354,018
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $42,915,351
===========
</TABLE>

See Notes to Financial Statements

B-38
<PAGE> 289

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 Loss....................................... $ (1,438,667) $ (86,224)
Net Realized Gain/Loss.................................... 12,903,865 (1,757,194)
Net Unrealized Appreciation During the Period............. 31,450,153 7,484,772
------------ ------------
Change in Net Assets from Operations...................... 42,915,351 5,641,354
------------ ------------
Distributions from Net Realized Gain...................... (6,327,980) (23,514)
Distributions in Excess of Net Realized Gain.............. -0- (1,799)
------------ ------------
Distributions from and in Excess of Net Realized
Gain*................................................. (6,327,980) (25,313)
Return of Capital Distribution*........................... -0- (21,887)
------------ ------------
Total Distributions..................................... (6,327,980) (47,200)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... 36,587,371 5,594,154
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................. 28,476,433 122,206,757
Net Asset Value of Shares Issued Through Dividend
Reinvestment............................................ 5,825,754 2,031
Cost of Shares Repurchased................................ (33,462,669) (11,696,360)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS........ 839,518 110,512,428
------------ ------------
TOTAL INCREASE IN NET ASSETS.............................. 37,426,889 116,106,582
NET ASSETS:
Beginning of the Period................................... 116,423,128 316,546
------------ ------------
End of the Period (Including accumulated net investment
loss of $47,131 and $23,118, respectively).............. $153,850,017 $116,423,128
============ ============
</TABLE>

See Notes to Financial Statements

B-39
<PAGE> 290

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Year Ended Year Ended Investment Operations)
Class A Shares June 30, 1998 June 30, 1997(a) to June 30, 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $17.878 $13.696 $10.000
------- ------- -------
Net Investment Income/Loss........ (.136) .031 (.044)
Net Realized and Unrealized
Gain............................ 6.711 4.810 3.740
------- ------- -------
Total from Investment Operations.... 6.575 4.841 3.696
Less:
Distributions from and in Excess
of Net Realized Gain............ .990 .353 -0-
Return of Capital Distribution.... -0- .306 -0-
------- ------- -------
Total Distributions................. .990 .659 -0-
------- ------- -------
Net Asset Value, End of the
Period............................ $23.463 $17.878 $13.696
======= ======= =======
Total Return* (b)................... 38.52% 36.00% 37.00%**
Net Assets at End of the Period (In
millions)......................... $ 64.9 $ 53.1 $ .1
Ratio of Expenses to Average Net
Assets*........................... 1.30% 1.32% 1.46%
Ratio of Net Investment Income to
Average Net Assets*............... (.64%) .19% (.79%)
Portfolio Turnover.................. 125% 139% 94%**
* If certain fees had not been
assumed by Van Kampen, Total
Return would have been lower and
the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets............................ 1.58% 2.31% 15.69%
Ratio of Net Investment Income to
Average Net Assets................ (.92%) (.80%) (15.02%)
</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.

See Notes to Financial Statements

B-40
<PAGE> 291
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Year Ended Year Ended Investment Operations)
Class B Shares June 30, 1998 June 30, 1997(a) to June 30, 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period.............................. $17.796 $13.695 $10.000
------- ------- -------
Net Investment Loss................. (.270) (.093) (.045)
Net Realized and Unrealized Gain.... 6.637 4.853 3.740
------- ------- -------
Total from Investment Operations...... 6.367 4.760 3.695
Less:
Distributions from and in Excess of
Net Realized Gain................. .990 .353 -0-
Return of Capital Distribution...... -0- .306 -0-
------- ------- -------
Total Distributions................... .990 .659 -0-
------- ------- -------
Net Asset Value, End of the Period.... $23.173 $17.796 $13.695
======= ======= =======
Total Return* (b)..................... 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)........................... $ 79.7 $ 55.0 $ .1
Ratio of Expenses to Average Net
Assets*............................. 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets*................. (1.40%) (.56%) (.74%)
Portfolio Turnover.................... 125% 139% 94%**
* If certain fees had not been assumed
by Van Kampen, Total Return would
have been lower and the ratios would
have been as follows:
Ratio of Expenses to Average Net
Assets.............................. 2.34% 3.04% 15.70%
Ratio of Net Investment Income to
Average Net Assets.................. (1.68%) (1.53%) (14.97%)
</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.

See Notes to Financial Statements

B-41
<PAGE> 292
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Year Ended Year Ended Investment Operations)
Class C Shares June 30, 1998 June 30, 1997(a) to June 30, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $17.793 $13.695 $10.000
------- ------- -------
Net Investment Loss.............. (.311) (.096) (.045)
Net Realized and Unrealized
Gain........................... 6.681 4.853 3.740
------- ------- -------
Total from Investment Operations... 6.370 4.757 3.695
Less:
Distributions from and in Excess
of Net Realized Gain........... .990 .353 -0-
Return of Capital Distribution... -0- .306 -0-
------- ------- -------
Total Distributions................ .990 .659 -0-
------- ------- -------
Net Asset Value, End of the
Period........................... $23.173 $17.793 $13.695
======= ======= =======
Total Return* (b).................. 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)........................ $9.2 $8.3 $.1
Ratio of Expenses to Average Net
Assets*.......................... 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets*.............. (1.39%) (.57%) (.74%)
Portfolio Turnover................. 125% 139% 94%**
* If certain fees had not been
assumed by Van Kampen, Total
Return would have been lower and
the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets........................... 2.34% 3.04% 15.70%
Ratio of Net Investment Income to
Average Net Assets............... (1.68%) (1.55%) (14.97%)
</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.

See Notes to Financial Statements

B-42

<PAGE> 293

NOTES TO FINANCIAL STATEMENTS

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

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Growth Fund, formerly known as Van Kampen American Capital Growth
Fund, (the "Fund") is organized as a Delaware business trust, and is registered
as a diversified open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
capital growth by investing primarily in a diversified portfolio of common
stocks and other equity securities of growth companies. The Fund commenced
investment operations on December 27, 1995, with three classes of common shares,
Class A, Class B and Class C.

A. SECURITY VALUATION--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Investments in securities not listed on a securities exchange are valued based
on their last quoted bid price or, if not available, their fair value as
determined 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 basis.
Realized gains and losses are determined on an identified cost basis.

The Fund may invest in repurchase agreements, which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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.

B-43
<PAGE> 294
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

C. INCOME AND EXPENSES--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Original issue discount on debt
securities purchased are amortized over the expected life of each applicable
security. Premiums on debt securities are not amortized. 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. ORGANIZATIONAL COSTS--The Fund has agreed to reimburse Van Kampen Funds Inc.
or its affiliates ("collectively Van Kampen") for costs incurred in connection
with the Fund's organization in the amount of $40,000. These costs are being
amortized on a straight line basis over the 60 month period ending December 27,
2000. The Adviser has agreed that in the event any of the initial shares of the
Fund originally purchased by Van Kampen are redeemed during the amortization
period, the Fund will be reimbursed for any unamortized organizational costs in
the same proportion as the number of shares redeemed bears to the number of
initial shares held at the time of redemption.

Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of losses from wash sales and post October 31
losses which are not recognized for tax purposes until the first day of the
following fiscal year.

At June 30, 1998, for federal income tax purposes the cost of long- and
short-term investments is $116,081,935; the aggregate gross unrealized
appreciation is $40,818,724 and the aggregate gross unrealized depreciation is
$2,116,627, resulting in net unrealized appreciation of $38,702,097.

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

Due to interest 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 current fiscal year

B-44
<PAGE> 295
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

have been identified and appropriately reclassified. A permanent difference
related to net operating loss which may be used as an offset against short-term
gains for tax purposes totaling $1,414,654 has been reclassified from
accumulated net investment loss to accumulated net realized gain.

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%
Next $500 million....................................... .70 of 1%
Over $1 billion......................................... .65 of 1%
</TABLE>

Van Kampen has agreed to waive fees or reimburse certain expenses through
June 30, 1998 to the extent necessary so that the net expense based upon Average
Net Assets would not exceed 1.30%, 2.05% and 2.05% for Classes A, B and C
shares, respectively.

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $3,000 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended June 30, 1998, the Fund recognized expenses of
approximately $50,100 representing Van Kampen's 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 of the Fund. For the year ended June
30, 1998, the Fund recognized expenses of approximately $412,300. 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.

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.

B-45
<PAGE> 296
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

At June 30, 1998, Van Kampen owned 7,000 shares of Class A and 6,500 shares
each of Classes B and C, respectively.

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 $46,142,115, $58,925,789, and
$6,457,916 for Classes A, B, and C, respectively. For the year ended June 30,
1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 703,177 $ 14,445,936
Class B.................................. 623,694 12,750,067
Class C.................................. 63,730 1,280,430
---------- ------------
Total Sales................................ 1,390,601 $ 28,476,433
========== ============
Dividend Reinvestment:
Class A.................................. 141,978 $ 2,548,516
Class B.................................. 166,305 2,960,278
Class C.................................. 17,807 316,960
---------- ------------
Total Dividend Reinvestment................ 326,090 $ 5,825,754
========== ============
Repurchases:
Class A.................................. (1,052,014) $(21,445,447)
Class B.................................. (440,708) (9,047,981)
Class C.................................. (147,921) (2,969,241)
---------- ------------
Total Repurchases.......................... (1,640,643) $(33,462,669)
========== ============
</TABLE>

B-46
<PAGE> 297
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

At June 30, 1997, capital aggregated $50,593,110, $52,263,425, and
$7,829,767 for Classes A, B, and C, respectively. For the year ended June 30,
1997, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 3,381,843 $ 57,414,786
Class B.................................. 3,282,280 55,512,272
Class C.................................. 548,147 9,279,699
--------- ------------
Total Sales................................ 7,212,270 $122,206,757
========= ============
Dividend Reinvestment:
Class A.................................. 132 $ 2,031
Class B.................................. -0- -0-
Class C.................................. -0- -0-
--------- ------------
Total Dividend Reinvestment................ 132 $ 2,031
========= ============
Repurchases:
Class A.................................. (419,798) $ (6,901,267)
Class B.................................. (197,416) (3,284,564)
Class C.................................. (89,792) (1,510,529)
--------- ------------
Total Repurchases.......................... (707,006) $(11,696,360)
========= ============
</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 for Class B and C shares will be imposed on most redemptions
made within five years of the purchase for Class B and one year of the purchase
for Class C as detailed in the following schedule.

<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- -----------------------------------------------------------------------------
<S> <C> <C>
First.......................................... 5.00% 1.00%
Second......................................... 4.00% None
Third.......................................... 3.00% None
Fourth......................................... 2.50% None
Fifth.......................................... 1.50% None
Sixth and thereafter........................... None None
</TABLE>

B-47
<PAGE> 298
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

For the year ended June 30, 1998, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$38,700 and CDSC on the redeemed shares of Classes B and C of approximately
$191,300. Sales charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $167,989,019 and $160,998,244,
respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS

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

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

During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in stock index futures. These contracts are generally used as
a substitute for purchasing and selling specific securities. 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).

B-48
<PAGE> 299
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

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

<TABLE>
<CAPTION>
CONTRACTS
- ----------------------------------------------------------------------
<S> <C>
Outstanding at June 30, 1997................................ 15
Futures Opened.............................................. 0
Futures Closed.............................................. (15)
---
Outstanding at June 30, 1998................................ 0
===
</TABLE>

6. DISTRIBUTION AND SERVICE PLANS

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

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended June 30, 1998, are payments retained by Van Kampen of
approximately $568,400.

B-49
<PAGE> 300

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

Van Kampen American Capital Value Fund (the "Fund") is a separate, diversified
series of Van Kampen Equity Trust (the "Trust"), an open-end investment company.
The Fund seeks long-term growth of capital. The Fund will attempt to achieve
this investment objective by investing primarily in a diversified portfolio of
common stocks and other equity securities of medium and larger capitalization
companies that are believed by the Fund's investment adviser to be selling below
their intrinsic values and to offer the opportunity for significant growth of
capital. 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 of the Fund. A copy of the Prospectus may
be obtained without charge by writing Van Kampen Funds Inc., One Parkview Plaza,
Oakbrook Terrace, IL 60181 or calling (800) 341-2911 ((800) 421-2833 for the
hearing impaired). This Statement of Additional Information incorporates by
reference the entire Prospectus.

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
Description of Securities Ratings........................... B-11
Trustees and Officers....................................... B-17
Legal Counsel............................................... B-25
Transfer Agency............................................. B-26
Investment Advisory and Other Services...................... B-26
Custodian and Independent Accountants....................... B-27
Portfolio Transactions and Brokerage Allocation............. B-27
Tax Status of the Fund...................................... B-28
The Distributor............................................. B-28
Distribution and Service Plans.............................. B-29
Performance Information..................................... B-30
Report of Independent Accountants........................... B-32
Financial Statements........................................ B-33
Notes to Financial Statements............................... B-41
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 30, 1998.

<PAGE> 301

THE FUND AND THE TRUST

Van Kampen American Capital Value Fund (the "Fund") is a separate, diversified
series of the Van Kampen Equity Trust (the "Trust"), an open-end management
investment company. The Fund was established as the Van Kampen American Capital
Value Fund pursuant to a Designation of Series dated May 10, 1995. At present,
the Fund, Van Kampen Utility Fund, Van Kampen Growth Fund, Van Kampen Great
American Companies Fund, Van Kampen Prospector Fund and Van Kampen Aggressive
Growth Fund are the only other 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.

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 Trust originally was organized as the Van Kampen Merritt Equity Trust, a
Massachusetts business trust, created by a Declaration of Trust dated March 26,
1987 (the "Massachusetts Trust"). The Massachusetts Trust was reorganized into
the Trust under the name Van Kampen American Capital Equity 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 and
Fund adopted their current names.

B-2
<PAGE> 302

INVESTMENT POLICIES AND RESTRICTIONS

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, such 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 open-end 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, provided,
however, that this limitation excludes shares of other open-end investment
companies owned by the Fund but includes the Fund's pro rata portion of
the securities and other assets owned by any such company. Neither the
U.S. Government nor any of its agencies or instrumentalities will be
considered an industry for purposes of this restriction.

6. 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.

7. Make investments for the purpose of exercising control or participation in
management, except to the extent that exercise by the Fund of its rights
under agreements related to portfolio securities would be deemed to
constitute such control or participation, and 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.

8. Investment in securities issued by other investment companies except as
part of a merger, reorganization or other acquisition and 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 interests in oil, gas, or other mineral exploration or
development programs except pursuant to the exercise by the Fund of its
rights under agreements relating to portfolio securities.

B-3
<PAGE> 303

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

The Fund may invest up to 15% of its total assets in illiquid securities,
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 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 securities by the Fund for purposes of the
limitation set forth above. The Fund's policy with respect to investment in
illiquid 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 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.

From time to time the Fund may commit to more stringent restrictions in order
to be able to offer its shares to residents in particular states.

ADDITIONAL INVESTMENT CONSIDERATIONS

BORROWING

Borrowing by the Fund creates an opportunity for increased net income but, at
the same time, creates special risk considerations such as potential changes in
the net asset value of the Shares and in the yield on the Fund's portfolio.
Although the principal of such borrowings will be fixed, the Fund's assets may
change in value during the time the borrowing is outstanding. Borrowing will
create interest expenses for the Fund which can exceed the income from the
assets retained. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay, the Fund's net
income will be greater than if borrowing were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of borrowing, the net income of the Fund will be less than if borrowing
were not used, and therefore the amount available for distribution to
shareholders as dividends will be reduced.

B-4
<PAGE> 304

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, equity and fixed-income indices and other
financial instruments and purchase and sell financial futures contracts and
options thereon and enter into various currency transactions such as currency
forward contracts, currency futures contracts, currency swaps and options on
currencies 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
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 protect against changes in currency exchange rates, or to establish
a position in the derivatives markets as a temporary substitute for purchasing
or selling particular securities.

Strategic Transactions have risks associated with them including possible
default by the other party to the transaction, illiquidity and, to the extent
the Adviser's view as to certain market movements is incorrect, the risk that
the use of such Strategic Transactions could result in losses greater than if
they had not been used. Use of put and call options may result in losses to the
Fund, force the sale or purchase of portfolio securities at inopportune times or
for prices other than current market values, limit the amount of appreciation
the Fund can realize on its investments or cause the Fund to hold a security it
might otherwise sell. The use of 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 use of
futures and options transactions for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position, at the same time they
tend to limit any potential gain which might result from an increase in value of
such position. Finally, the daily variation margin requirements for futures
contracts would create a greater ongoing potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been utilized. Income earned or deemed to be
earned, if any, by the Fund from its Strategic Transactions will generally be
taxable income of the Fund. See "Tax Status" in the Prospectus.

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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 are cash settled
for the net amount, if any, by which the option is "in-the-money" (i.e., where
the value of the underlying instrument exceeds, in the case of a call option, or
is less than, in the case of a put option, the exercise price of the option) at
the time the option is exercised. Frequently, rather than taking or making
delivery of the underlying instrument through the process of exercising the
option, listed options are closed by entering into offsetting purchase or sale
transactions that do not result in ownership of the new option.

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that the terms of the OTC option will be satisfied. The Fund will engage in OTC
option transactions only with United States government securities dealers
recognized by the Federal Reserve Bank of New York as "primary dealers", or
broker dealers, domestic or foreign banks or other financial institutions which
have received (or the guarantors of the obligation of which have received) a
short-term credit rating of "A-1" from Standard & Poor's Ratings Group ("S&P")
or "P-1" from Moody's Investor Services, Inc. ("Moody's") or an equivalent
rating from any other nationally recognized statistical rating organization
("NRSRO"). The staff of the SEC currently takes the position that, in general,
OTC options on securities other than U.S. Government securities purchased by the
Fund, and portfolio securities "covering" the amount of the Fund's obligation
pursuant to an OTC option sold by it (the cost of the sell-back plus the
in-the-money amount, if any) are illiquid, and are subject to the Fund's
limitation on investing no more than 15% of its assets in illiquid securities.

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

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on a daily basis as the marked to market value of the contract fluctuates. The
purchase of options on financial futures involves payment of a premium for the
option without any further obligation on the part of the Fund. If the Fund
exercises an option on a futures contract it will be obligated to post initial
margin (and potential subsequent variation margin) for the resulting futures
position just as it would for any position. Futures contracts and options
thereon are generally settled by entering into an offsetting transaction but
there can be no assurance that the position can be offset prior to settlement at
an advantageous price nor that delivery will not occur.

The Fund also may invest in foreign stock index futures traded outside the
United States. Foreign stock index futures traded outside the United States
include the Nikkei Index of 225 Japanese stocks traded on the Singapore
International Monetary Exchange ("Nikkei Index"), Osaka Index of 50 Japanese
stocks traded on the Osaka Exchange, Financial Times Stock Exchange Index of the
100 largest stocks on the London Stock Exchange, the All Ordinaries Share Price
Index of 307 stocks on the Sydney, Melbourne Exchanges, Hang Seng Index of 33
stocks on the Hong Kong Stock Exchange, Barclays Share Price Index of 40 stocks
on the New Zealand Stock Exchange and Toronto Index of 35 stocks on the Toronto
Stock Exchange. Futures and futures options on the Nikkei Index are traded on
the Chicago Mercantile Exchange and United States commodity exchanges may
develop futures and futures options on other indices of foreign securities.
Futures and options on United States devised index of foreign stocks are also
being developed. Investments in securities of foreign entities and securities
denominated in foreign currencies involve risks not typically involved in
domestic investment, including fluctuations in foreign exchange rates, future
foreign political and economic developments and the possible imposition of
exchange controls or other foreign or United States governmental laws or
restrictions applicable to such investments.

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Moody's, respectively, or that have an equivalent rating from an NRSRO or
(except for OTC currency 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 of liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

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

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

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
assets sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. Such assets may consist of cash, cash equivalents, liquid debt
or equity securities or other acceptable assets. To the extent such assets are
other than cash or cash equivalents, such assets will be marked to market on a
daily basis. To the extent that the Fund segregates assets other than cash or
cash equivalents in connection with the purchase or sale of a futures contract
or the sale of an option thereon, the Fund will be subject to market risks with
respect to the open futures or option position as well as with respect to the
portfolio securities segregated against such position. To the extent that the
market value of such position and of such portfolio securities have a high
degree of positive correlation, market fluctuations may adversely affect both
the value of such position

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and the value of such portfolio securities, which has the effect of leveraging
the Fund's portfolio assets and increasing the Fund's investment risk.

DESCRIPTION OF SECURITIES RATINGS

1. DEBT

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 financial 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 creditor's 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.

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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

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" rating.

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.

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.

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