VAN KAMPEN EQUITY TRUST, 485BPOS, 1999-07-29

VAN KAMPEN EQUITY TRUST
485BPOS, 1999-07-29

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1999

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. 33 [X]

and

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

Amendment No. 34 [X]

VAN KAMPEN EQUITY TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)

1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555
(Address of Principal Executive Offices) (Zip Code)
(630) 684-6000
Registrant's Telephone Number, including Area Code

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

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

Copies to:

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

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

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

It is proposed that this filing will become effective:

[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. 33 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

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

Van Kampen Utility Fund
Van Kampen Growth Fund
Van Kampen Mid Cap 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 Mid Cap Value Fund
Van Kampen Great American Companies Fund
Van Kampen Prospector Fund
Van Kampen Aggressive Growth Fund

Part C Information

Exhibits

The prospectus and statement of additional information of the Van Kampen Small
Cap Value Fund of the Registrant is incorporated herein by reference to
Post-Effective Amendment No. 32 under the Securities Act of 1933, as amended,
which was filed with the Commission on June 16, 1999. This Amendment is not
intended to amend the prospectus and statement of additional information
incorporated herein.

<PAGE> 3

VAN KAMPEN
UTILITY FUND

Van Kampen Utility Fund is a mutual fund with an investment objective to seek to
provide its shareholders with capital appreciation and current income. The
Fund's management seeks to achieve the investment objective by investing
primarily in a diversified portfolio of common stocks and income securities
issued by companies engaged in the utilities industry.

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

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary............................... 3
Fees and Expenses of the Fund..................... 6
Investment Objective, Policies and Risks.......... 7
Investment Advisory Services...................... 12
Purchase of Shares................................ 13
Redemption of Shares.............................. 20
Distributions from the Fund....................... 21
Shareholder Services.............................. 22
Federal Income Taxation........................... 23
Financial Highlights.............................. 25
Appendix--Description of Securities Ratings....... A-1
</TABLE>

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus, in connection with the offer contained in this prospectus and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund, the Fund's investment adviser or the
Fund's distributor. This prospectus does not constitute an offer by the Fund or
by the Fund's distributor to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful for the Fund to make such an offer in such jurisdiction.
<PAGE> 5

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek to provide its
shareholders with capital appreciation and current income.

INVESTMENT STRATEGIES

The Fund's management seeks to achieve the investment objective by investing
primarily in a diversified portfolio of common stocks and income securities
issued by companies engaged in the utilities industry. Under normal market
conditions, the Fund invests at least 80% of its total assets in such
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. In selecting securities for investment, the
Fund's investment adviser focuses on securities that it believes offer capital
appreciation and current income at a reasonable risk. As a result, the Fund will
not necessarily invest in the highest-yielding securities permitted by the
Fund's investment policies if such investments would subject the Fund to
excessive risk.

The Fund's investments in income securities may include preferred stock and debt
securities, including convertible securities, of various maturities which are
considered "investment-grade" quality at the time of investment. The Fund may
invest up to 20% of its total assets in lower-grade securities commonly referred
to as "junk bonds," which involve special risks as compared to investments in
higher-grade securities.

The Fund may invest up to 35% of its total assets in securities of foreign
issuers. The Fund may invest in certain derivatives, such as options and
futures, which may subject the Fund to additional risks.

INVESTMENT RISKS

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

RISKS OF INVESTING IN A UTILITIES INDUSTRY-CONCENTRATED FUND. Because of the
Fund's policy of investing primarily in securities issued by companies engaged
in the utilities industry, the Fund is susceptible to economic, political or
regulatory risks or other occurrences associated with the utilities industry.
These risks can include, for example, increases in fuel and other operating
costs; high interest expenses for capital construction programs; failure of
regulatory authorities to approve rate changes; costs associated with compliance
of environmental and nuclear safety regulations; service interruption due to
environmental, operational or other mishaps; the effects of economic slowdowns;
surplus capacity and competition; and changes in the overall regulatory climate
that may result in increased costs or the impairment of utility companies to
operate their facilities. The rates charged by utility companies for
utility-related goods or services and the operations of utilities companies
often are subject to review and limitations by utilities' regulatory commissions
which may directly impact utility companies' growth and distributions.

3
<PAGE> 6

UNDERSTANDING

QUALITY RATINGS

Securities ratings are based on the issuer's ability to pay interest and
repay the principal. Securities with ratings above the line are considered
"investment-grade," while those with ratings below the line are regarded as
"noninvestment-grade," or "junk bonds." A detailed explanation of these
ratings can be found in the appendix to this prospectus.

<TABLE>
<CAPTION>
S&P Moody's Meaning
- ------------------------------------------------------
<C> <S> <C>
AAA Aaa Highest quality
......................................................
AA Aa High quality
......................................................
Aa A Above-average quality
......................................................
BBB Baa Average quality
- ------------------------------------------------------
BB Ba Below-average quality
......................................................
B B Marginal quality
......................................................
CCC Caa Poor quality
......................................................
CC Ca Highly speculative
......................................................
C C Lowest quality
......................................................
D -- In default
......................................................
</TABLE>

CREDIT RISK. Credit risk refers to an issuer's ability to make timely payments
of interest and principal. Because the Fund may invest up to 20% of its total
assets in securities below investment-grade credit quality, the Fund is subject
to a higher level of credit risk than a fund that buys only investment grade
securities. "Noninvestment-grade" securities are considered speculative by
recognized rating agencies with respect to the issuer's continuing ability to
pay interest and principal, and such securities have a higher incidence of
default than investments in higher-grade securities.

INCOME RISK. The ability of the Fund's common stocks and preferred stocks to
generate income generally depends on the earnings and the continuing declaration
of dividends by the issuers of such securities. The interest on the Fund's debt
securities is generally affected by prevailing interest rates, which can vary
widely over the short and long term. If dividends are reduced or discontinued or
interest rates drop, your income from the Fund may drop as well.

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

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

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

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

INVESTOR PROFILE

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

- - Seek capital appreciation over the long term.

- - Seek current income.

- - Are willing to take on the increased risks of an investment concentrated in
securities of companies operating in the same industry.

- - Wish to add to their personal investment portfolio a fund that invests
primarily in companies engaged in the utilities industry.

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

4
<PAGE> 7

ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1994' -9.84
'1995' 25.69
'1996' 10.94
'1997' 25.7
'1998' 18
</TABLE>

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

During the five-year period shown in the bar chart, the highest quarterly return
was 12.63% (for the quarter ended December 31, 1997) and the lowest quarterly
return was -7.24% (for the quarter ended March 31, 1994).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Standard & Poor's 40
Utilities Index, a broad-based market index (consisting of the utility sector of
the Standard & Poor's 500-Stock Index) that the Fund's management believes is an
applicable benchmark for the Fund. The Fund's performance figures include the
maximum sales charges paid by investors. The index performance figures do not
include commissions or sales charges that would be paid by investors purchasing
the securities represented by the index. Average annual total returns are shown
for the periods ended December 31, 1998 (the most recently completed calendar
year prior to the date of this prospectus). Remember that the past performance
of the Fund is not indicative of its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns
for the
Periods Ended Past Past Since
December 31, 1998 1 Year 5 Years Inception
- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Van Kampen
Utility Fund --
Class A Shares 11.24% 11.95% 11.53%(1)

Standard & Poor's
40 Utilities
Index 14.77% 13.90% 12.46%(2)
.......................................................
Van Kampen
Utility Fund --
Class B Shares 13.14% 12.22% 11.78%(1)

Standard & Poor's
40 Utilities
Index 14.77% 13.90% 12.46%(2)
.......................................................
Van Kampen
Utility Fund --
Class C Shares 16.15% 12.42% 11.76%(3)

Standard & Poor's
40 Utilities
Index 14.77% 13.90% 12.46%(2)
.......................................................
</TABLE>

Inception dates: (1) 7/28/93, (2) 7/31/93, (3) 8/13/93.

5
<PAGE> 8

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a 5.75%(1) None None
percentage of
offering price)
............................................................
Maximum deferred
sales charge (load)
(as a percentage of
the lesser of
original purchase
price or redemption None(2) 4.00%(3) 1.00%(4)
proceeds)
............................................................
Maximum sales charge
(load) imposed on
reinvested dividends
(as a percentage of None None None
offering price)
............................................................
Redemption fees (as a
percentage of amount None None None
redeemed)
............................................................
Exchange fee None None None
............................................................
</TABLE>

(1) Reduced for purchases of $50,000 and over. See "Purchase of Shares -- Class
A Shares."
(2) Investments of $1 million or more are not subject to any sales charge at the
time of purchase, but a deferred sales charge of 1.00% may be imposed on
certain redemptions made within one year of the purchase. See "Purchase of
Shares -- Class A Shares."
(3) The maximum deferred sales charge is 4.00% in the first year after purchase
and declining thereafter as follows:
Year 1-4.00%
Year 2-3.75%
Year 3-3.50%
Year 4-2.50%
Year 5-1.50%
Year 6-1.00%
After-None
See "Purchase of Shares -- Class B Shares."
(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter. See "Purchase of Shares -- Class C Shares."

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.65% 0.65% 0.65%
..............................................................
Distribution and/or
Service (12b-1) 0.25% 1.00%(2) 1.00%(2)
Fees(1)
..............................................................
Other Expenses 0.34% 0.34% 0.34%
..............................................................
Total Annual Fund
Operating Expenses 1.24% 1.99% 1.99%
..............................................................
</TABLE>

(1) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and Class C Shares are each subject to a combined annual distribution
and service fee of up to 1.00% of the average daily net assets attributable
to such class of shares. See "Purchase of Shares."
(2) Because Distribution and/or Service (12b-1) Fees are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.

Example:

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

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $694 $946 $1,217 $1,989
......................................................................
Class B Shares $602 $974 $1,223 $2,123*
......................................................................
Class C Shares $302 $624 $1,073 $2,317
......................................................................
</TABLE>

6
<PAGE> 9

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $694 $946 $1,217 $1,989
......................................................................
Class B Shares $202 $624 $1,073 $2,123*
......................................................................
Class C Shares $202 $624 $1,073 $2,317
......................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

The Fund operates under the following fundamental investment policies which may
not be changed without the approval of a majority of shareholders of the Fund's
outstanding voting securities, as defined in the Investment Company Act of 1940,
as amended ("1940 Act"). There are risks inherent in all investments in
securities; accordingly there can be no assurance that the Fund will achieve its
investment objective.

- - The Fund's investment objective is 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. Income
securities include preferred stock and debt securities of various maturities.
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, the Fund
invests at least 80% of the Fund's total assets in the securities of such
companies.

- - Under normal market conditions, the Fund may invest up to 20% of its total
assets in cash and securities (including common stocks, income securities and
money market instruments) of companies outside the utilities industry.

- - The Fund may invest in income securities which are rated, at the time of
investment, BBB or higher by Standard & Poor's ("S&P") or rated Baa or higher
by Moody's Investors Service, Inc. ("Moody's") or comparably rated by any
other nationally recognized statistical rating organization ("NRSRO"). The
Fund may also invest up to 20% of its total assets in income securities rated
BB or B by S&P or Ba or B by Moody's or comparably rated by any other NRSRO or
unrated securities determined by the Fund's investment adviser to be of
comparable or higher quality. Lower-grade 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, assurance of interest and
principal payments or maintenance of other terms of the securities over any
long period of time may be small. While offering opportunities for higher
yields, lower-grade securities involve a greater degree of credit risk than
investment-grade income securities.

- - The Fund may invest up to 35% of its total assets in securities of foreign
issuers.

The Fund's investment adviser seeks securities offering capital appreciation
together with current income that entail reasonable credit risk considered in
relation to the Fund's investment policies. In selecting securities for
investment, the Fund's investment 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 factors pertinent to the utilities industry. Factors pertaining to the
utilities industry include the regulatory environment, energy sources, the costs
of alternative fuels and, in the case of electric utilities, the extent and
nature of involvement with nuclear powers. The Fund focuses on a security's
potential for capital appreciation, current and projected yields, prospective
growth in earnings and dividends in relation to price or earnings ratios and
investment risk. The Fund's investment adviser believes that securities issued
by utility companies often provide above-average dividend returns and
below-average price or earnings ratios which are factors that not only provide
current income but also generally tend to moderate risk. The Fund may not
necessarily invest in the highest-yielding utility securities permitted by the
Fund's investment policies if such investments would subject the Fund to
excessive risk.

Companies engaged in the utilities industry include a variety of entities
involved in (i) the 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. The rate of return of
issuers of utility securities are often subject

7
<PAGE> 10

to review and limitations by utilities' regulatory 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. The public utilities industry has experienced
significant changes in recent years, primarily due to increased competition
through deregulation.

Legislation and regulation have significant impacts on the utility industry.
Competition and technological advances has over time often provided better-
positioned utility companies with opportunities for enhanced profitability,
although increased competition and other structural changes has often adversely
affected the profitability of other utilities.

The telecommunications industry has experienced significant changes as local and
long distance telephone companies, wireless communications companies and cable
television providers compete to provide services and as new technologies
develop. Regulation may limit rates charged by such providers based on an
authorized level of earnings, a price index, or another formula. Regulation may
also limit the use of new technologies and hamper efficient depreciation of
existing assets.

Gas and electric utility companies are affected by changes in fuel prices and
interest rates. Many gas utilities generally have been adversely affected by
oversupply conditions, and by increased competition from other providers of
utility services. Certain electric utilities with uncompleted nuclear power
facilities may have problems completing and licensing such facilities.
Regulatory changes with respect to nuclear and conventionally fueled generating
facilities could increase costs or impair the ability of electric companies to
operate such facilities.

Other utility companies 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.

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 regulatory authorities, companies engaged in the
public utilities industry are subject to the risk that such authority will not
authorize increased rates. Regulatory authorities also may restrict a company's
access to new markets, thereby diminishing the company's long-term prospects. In
addition, individual sectors of the utility market are subject to additional
risks. In addition, because of the Fund's policy of concentrating its
investments in utility securities, the Fund may be more susceptible than a fund
without such a policy to any single economic, political or regulatory occurrence
affecting the public utilities industry.

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

PORTFOLIO SECURITIES. 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.

8
<PAGE> 11

The Fund also invests in preferred stocks and securities convertible into common
stocks or other equity securities. 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 ability of common stocks and preferred
stocks to generate income is dependent on the earnings and continuing
declaration of dividends by the issuers of such securities. A convertible
security is a bond, debenture, note, preferred stock, warrant 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 different issuer within a particular
period of time at a specified price or formula. A convertible security generally
entitles the holder to receive interest paid or accrued on debt securities or
the dividend paid on preferred stock until the convertible security matures or
is redeemed, converted or exchanged. Before conversion, convertible securities
generally have characteristics similar to both debt and equity securities. The
value of convertible securities tends to decline as interest rates rise and,
because of the conversion feature, tends to vary with fluctuations in the market
value of the underlying equity security. Convertible securities ordinarily
provide a stream of income with generally higher yields than those of common
stock of the same or similar issuers. Convertible securities generally rank
senior to common stock in a corporation's capital structure but are usually
subordinated to comparable nonconvertible securities. Convertible securities
generally do not participate directly in any dividend increases or decreases of
the underlying equity security although the market prices of convertible
securities may be affected by any such dividend changes or other changes in the
underlying equity security.

The Fund may invest in debt securities of various maturities. Debt securities of
a corporation or other entity generally entitle the holder to receive interest,
at a fixed, variable or floating interest rate, during the term of the security
and repayment of principal at maturity or redemption. The Fund invests primarily
in debt securities considered investment-grade at the time of purchase. A
subsequent reduction in rating does not require the Fund to dispose of a
security. Investment grade securities are securities rated BBB or higher by S&P
or rated Baa or higher by Moody's or comparably rated by any other NRSRO.
Securities rated BBB by S&P or rated Baa by Moody's are in the lowest of the
four investment grade categories and are considered by the rating agencies to be
medium-grade obligations which possess speculative characteristics so that
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than in the case of
higher-grade securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall and such changes may be greater among
debt securities with longer durations. The ratings assigned by the ratings
agencies represent their opinions of the quality of the debt securities they
undertake to rate, but not the market value risk of such securities. It should
be emphasized that ratings are general and are not absolute standards of
quality. For further description of securities ratings, see appendix to this
prospectus. The Fund may invest up to 20% of its total assets in securities
rated below investment grade which involve, among other things, greater credit
risk. See "Risks of Lower-Grade Debt Securities" below.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 35% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign currency exchange rates, political and
economic developments (including war or other instability, expropriation of
assets, nationalization and confiscatory taxation), the imposition of foreign
exchange limitations (including currency blockage), withholding taxes on income
or capital transactions or other restrictions, higher transaction costs
(including higher brokerage, custodial and settlement costs and currency
translation costs) and difficulty in enforcing contractual obligations or taking
judicial action. In addition, there often is less publicly available information
about many foreign issuers, and issuers of foreign securities are subject to
different, often less comprehensive, auditing, accounting, financial reporting
and disclosure requirements than domestic issuers. Such securities may be less
liquid than the securities of domestic issuers. Such securities may also be
subject

9
<PAGE> 12

to greater fluctuations in price than securities of domestic issuers. There is
generally less government regulation of stock exchanges, brokers and listed
companies abroad than in the U. S., and, with respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation, or
diplomatic developments which could affect investment in those countries.
Because there is usually less supervision and governmental regulation of
exchanges, brokers and dealers than there is in the U.S., the Fund may
experience settlement difficulties or delays not usually encountered in the U.S.
The risks of foreign investments should be considered carefully by an investor
in the Fund.

RISK OF INVESTING IN

LOWER-GRADE DEBT SECURITIES

Under normal market conditions, the Fund may invest up to 20% of its total
assets in debt securities below investment-grade. The Fund may invest in
lower-grade debt securities rated at the time of purchase BB or B by S&P or
rated Ba or B by Moody's or comparably rated by any other NRSRO or, if unrated,
believed by the Fund's investment adviser to be of comparable quality. Such
lower-grade debt securities are commonly referred to as "junk bonds" and involve
special risks as compared to investments in higher-grade securities. Lower-
grade debt securities 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. Lower-grade debt securities involve greater risks,
such as greater credit risk, greater market risk and volatility, greater
liquidity concerns and potentially greater manager risk. For a description of
securities ratings, see the appendix to this prospectus.

Lower-grade debt securities are more susceptible to nonpayment of interest and
principal and default than higher-grade securities. Adverse changes in the
economy or the individual issuer often have a more significant impact on the
ability of lower-grade issuers to make payments, meet projected goals or obtain
additional financing. When an issuer of such securities is in financial
difficulties, the Fund may incur additional expenditures or invest additional
assets in an effort to obtain partial or full recovery on amounts due. While all
debt securities fluctuate inversely with changes in interest rates, the prices
of lower-grade securities generally are less sensitive to changes in interest
rates and are more sensitive to real or perceived general adverse economic
changes or specific issuer developments. A significant increase in market
interest rates or general economic developments could severely disrupt the
market for such securities and the market values of such securities. Such
securities also often experience more volatility in prices than higher-grade
securities. Lack of liquidity in a security makes the sale of the security more
difficult in a timely manner, at least without price concessions. The market for
lower-grade securities may have less available information available, further
complicating evaluations and valuations of such securities, and placing more
emphasis on the investment adviser's experience, judgment and analysis than
other securities.

For further information regarding investing in lower-grade securities, see the
Fund's Statement of Additional Information.

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, use various investment strategic
transactions described below to earn income, facilitate portfolio management and
mitigate risks. Such strategic transactions are generally accepted under modern
portfolio management and are regularly used by many mutual funds and other
institutional investors. Although the investment adviser seeks to use the
practices to further the Fund's investment objective, no assurance can be given
that these practices will achieve this result.

The Fund may purchase and sell derivative instruments such as exchange-listed
and over-the-counter put and call options on securities, financial futures,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, and enter into various
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 generally seeks to use Strategic Transactions as a portfolio management or
hedging technique to seek to protect against possible adverse changes in the
market value of securities held in or to be purchased for the Fund's portfolio,
protect the Fund's unrealized gains, facilitate the sale of certain securities
for investment purposes, protect against changes in currency exchange rates, or
establish positions in the derivatives markets as a temporary substitute for
purchasing or selling particular securities.

10
<PAGE> 13

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the Fund's investment adviser's ability to predict pertinent market movements,
which cannot be assured. Thus, the use of Strategic Transactions may result in
losses greater than if they had not been used, may require the Fund to sell or
purchase portfolio securities at inopportune times or for prices other than
current market values, may limit the amount of appreciation the Fund can
otherwise realize on an investment, or may cause the Fund to hold a security
that it might otherwise sell. The use of currency transactions can result in the
Fund incurring losses because of the imposition of exchange controls, suspension
of settlements or the inability to deliver or receive a specified currency.
Additionally, amounts paid as premiums and cash or other assets held in margin
accounts with respect to Strategic Transactions are not otherwise available to
the Fund for investment purposes.

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

OTHER INVESTMENTS AND RISK FACTORS

For cash management purposes, the Fund may engage in repurchase agreements with
banks and broker-dealers to earn a return on temporarily available cash. Such
transactions are subject to the risk of default by the other party. It is
currently the policy of the Fund not to invest more than 20% of its total assets
at the time of purchase in securities subject to repurchase agreements.

The Fund may purchase and sell securities on a "when-issued" and "delayed
delivery" basis. The Fund accrues no income on such securities until the Fund
actually takes delivery of such securities. These transactions are subject to
market fluctuation; the value of the securities at delivery may be more or less
than their purchase price. The value or yield generally available on comparable
securities when delivery occurs may be higher than the value or yield on the
securities obtained pursuant to such transactions. Because the Fund relies on
the buyer or seller to consummate the transaction, failure by the other party to
complete the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. The Fund will engage
in when-issued and delayed delivery transactions for the purpose of acquiring
securities consistent with the Fund's investment objective and policies and not
for the purpose of investment leverage.

The Fund may lend its portfolio securities in an amount up to 50% of its total
assets to broker-dealers, banks or other recognized institutional borrowers of
securities. Such loans must be callable at any time and the borrower at all
times during the loan must maintain cash or liquid securities as collateral or
provide the Fund an irrevocable letter of credit equal to at least 100% of the
value of the securities loaned (including accrued interest). During the time
portfolio securities are on loan, the Fund receives any dividends or interest
paid on such securities and receives the interest earned on the collateral which
is invested in short-term instruments or receives an agreed-upon amount of
interest income from the borrower who has delivered the collateral or letter of
credit. As with any extensions of credit, there are risks of delay in recovery
and in some cases even loss of rights in the collateral should the borrower of
the securities fail financially.

The Fund may invest up to 15% of the Fund's net assets in illiquid securities
and certain restricted securities. Such securities may be difficult or
impossible to sell at the time and the price that the Fund would like. Thus, the
Fund may have to sell such securities at a lower price, sell other securities
instead to obtain cash or forego other investment opportunities.

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

11
<PAGE> 14

sions or dealer costs, and may result in the realization of more short-term
capital gains than if the Fund had lower portfolio turnover. Increases in the
Fund's transaction costs would impact the Fund's performance. The turnover rate
will not be a limiting factor, however, if the Fund's investment adviser
considers portfolio changes appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital appreciation and current income on these securities will tend to be
lower than the potential for capital appreciation and current income on other
securities that may be owned by the Fund. The Fund may not achieve its
investment objective if it takes a defensive position.

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 investment 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 Fund's investment 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 assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. These risks may be more acute in
certain foreign countries, particularly emerging markets countries. Accordingly,
the Fund's investments may be adversely affected. The statements above are
subject to the Year 2000 Information and Readiness Disclosure Act which Act may
limit the legal rights regarding the use of such statements in the case of a
dispute.

INVESTMENT ADVISORY SERVICES

THE ADVISER. Van Kampen Investment Advisory Corp. is the Fund's investment
adviser (the "Adviser" or "Advisory Corp."). The Adviser is a wholly owned
subsidiary of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company with more than two million
retail investor accounts, extensive capabilities for managing institutional
portfolios, and more than $75 billion under management or supervision. Van
Kampen Investments' 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 (the
"Distributor") and the sponsor of the funds mentioned above, is also a wholly
owned subsidiary of Van Kampen Investments. Van Kampen Investments is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The
Adviser's principal office is located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555.

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

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
- -----------------------------------------------
<S> <C> <C> <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>

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.65% of the Fund's average daily net assets for the Fund's
fiscal period ended March 31, 1999.

12
<PAGE> 15

Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment, provides administrative services, and permits its
officers and employees to serve without compensation as trustees of the Trust or
officers of the Fund if elected to such positions. The Fund pays all charges and
expenses of its day-to-day operations, including the compensation of trustees of
the Trust (other than those who are affiliated persons of the Adviser,
Distributor or Van Kampen Investments), the charges and expenses of legal
counsel and independent accountants, distribution fees, service fees, custodian
fees, the costs of providing reports to shareholders, and all other ordinary
business expenses not specifically assumed by the Adviser.

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

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

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

PORTFOLIO MANAGEMENT. The Fund's portfolio management team is headed by
Christine Drusch, Senior Portfolio Manager. Ms. Drusch has been Senior Portfolio
Manager since January 1998 and Vice President of the Adviser and Asset
Management since December 1998. Prior to December 1998, Ms. Drusch was an
Assistant Vice President of the Adviser and Asset Management. Prior to September
1995, Ms. Drusch was an Associate Portfolio Manager of Asset Management. 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.

Portfolio Managers Mathew Hart and David McLaughlin are responsible as
co-managers for the day-to-day management of the Fund's investment portfolio.
Mr. Hart has been a Portfolio Manager since January 1998 and Vice President of
the Adviser and Asset Management since December 1998. Prior to January 1998, Mr.
Hart was Associate Portfolio Manager of the Adviser and Asset Management. Prior
to August 1997, Mr. Hart was with AIM Capital Management. Mr. Hart has been
co-manager of the Fund since January 1998.

Mr. McLaughlin has been a Portfolio Manager and Vice President of the Adviser
and Asset Management since June 1995. Prior to June 1995, Mr. McLaughlin was a
Senior Equity Trader for the Adviser. Mr. McLaughlin has been co-manager of the
Fund since October 1998.

PURCHASE OF SHARES

GENERAL

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

Initial investments must be at least $1,000 for each class of shares, and
subsequent investments must be at least $25 for each class of shares. Both
minimums may be waived by the Distributor for plans involving periodic
investments.

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

13
<PAGE> 16

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

The net asset value per share for each class of shares of the Fund generally is
determined once daily as of 5:00 p.m., Eastern time, Monday through Friday,
except on customary business holidays, or except on any day on which no purchase
or redemption orders are received or there is not a sufficient degree of trading
in the Fund's portfolio securities such that the Fund's net asset value per
share might be materially affected. The Fund's Board of Trustees reserves the
right to calculate the net asset value and adjust the offering price more
frequently than once a day if deemed desirable. Net asset value per share for
each class is determined by dividing the value of the Fund's portfolio
securities, cash and other assets (including accrued interest) attributable to
such class, less all liabilities (including accrued expenses) attributable to
such class, by the total number of shares of the class outstanding. 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 by the Board of Trustees. Securities or other assets for
which market quotations are not readily available are valued at a fair value as
determined in good faith by the Adviser in accordance with procedures
established by the Board of Trustees. Short-term investments with a maturity of
60 days or less when purchased are valued at amortized cost which approximates
fair value at which it is expected such securities may be resold.

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

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

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

The offering price for shares is based on the next calculation of net asset
value per share (plus sales charges, where applicable) after an order is
received

14
<PAGE> 17

by Investor Services. Orders received by authorized dealers are priced based on
the date of receipt provided such order is transmitted to Investor Services
prior to Investor Services' close of business on such date. Orders received by
authorized dealers transmitted to Investor Services after its close of business
are priced based on the date of the next computed net asset value per share
provided they are received by Investor Services prior to Investor Services'
close of business on such date. It is the responsibility of authorized dealers
to transmit orders received by them to Investor Services so they will be
received in a timely manner.

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

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

CLASS A SHARES

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

CLASS A SHARES

SALES CHARGE SCHEDULE

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

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

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

Under the Distribution Plan and Service Plan, the Fund may spend a total of
0.25% per year of the average daily net assets with respect to the Class A
Shares of the Fund. From such amount, under the Service Plan, the Fund may spend
up to 0.25% per year of the Fund's average daily net assets with respect to the
Class A Shares for the ongoing provision of services to Class A shareholders by
the Distributor and by brokers, dealers or financial intermediaries and for the
maintenance of such shareholders' accounts.

15
<PAGE> 18

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
as a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ------------------------------------------------
<S> <C> <C> <C>
First 4.00%
................................................
Second 3.75%
................................................
Third 3.50%
................................................
Fourth 2.50%
................................................
Fifth 1.50%
................................................
Sixth 1.00%
................................................
Seventh and After None
................................................
</TABLE>

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

The amount of the contingent deferred sales charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B Shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are totaled and deemed to have been made on the last day
of the month.

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

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class B Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class B Shares for the
ongoing provision of services to Class B shareholders by the Distributor and by
brokers, dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

In determining whether a contingent deferred sales charge is applicable to a
redemption, it is assumed that the redemption is first of any shares in the
shareholder's Fund account that are not subject to a contingent deferred sales
charge and then of shares held the longest in the shareholder's account.

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class C Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class C Shares for the
ongoing provision of services to Class C shareholders by the Distributor and by
brokers, dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.

CONVERSION FEATURE

Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment
plan Class B Shares received on such shares, automatically convert to Class A
Shares eight years after the end of the

16
<PAGE> 19

calendar month in which the shares were purchased. Class B Shares purchased
before June 1, 1996, and any dividend reinvestment plan Class B Shares received
on such shares, 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 Class C
Shares received on such shares, 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 share of the Fund acquired through the exchange
privilege from another Van Kampen fund participating in the exchange program is
determined by reference to the Van Kampen fund from which such share was
originally purchased.

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

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

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

QUANTITY DISCOUNTS

Investors purchasing Class A Shares may, under certain circumstances described
below, be entitled to pay reduced or no sales charges. Investors, or their
authorized dealers, must notify the Fund at the time of the purchase order
whenever a quantity discount is applicable to purchases. Upon such notification,
an investor will 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 authorized dealer or the Distributor.

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

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

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

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

17
<PAGE> 20

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

OTHER PURCHASE PROGRAMS

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

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

The administrator of such a unit investment trust must have an agreement with
the Distributor pursuant to which the administrator will (1) submit a single
bulk order and make payment with a single remittance for all investments in the
Fund during each distribution period by all investors who choose to invest in
the Fund through the program and (2) provide Investor Services with appropriate
backup data for each investor participating in the program 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 quarterly basis only, even
if their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.

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

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

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

(3) Directors, officers, employees and, when permitted, registered
representatives, of financial

18
<PAGE> 21

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

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

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

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

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

(8) Trusts created under pension, profit sharing or other employee benefit plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), or custodial accounts held by a bank created pursuant
to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code and assets held by an employer
or trustee in connection with an eligible deferred compensation plan under
Section 457 of the Code. Such plans will qualify for purchases at net asset
value provided, for plans initially establishing accounts with the
Distributor in the Participating Funds after 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, 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, plus 0.25% on the
excess over $50 million.

(9) Individuals who are members of a "qualified group." For this purpose, a
qualified group is one which (i) has been in existence for more than six
months, (ii) has a purpose other than to acquire shares of the Fund or
similar investments, (iii) has given and continues to give its endorsement
or authorization, on behalf of the group, for purchase of shares of the Fund
and Participating Funds, (iv) has a membership that the authorized dealer
can certify as to the group's members and (v) satisfies other uniform
criteria established by the Distributor for the purpose of realizing
economies of scale in distributing such shares. A qualified group does not
include one whose sole organizational nexus, for example, is that its
participants are credit card holders of the same institution, policy holders
of an insurance company, customers of a bank or broker-dealer, clients of an
investment adviser or other similar groups. Shares purchased in each group's
participants account in connection with this privilege will be subject to a

19
<PAGE> 22

contingent deferred sales charge of 1.00% in the event of redemption within
one year of purchase, and a commission will be paid to authorized dealers
who initiate and are responsible for such sales to each individual as
follows: 1.00% on sales to $2 million, plus 0.80% on the next $1 million and
0.50% on the excess over $3 million.

The term "families" includes a person's spouse, children 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 dealers as described above or directly with Investor Services by the
investment adviser, trust company or bank trust department, provided that
Investor Services receives federal funds for the purchase by the close of
business on the next business day following acceptance of the order. An
authorized dealer may charge a transaction fee for placing an order to purchase
shares pursuant to this provision or for placing a redemption order with respect
to such shares. Authorized dealers will be paid a service fee as described 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.

REDEMPTION OF
SHARES

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

Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the request and any other necessary documents in
proper order. Such payment may be postponed or the right of redemption suspended
as provided by the rules of the SEC. Such payment may, under certain
circumstances, be paid wholly or in part by a distribution-in-kind of portfolio
securities. If the shares to be redeemed have been recently purchased by check,
Investor Services may delay the payment of redemption proceeds until it confirms
the purchase check has cleared, which may take up to 15 days. A taxable gain or
loss will be recognized by the shareholder upon redemption of shares.

WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor Services
Inc., PO Box 218256, Kansas City, MO 64121-8256. The request for redemption
should indicate the number of shares to be redeemed, the class designation of
such shares and the shareholder's account number. The redemption request must be
signed by all persons in whose names the shares are registered. Signatures must
conform exactly to the account registration. If the proceeds of the redemption
exceed $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.

Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption to be in proper form. In some
cases, however, additional documents may be necessary. In the case of
shareholders holding certificates, the certificates for the shares being
redeemed properly endorsed for transfer must accompany 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. IRA redemption requests should be sent to the
IRA custodian to be forwarded to Investor Services. Contact the IRA custodian
for further information.

20
<PAGE> 23

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

AUTHORIZED DEALER REDEMPTION REQUESTS. Shareholders may place redemption
requests through an authorized dealer. Orders sent through authorized dealers
must be at least $500 (unless transmitted by your authorized dealer via the
FUNDSERV network). The redemption price for such shares is the net asset value
per share next calculated after an order in proper form is received by an
authorized dealer provided such order is transmitted to the Distributor prior to
the Distributor's close of business on such day. It is the responsibility of
authorized dealers to transmit redemption requests received by them to the
Distributor so they will be received prior to such time. Redemptions completed
through an authorized dealer may involve additional fees charged by the dealer.

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. To establish
such privilege, a shareholder must complete the appropriate section of the
application form accompanying this prospectus or call the Fund at (800) 341-2911
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. Van Kampen Investments, Investor Services and the Fund employ
procedures considered by them to be reasonable to confirm that instructions
communicated by telephone are genuine. Such procedures include requiring certain
personal identification information prior to acting upon telephone instructions,
tape recording telephone communications and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
neither Van Kampen Investments, Investor Services nor the Fund will be liable
for following telephone instructions which it reasonably believes to be genuine.
Telephone redemptions may not be available if the shareholder cannot reach
Investor Services by telephone, whether because all telephone lines are busy or
for any other reason; in such case, a shareholder would have to use the Fund's
other redemption procedure previously described. Requests received by Investor
Services prior to 4:00 p.m., New York time, will be processed at the next
determined net asset value per share. These privileges are available for 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 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 payable by wire transfer are expected to be wired on the next
business day following the date of redemption. The Fund reserves the right at
any time to terminate, limit or otherwise modify this redemption privilege.

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

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

21
<PAGE> 24

is to distribute all or substantially all of this income, less expenses, at
least quarterly as dividends to shareholders. Dividends are automatically
applied to purchase additional shares of the Fund at the next determined net
asset value unless the shareholder instructs otherwise.

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

CAPITAL GAINS. The Fund may realize capital gains or losses when it sells
securities, depending on whether the sales prices for the securities are higher
or lower than purchase prices. Net realized capital gains represent the total
profit from sales of securities minus total losses from sales of securities
including losses carried forward from prior years. The Fund distributes any
taxable net realized capital gains to shareholders as capital gains dividends at
least annually. As in the case of dividends, capital gains dividends are
automatically reinvested in additional shares of the Fund at net asset value
unless the shareholder instructs otherwise.

SHAREHOLDER SERVICES

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

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 applicable payable date of the dividend or capital gains
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 by 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.

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 predetermined amounts in the Fund. Additional
information is available from the Distributor or your authorized dealer.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next 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 that Participating Fund are
available for sale; however, during periods of suspension of sales, shares of a
Participating Fund may be available for sale only to existing shareholders of a
Participating Fund. Shareholders seeking an exchange into a Participating Fund
should obtain and read the current prospectus for such fund.

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

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

22
<PAGE> 25

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. A shareholder automatically has telephone exchange privileges unless
otherwise designated in the application form accompanying the prospectus. Van
Kampen Investments, Investor Services and the Fund employ procedures considered
by them to be reasonable to confirm that instructions communicated by telephone
are genuine. Such procedures include requiring certain personal identification
information prior to acting upon telephone instructions, tape recording
telephone communications, and providing written confirmation of instructions
communicated by telephone. If reasonable procedures are employed, neither Van
Kampen Investments, Investor Services nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. If the
exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gains options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privileges to such shareholders. For further
information on these restrictions see the Statement of Additional Information.
The Fund may modify, restrict or terminate the exchange privilege at any time on
60 days' notice to its shareholders of any termination or material amendment.

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

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

A prospectus of any of these Participating Funds may be obtained from any
authorized dealer 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.

INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instruction. Van Kampen Investments, Investor
Services and the Fund employ procedures considered by them to be reasonable to
confirm that instructions communicated through the internet are genuine. Such
procedures include requiring use of a personal identification number prior to
acting upon internet instructions and providing written confirmation of
instructions communicated through the internet. If reasonable procedures are
employed, neither Van Kampen Investments, Investor Services 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.

FEDERAL INCOME TAXATION

23
<PAGE> 26

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

The sale or exchange of shares is a taxable transaction for federal income tax
purposes. Shareholders who sell their shares 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 the shares are held as a capital asset,
the gain or loss will be a capital gain or loss. Any capital gains may be taxed
at different rates depending on how long the shareholder held such shares.

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

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

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

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

24
<PAGE> 27

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
Class A Shares
From July 28, 1993
(Commencement of
Nine Months Investment
Ended Year Ended June 30, Operations) to
March 31, 1999 1998 1997 1996 1995 June 30, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Net Asset Value,
Beginning of the
Period $17.657 $16.441 $15.298 $13.386 $12.906 $14.300
------- ------- ------- ------- ------- -------
Net Investment
Income .310 .429 .637 .538 .595 .479
Net Realized and
Unrealized
Gain/Loss .013 3.909 1.317 2.077 .485 (1.513)
------- ------- ------- ------- ------- -------
Total from Investment
Operations .323 4.338 1.954 2.615 1.080 (1.034)
------- ------- ------- ------- ------- -------
Less:
Distributions from
and in Excess of
Net
Investment Income .300 .480 .610 .703 .600 .323
Distributions from
and in Excess of
Net
Realized Gain .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions .515 3.122 .811 .703 .600 .360
------- ------- ------- ------- ------- -------
Net Asset Value, End
of the Period $17.465 $17.657 $16.441 $15.298 $13.386 $12.906
======= ======= ======= ======= ======= =======
Total Return(a) 1.72%* 28.17% 13.20% 19.93% 8.70% (7.38)%*

Net Assets at End of
the Period (In
millions) $62.1 $60.4 $52.5 $57.7 $50.4 $51.5
Ratio of Expenses to
Average Net
Assets(b) 1.24% 1.30% 1.41% 1.38% 1.34% 1.34%
Ratio of Net
Investment Income to
Average Net
Assets(b) 2.29% 2.47% 4.03% 3.61% 4.55% 4.10%
Portfolio Turnover 13%* 23% 102% 121% 109% 102%*

<CAPTION>
Class B Shares
From July 28, 1993
(Commencement of
Nine Months Investment
Ended Year Ended June 30, Operations) to
March 31, 1999 1998 1997 1996 1995 June 30, 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period $17.632 $16.434 $15.296 $13.356 $12.880 $14.300
------- ------- ------- ------- ------- -------
Net Investment
Income .208 .309 .519 .426 .507 .394
Net Realized and
Unrealized
Gain/Loss .012 3.891 1.314 2.080 .461 (1.519)
------- ------- ------- ------- ------- -------
Total from Investment
Operations .220 4.200 1.833 2.506 .968 (1.125)
------- ------- ------- ------- ------- -------
Less:
Distributions from
and in Excess of
Net
Investment Income .200 .360 .494 .566 .492 .258
Distributions from
and in Excess of
Net
Realized Gain .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions .415 3.002 .695 .566 .492 .295
------- ------- ------- ------- ------- -------
Net Asset Value, End
of the Period $17.437 $17.632 $16.434 $15.296 $13.356 $12.880
======= ======= ======= ======= ======= =======
Total Return(a) 1.21%* 27.20% 12.30% 19.08% 7.80% (8.02)%*
Net Assets at End of
the Period (In
millions) $84.1 $86.8 $83.3 $92.9 $81.0 $83.7
Ratio of Expenses to
Average Net
Assets(b) 1.99% 2.07% 2.17% 2.13% 2.05% 2.06%
Ratio of Net
Investment Income to
Average Net
Assets(b) 1.53% 1.74% 3.27% 2.86% 3.84% 3.36%
Portfolio Turnover 13%* 23% 102% 121% 109% 102%*

<CAPTION>
Class C Shares

From August 13, 1993
Nine Months (Commencement of
Ended Year Ended June 30, Distribution) to
March 31, 1999 1998 1997 1996 1995 June 30, 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period $17.619 $16.426 $15.290 $13.356 $12.868 $14.460
------- ------- ------- ------- ------- -------
Net Investment
Income .209 .308 .503 .470 .482 .330
Net Realized and
Unrealized
Gain/Loss .013 3.887 1.328 2.030 .498 (1.627)
------- ------- ------- ------- ------- -------
Total from Investment
Operations .222 4.195 1.831 2.500 .980 (1.297)
------- ------- ------- ------- ------- -------
Less:
Distributions from
and in Excess of
Net
Investment Income .200 .360 .494 .566 .492 .258
Distributions from
and in Excess of
Net
Realized Gain .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions .415 3.002 .695 .566 .492 .295
------- ------- ------- ------- ------- -------
Net Asset Value, End
of the Period $17.426 $17.619 $16.426 $15.290 $13.356 $12.868
======= ======= ======= ======= ======= =======
Total Return(a) 1.22%* 27.14% 12.37% 19.00% 7.88% (9.11)%*
Net Assets at End of
the Period (In
millions) $7.0 $5.9 $4.9 $5.0 $1.3 $1.1
Ratio of Expenses to
Average Net
Assets(b) 1.99% 2.06% 2.17% 2.13% 2.09% 2.05%
Ratio of Net
Investment Income to
Average Net
Assets(b) 1.53% 1.73% 3.23% 2.78% 3.80% 3.38%
Portfolio Turnover 13%* 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 the
Adviser's reimbursement of certain expenses was less than 0.01%.

See Financial Statements and Notes Thereto

25
<PAGE> 28

APPENDIX -- DESCRIPTION
OF SECURITIES RATINGS

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

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.
1. LONG-TERM DEBT -- INVESTMENT GRADE

AAA: Debt rated "AAA" has the highest rating assigned by S&P. Capacity to meet
its financial commitment on the obligation is extremely strong.

AA: Debt rated "AA" differs from the highest rated issues only in small degree.
Capacity to meet its financial commitment on the obligation is very strong.

A: Debt rated "A" is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rated
categories. Capacity to meet its financial commitment on the obligation is still
strong.

BBB: Debt rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.

SPECULATIVE GRADE

BB, B, CCC, CC, C: Debts rated "BB", "B", "CCC", "CC" and "C" are regarded as
having significant speculative characteristics. "BB" indicates the least degree
of speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated "BB" is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B: Debt rated "B" is more vulnerable to nonpayment than obligations rated "BB",
but the obligor currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its financial commitment on
the obligation.

CCC: Debt rated "CCC" is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC: Debt rated "CC" is currently highly vulnerable to nonpayment.

A- 1
<PAGE> 29

C: The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued.

D: Debt rated "D" is in payment default. The "D" rating category is used when
payments on an obligation 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 or the taking of a similar action if payments on an
obligation 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.

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 prepayment 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 ratings 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: The highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

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

B: Issues rated "B" are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C: This rating is assigned to short-term debt obligations currently vulnerable
to nonpayment and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation.

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 or the taking of a similar action if
payments on an obligation are jeopardized.

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

A- 2
<PAGE> 30

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. PREFERRED STOCK

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

The preferred stock ratings are based on the following considerations:

i. 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.

ii. Nature of, and provisions of, the issuer.

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

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, B and CCC: Preferred stock rated "B", "B", and "CCC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay preferred stock obligations.

"BB" indicates the lowest degree of speculation and "CCC" the highest. While
such issues will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

CC: The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments, but that is currently paying.

C: A preferred stock rated "C" is a nonpaying issue.

D: A preferred stock rated "D" is a nonpaying issue with the issuer in default
on debt instruments.

NR: This indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy. PLUS (+) or MINUS (-): To provide more
detailed indications of preferred stock quality, ratings from "AA" to "CCC" may
be modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

A preferred stock rating is not a recommendation to purchase, sell, or hold a
security inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer 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)

A- 3
<PAGE> 31

rating symbols and their meanings (as published by Moody's Investors 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
edged." 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 the 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 some time 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 be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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 issue 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 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.

A- 4
<PAGE> 32

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

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

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

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

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

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

Preferred stock rating symbols and their definitions are as follows:

AAA: As 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.

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.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category, the modifier 2 indicates a mid-range ranking, and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.

A- 5
<PAGE> 33

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

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

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Utility Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO 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 LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 34

VAN KAMPEN
UTILITY FUND

PROSPECTUS

JULY 29, 1999

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

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

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

Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC Public
Reference Room in Washington, DC or online at
the SEC's web site (http://www.sec.gov). For
more information, please call the SEC at (800)
SEC-0330. You can also request these materials
by writing the Public Reference Section of the
SEC, Washington DC, 20549-6009, and paying a
duplication fee.

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-4805.
UTLF PRO
7/99

<PAGE> 35

VAN KAMPEN
GROWTH FUND

Van Kampen Growth Fund is a mutual fund with an investment objective to seek
capital growth. The Fund's management seeks to achieve the investment objective
by investing primarily in common stocks and other equity securities of growth
companies.

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 36

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 9
Purchase of Shares................................. 11
Redemption of Shares............................... 17
Distributions from the Fund........................ 18
Shareholder Services............................... 19
Federal Income Taxation............................ 20
Financial Highlights............................... 22
</TABLE>

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek capital growth.
Any income received from the investment of portfolio securities is incidental to
the Fund's investment objective.

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's management seeks to achieve the
investment objective by investing primarily in common stocks and other equity
securities of "growth" companies. The Fund focuses on those companies with
established records or future prospects of growth in sales or earnings and
companies with new products, services or processes that the Fund's investment
adviser believes offer above-average potential for capital growth. The Fund may
invest up to 25% of its total assets in securities of foreign issuers. The Fund
may invest in certain derivatives, such as options and futures, which may
subject the Fund to additional risks.

Investment opportunities for securities of growth companies 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, suspend the continuous
offering of its shares to investors. As market conditions permit, the Fund may
reopen sales of its shares to investors. These limited offerings of the Fund may
begin and end without any prior notice.

INVESTMENT RISKS

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

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

INVESTOR PROFILE

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

- - Seek capital growth over the long term.

- - Do not seek current income from their investment.

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

- - Wish to add to their personal investment portfolio a fund that emphasizes a
"growth" style of investing in common stocks and other equity securities.

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

3
<PAGE> 38

consider their long-term investment goals and financial needs when making an
investment decision about 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.
ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1996*' 61.99
'1997*' 27.01
'1998' 23.3
</TABLE>

*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. One factor impacting
the Fund's 1996 performance was the Fund's investments in initial public
offerings (IPOs). These investments had a greater effect on the Fund's 1996
performance than similar investments made in subsequent years, in part because
of the smaller size of the Fund in 1996. There is no assurance that the Fund's
future investments in IPOs will have the same effect on performance as the IPOs
did in 1996.

During the three-year period shown in the bar chart, the highest quarterly
return was 28.41% (for the quarter ended December 31, 1998) and the lowest
quarterly return was -22.85% (for the quarter ended September 30, 1998).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Standard & Poor's 500-Stock
Index, a broad-based market index (consisting of 500 widely held common stocks)
that the Fund's management believes is an applicable benchmark for the Fund, and
with the Lipper Growth Fund Index, an index of funds with similar investment
objectives. The Fund's performance figures include the maximum sales charges
paid by investors. The indices' performance figures do not include commissions
or sales charges that would be paid by investors purchasing the securities
represented by those indices. Average annual total returns are shown for the
periods ended December 31, 1998 (the most recently completed calendar year prior
to the date of this prospectus). Remember that the past performance of the Fund
is not indicative of its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns
for the
Periods Ended Past Since
December 31, 1998 1 Year Inception
- ---------------------------------------------
<S> <C> <C> <C> <C>
Van Kampen Growth
Fund -- Class A
Shares 16.21% 33.93%(1)
Standard & Poor's
500-Stock Index 28.58% 28.23%(2)
Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
Van Kampen Growth
Fund -- Class B
Shares 17.37% 35.43%(1)
Standard & Poor's
500-Stock Index 28.58% 28.23%(2)
Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
Van Kampen Growth
Fund -- Class C
Shares 21.32% 35.86%(1)
Standard & Poor's
500-Stock Index 28.58% 28.23%(2)
Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
</TABLE>

Inception dates: (1)12/27/95, (2) 12/31/95.

4
<PAGE> 39

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

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

(1) Reduced for purchases of $50,000 and over. See "Purchase of Shares -- Class
A Shares."

(2) Investments of $1 million or more are not subject to any sales charge at the
time of purchase, but a deferred sales charge of 1.00% may be imposed on
certain redemptions made within one year of the purchase. See "Purchase of
Shares -- Class A Shares."

(3) The maximum deferred sales charge is 5.00% in the first year after purchase
and declining thereafter as follows:

Year 1-5.00%
Year 2-4.00%
Year 3-3.00%
Year 4-2.50%
Year 5-1.50%
After-None
See "Purchase of Shares -- Class B Shares."

(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter. See "Purchase of Shares -- Class C Shares."

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.75% 0.75 % 0.75 %
..............................................................
Distribution and/or
Service (12b-1) 0.25% 1.00 %(2) 1.00 %(2)
Fees(1)
..............................................................
Other Expenses 0.68% 0.69 % 0.70 %
..............................................................
Total Annual Fund
Operating Expenses 1.68% 2.44 % 2.45 %
..............................................................
</TABLE>

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

Example:

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $736 $1,074 $1,435 $2,448
.......................................................................
Class B Shares $747 $1,061 $1,451 $2,589*
.......................................................................
Class C Shares $348 $764 $1,306 $2,786
.......................................................................
</TABLE>

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $736 $1,074 $1,435 $2,448
.......................................................................
Class B Shares $247 $761 $1,301 $2,589*
.......................................................................
Class C Shares $248 $764 $1,306 $2,786
.......................................................................
</TABLE>

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

5
<PAGE> 40

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

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

Under normal market conditions, the Fund's investment adviser seeks to achieve
the investment objective by investing primarily in common stocks and other
equity securities of "growth" companies. Growth companies are those companies
with established records or future prospects of growth in sales or earnings and
companies with new products, services or processes that the Fund's investment
adviser believes offer above-average potential for capital growth. The Fund's
primary approach is to seek what the Fund's investment adviser believes to be
unusually attractive growth investments on an individual company basis.
Investments in such companies may have above average volatility of price
movement. Because prices of common stocks and other securities fluctuate, the
value of an investment in the Fund will vary. The Fund attempts to reduce
overall exposure to risk from declines in securities prices by spreading its
investments over many different companies in a variety of industries.

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

While the Fund invests primarily in common stocks, the Fund may invest in
preferred stocks and securities convertible into common stocks or other equity
securities. 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. A convertible security is a bond, debenture, note,
preferred stock, warrant 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 generally 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 generally have characteristics similar
to both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying equity security although the
market prices of convertible securities may be affected by any such dividend
changes or other changes in the underlying security. Generally, warrants are
securities that may be exchanged for a prescribed amount of common stock or
other equity security of the issuer within a particular period of time at a
specified price or in accordance with a specified formula. Warrants do not carry
with them the right to dividends and they do not represent any rights in the
assets of the issuer. As a result, any such investments may be considered to be
more speculative than most other types of equity investments.

6
<PAGE> 41

the four investment grade categories and are considered by the rating agencies
to be medium-grade obligations which possess speculative characteristics so that
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than in the case of
higher-rated securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall. The market prices of longer-term debt
securities generally tends to fluctuate more in response to changes in interest
rates than short-term debt securities.

In selecting securities for investment, the Fund generally focuses on common
stocks of "growth" companies, which generally include those 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 above-average potential for capital growth. The Fund may invest in
cyclical industries when the Fund's investments adviser believes such industries
are in or are entering into a growth cycle and have above-average potential for
capital growth. Stocks of different types, such as "growth" or "value" stocks,
tend to shift in and out of favor depending on market and economic conditions.
Thus, the value of the Fund's investments in "growth" stocks will vary and at
times may be lower or higher than that of other types of funds. Additionally,
the market values of "growth" common stocks may be more volatile than other
types of investments.

The Fund may invest in unseasoned issuers or special situations and in issuers
in any market capitalization range, provided such companies have prospects that
the Fund's investment adviser believes are favorable for above-average capital
appreciation. The Fund may invest in securities involving special situations or
unusual developments, such as initial public offerings, new management or
management reliant on one or a few key people, special products and techniques,
limited or cyclical product lines, markets or resources, mergers, liquidations
or leveraged buyouts. Investments in unseasoned issuers or special situations
may be subject to greater investment risk than that assumed through investment
in securities of larger, more established companies. Similarly, investments in
small- or medium-size companies may be subject to more abrupt or erratic market
movements and may have lower trading volumes or more erratic trading than
securities of larger-sized companies or the market averages in general. Such
companies may be subject to a greater degree of change in earnings and business
prospects than are larger, more established companies.

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

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 25% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign currency exchange rates, political and
economic developments (including war or other instability, expropriation of
assets, nationalization and confiscatory taxation), the imposition of foreign
exchange limitations (including currency blockage), withholding taxes on income
or capital transactions or other restrictions, higher transaction costs
(including higher brokerage, custodial and settlement costs and currency
translation costs) and difficulty in enforcing contracted obligations or taking
judicial action. In addition, there often is less publicly available information
about many foreign issuers, and issuers of foreign securities are subject to
different, often less comprehensive, auditing, accounting, financial reporting
and disclosure requirements than domestic issuers. Such securities may be less
liquid than the securities of domestic issuers. Such securities may also be
subject to greater fluctuations in price than securities of domestic issuers.
There is generally less government regulation of stock exchanges, brokers and
listed companies abroad than in the U. S., and, with respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation, or
diplomatic developments which could affect investment in those countries.
Because there is usually less supervision and governmental regulation of
exchanges, brokers and dealers than there is in the U.S., the Fund may
experience settlement difficulties or delays not usually encountered in the U.S.
The

7
<PAGE> 42

risks of foreign investments should be considered carefully by an investor in
the Fund.

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, use various investment strategic
transactions described below to facilitate portfolio management and mitigate
risks. Such strategic transactions are generally accepted under modern portfolio
management and are regularly used by many mutual funds and other institutional
investors. Although the investment adviser seeks to use the practices to further
the Fund's investment objective, no assurance can be given that these practices
will achieve this result.

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the investment adviser's ability to predict pertinent market movements, which
cannot be assured. Thus, the use of Strategic Transactions may result in losses
greater than if they had not been used, may require the Fund to sell or purchase
portfolio securities at inopportune times or for prices other than current
market values, may limit the amount of appreciation the Fund can otherwise
realize on an investment, or may cause the Fund to hold a security that it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses because of the imposition of exchange controls, suspension of
settlements or the inability of the Fund to deliver or receive a specified
currency. Additionally, amounts paid as premiums or cash or other assets held in
margin accounts with respect to Strategic Transactions are not otherwise
available to the Fund for investment purposes.

OTHER INVESTMENTS AND RISK FACTORS

8
<PAGE> 43

or receives an agreed-upon amount of interest income from the borrower who had
delivered the collateral or letter of credit. As with any extensions of credit,
there are risks of delay in recovery and in some cases even loss of rights in
the collateral should the borrower of the securities fail financially.

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

Although the Fund does not intend to engage in substantial short-term trading,
it may sell securities without regard to the length of time they have been held
in order to take advantage of new investment opportunities or when the Fund's
investment adviser believes the potential for capital growth has lessened or
otherwise. The Fund's portfolio turnover is shown under the heading "Financial
Highlights." The portfolio turnover rate may be expected to vary from year to
year. A high portfolio turnover rate (100% or more) increases the Fund's
transactions costs, including brokerage commissions or dealer costs, and may
result in the realization of more short-term capital gains than if the Fund had
lower portfolio turnover. Increases in the Fund's transactions costs would
impact the Fund's performance. The turnover rate will not be a limiting factor,
however, if the Fund's investment adviser considers portfolio changes
appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks, and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital growth on these securities will tend to be lower than the potential
for capital growth on other securities that may be owned by the Fund. The Fund
may not achieve its investment objective if it takes a defensive position.

INVESTMENT ADVISORY SERVICES

9
<PAGE> 44

advisers nationwide. Van Kampen Funds Inc., the distributor of the Fund (the
"Distributor") and the sponsor of the funds mentioned above, is also a wholly
owned subsidiary of Van Kampen Investments. Van Kampen Investments is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The
Adviser's principal office is located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555.

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
- -----------------------------------------------
<S> <C> <C> <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>

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.71% of the Fund's average daily net assets for the Fund's
fiscal period ended March 31, 1999.

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's portfolio management team is headed by Jeff D.
New, Senior Portfolio Manager. Mr. New has been Senior Vice President and Senior
Portfolio Manager of the Adviser and 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 December 1994, he was Associate Portfolio
Manager of Asset Management. Mr. New joined the Adviser in 1995 and Asset
Management in 1990. Mr. New has been primarily responsible for managing the
Fund's investment portfolio since its inception.

Portfolio Managers Michael Davis and Mary Jayne Maly are responsible as
co-managers for the day-to-day management of the Fund's investment portfolio.
Mr. Davis has been Vice President and Portfolio Manager of the Adviser and Asset
Management since March 1998. Prior to March 1998 he was the owner of Davis
Equity Research, a stock research company. Mr. Davis has been an investment
professional since 1983. Mr. Davis has been a co-manager of the Fund since July
1998.

Ms. Maly has been Vice President and Portfolio Manager of the Adviser since July
1998. From July 1997 to June 1998, she was a Vice President at Morgan Stanley
Asset Management Inc. and assisted in the management of the Morgan Stanley
Institutional Real Estate Funds and the Van Kampen Real Estate Securities Fund.
Prior to July 1997, Ms. Maly was a Vice President and Portfolio Manager of the
Adviser and Asset Management. Prior to November 1992, she was a Vice President
and Senior Equity Analyst at Texas Commerce Investment Management Company. Ms.
Maly has been a co-manager of the Fund since July 1998.

10
<PAGE> 45

PURCHASE OF SHARES

GENERAL

The Fund is currently not open to new investors. The Fund may, from time to
time, reopen and close the offering of its shares to new investors. Any such
offerings may commence and terminate at any time and without prior notice.

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchase or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset values per share, and adjust the offering price more frequently than once
a day if deemed desirable. Net asset value per share for each class is
determined by dividing the value of the Fund's portfolio securities, cash and
other assets (including accrued interest) attributable to such class, less all
liabilities (including accrued expenses) attributable to such class, by the
total number of shares of the class outstanding. Such computation is made by
using prices as of the close of trading on the Exchange and (i) valuing
securities listed or traded on a national securities exchange at the last
reported sale price, or if there has been no sale that day, at the mean between
the last reported bid and asked prices, (ii) valuing over-the-counter securities
at the last reported sale price from the National Association of Securities
Dealers Automated Quotations ("NASDAQ"), (iii) valuing unlisted securities at
the mean between the last reported bid and asked prices, (iv) valuing any
securities for which market quotations are not readily available and any other
assets at fair value as determined in good faith by the Adviser in accordance
with procedures established by the Board of Trustees. Securities with remaining
maturity of 60 days or less are valued on an amortized cost basis, which
approximates market value.

11
<PAGE> 46

with other types of sales charge arrangements. Long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers, Inc.
("NASD"). The net income attributable to a class of shares will be reduced by
the amount of the distribution fees and other expenses associated with such
class of shares. To assist investors in comparing classes of shares, the tables
under the heading "Fees and Expenses of the Fund" provide a summary of sales
charges and expenses and an example of the sales charges and expenses of the
Fund applicable to each class of shares.

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

CLASS A SHARES

SALES CHARGE SCHEDULE

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

Under the Distribution Plan and Service Plan, the Fund may spend a total of
0.25% per year of the average daily net assets with respect to the Class A

12
<PAGE> 47

Shares of the Fund. From such amount, under the Service Plan, the Fund may spend
up to 0.25% per year of the Fund's average daily net assets with respect to the
Class A Shares for the ongoing provision of services to Class A shareholders by
the Distributor and by brokers, dealers or financial intermediaries and for the
maintenance of such shareholders' accounts.

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class C Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class C Shares for ongoing
provision of services to Class C shareholders by the Distributor and by brokers,
dealers or financial intermediaries for the maintenance of such shareholders'
accounts.

13
<PAGE> 48

CONVERSION FEATURE

Class B Shares and any dividend reinvestment plan Class B Shares received on
such 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 a
share of the Fund acquired through the exchange privilege from another Van
Kampen fund participating in the exchange program is determined by reference to
the Van Kampen fund from which such share was originally purchased.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

QUANTITY DISCOUNTS

14
<PAGE> 49

Each investment made during the period receives the reduced sales charge
applicable to the total amount of the investment goal. The initial purchase must
be for an amount equal to at least 5% of the minimum total purchase amount of
the level selected. If trades not initially made under a Letter of Intent
subsequently qualify for a lower sales charge through the 90-day backdating
provisions, an adjustment will be made at the time of the expiration of the
Letter of Intent to give effect to the lower charge. Such adjustment in sales
charge will be used to purchase additional shares for the shareholder at the
applicable discount category. The Fund initially will escrow shares totaling 5%
of the dollar amount of the Letter of Intent to be held by Investor Services in
the name of the shareholder. In the event the Letter of Intent goal is not
achieved within the specified period, the investor must pay the difference
between the sales charge applicable to the purchases made and the reduced sales
charge previously paid. Such payments may be made directly to the Distributor
or, if not paid, the Distributor will liquidate sufficient escrowed shares to
obtain the difference.

OTHER PURCHASE PROGRAMS

(1) Current or retired trustees or directors of funds advised by Morgan Stanley
Dean Witter and any of its subsidiaries 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.

15
<PAGE> 50

made an amount up to 0.50% of the amount invested, over a 12-month period.

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

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

16
<PAGE> 51

department, provided that Investor Services receives federal funds for the
purchase by the close of business on the next business day following acceptance
of the order. An authorized dealer may charge a transaction fee for placing an
order to purchase shares pursuant to this provision or for placing a redemption
order with respect to such shares. Authorized dealers will be paid a service fee
as described 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.

REDEMPTION OF
SHARES

17
<PAGE> 52

through an authorized dealer may involve additional fees charged by the dealer.

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

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

18
<PAGE> 53

shares of the Fund at net asset value unless the shareholder instructs
otherwise.

SHAREHOLDER SERVICES

19
<PAGE> 54

specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privileges to such shareholders. For further
information on these restrictions see the Statement of Additional Information.
The Fund may modify, restrict or terminate the exchange privilege at any time on
60 days' notice to its shareholders of any termination or material amendment.

FEDERAL INCOME TAXATION

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

The sale or exchange of shares is a taxable transaction for federal income tax
purposes. Shareholders who sell their shares will generally recognize gain or
loss

20
<PAGE> 55

in an amount equal to the difference between their adjusted tax basis in the
shares and the amount received. If the shares are held as a capital asset, the
gain or loss will be a capital gain or loss. Any capital gains may be taxed at
different rates depending on how long the shareholder held such shares.

21
<PAGE> 56

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Class A Shares
Nine Month December 27, 1995
Period Ended (Commencement of
March 31, Year Ended June 30, Investment Operations)
1999(a) 1998 1997(a) to June 30, 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $23.463 $17.878 $13.696 $10.000
------- ------- ------- -------
Net Investment Income/Loss............ (.185) (0.136) 0.031 (0.044)
Net Realized and Unrealized Gain...... .604 6.711 4.810 3.740
------- ------- ------- -------
Total from Investment Operations........ .419 6.575 4.841 3.696
------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain................... .584 0.990 0.353 -0-
Return of Capital Distribution........ -0- -0- 0.306 -0-
------- ------- ------- -------
Total Distributions..................... .584 0.990 0.659 -0-
------- ------- ------- -------
Net Asset Value, End of the Period...... $23.298 $23.463 $17.878 $13.696
======= ======= ======= =======
Total Return*(b)........................ 2.18%** 38.52% 36.00% 37.00%**
Net Assets at End of the Period (In
millions)............................. $60.1 $64.9 $53.1 $0.1
Ratio of Expenses to Average Net
Assets*............................... 1.64% 1.30% 1.32% 1.46%
Ratio of Net Investment Income to
Average Net Assets*................... (1.19%) (0.64%) 0.19% (0.79%)
Portfolio Turnover...................... 82%** 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.............................. 1.68% 1.58% 2.31% 15.69%
Ratio of Net Investment Income to
Average Net Assets.................. (1.23%) (0.92%) (0.80%) (15.02%)

<CAPTION>
Class B Shares
Nine Month December 27, 1995
Period Ended (Commencement of
March 31, Year Ended June 30, Investment Operations)
1999(a) 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $23.173 $17.796 $13.695 $10.000
------- ------- ------- -------
Net Investment Income/Loss............ (.299) (0.270) (0.093) (0.045)
Net Realized and Unrealized Gain...... .579 6.637 4.853 3.740
------- ------- ------- -------
Total from Investment Operations........ .280 6.367 4.760 3.695
------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain................... .584 0.990 0.353 -0-
Return of Capital Distribution........ -0- -0- 0.306 -0-
------- ------- ------- -------
Total Distributions..................... .584 0.990 0.659 -0-
------- ------- ------- -------
Net Asset Value, End of the Period...... $22.869 $23.173 $17.796 $13.695
======= ======= ======= =======
Total Return*(b)........................ 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)............................. $72.8 $79.7 $55.0 $0.1
Ratio of Expenses to Average Net
Assets*............................... 2.40% 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets*................... (1.95%) (1.40%) (0.56%) (0.74%)
Portfolio Turnover...................... 82%** 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.............................. 2.44% 2.34% 3.04% 15.70%
Ratio of Net Investment Income to
Average Net Assets.................. (1.99%) (1.68%) (1.53%) (14.97%)

<CAPTION>
Class C Shares
Nine Month December 27, 1995
Period Ended (Commencement of
March 31, Year Ended June 30, Investment Operations)
1999(a) 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $23.173 $17.793 $13.695 $10.000
------- ------- ------- -------
Net Investment Income/Loss............ (.300) (0.311) (0.096) (0.045)
Net Realized and Unrealized Gain...... .578 6.681 4.853 3.740
------- ------- ------- -------
Total from Investment Operations........ .278 6.370 4.757 3.695
------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain................... .584 0.990 0.353 -0-
Return of Capital Distribution........ -0- -0- 0.306 -0-
------- ------- ------- -------
Total Distributions..................... .584 0.990 0.659 -0-
------- ------- ------- -------
Net Asset Value, End of the Period...... $22.867 $23.173 $17.793 $13.695
======= ======= ======= =======
Total Return*(b)........................ 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)............................. $7.4 $9.2 $8.3 $0.1
Ratio of Expenses to Average Net
Assets*............................... 2.41% 2.05% 2.07% 1.46%
Ratio of Net Investment Income to
Average Net Assets*................... (1.96%) (1.39%) (0.57%) (0.74%)
Portfolio Turnover...................... 82%** 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.............................. 2.45% 2.34% 3.04% 15.70%
Ratio of Net Investment Income to
Average Net Assets.................. (2.00%) (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

22
<PAGE> 57

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

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

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Growth Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO Box 1713
Boston, MA 02105-1713
Attn: Van Kampen Growth Fund

Legal Counsel

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

Independent Accountants

KPMG LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 58

VAN KAMPEN
GROWTH FUND

PROSPECTUS

JULY 29, 1999

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

[VAN KAMPEN FUNDS LOGO]
The Fund's Investment Company Act
File No. is 811-4805.
GF PRO 7/99
<PAGE> 59

VAN KAMPEN
MID CAP VALUE FUND

Van Kampen Mid Cap Value Fund is a mutual fund with an investment objective to
seek long-term growth of capital. The Fund's management seeks to achieve the
investment objective by investing primarily in a diversified portfolio of common
stocks and other equity securities of medium-capitalization companies that the
Fund's investment adviser believes are selling below their intrinsic value and
offer the opportunity for significant growth of capital.

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 60

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 10
Purchase of Shares................................. 11
Redemption of Shares............................... 17
Distributions from the Fund........................ 19
Shareholder Services............................... 19
Federal Income Taxation............................ 21
Financial Highlights............................... 23
</TABLE>

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek long-term growth
of capital. Any income received from the investment of portfolio securities is
incidental to the Fund's investment objective.

INVESTMENT STRATEGIES

The Fund's management seeks to achieve the investment objective by investing
primarily in common stocks and other equity securities of medium-capitalization
companies that the Fund's investment adviser believes are selling below their
intrinsic values and offer the opportunity for significant growth of capital.
Under normal market conditions, the Fund invests in at least 65% of the Fund's
total assets in securities of medium-capitalization companies. The Fund
emphasizes a "value" style of investing focusing on those companies with strong
fundamentals, consistent track records, promising growth prospects, and
attractive valuations. The Fund may invest up to 25% of its total assets in
securities of foreign issuers. The Fund may invest in certain derivatives, such
as options and futures, which may subject the Fund to additional risks.

INVESTMENT RISKS

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

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

INVESTOR PROFILE

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

- - Seek capital growth over the long term.

- - Do not seek current income from their investment.

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

- - Wish to add to their personal investment portfolio a fund that emphasizes a
"value" style of investing in common stocks and other equity securities of
medium-sized companies.

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

3
<PAGE> 62

ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1996' 27.86
'1997' 20.52
'1998' 12.46
</TABLE>

During the three-year period shown in the bar chart, the highest quarterly
return was 18.16% (for the quarter ended December 31, 1998) and the lowest
quarterly return was -13.70% (for the quarter ended September 30, 1998).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with two broad-based indices that the
Fund's management believes are applicable benchmarks for the Fund: the Standard
& Poor's 500 Stock Index (an index of 500 widely held common stocks) and the
Standard & Poor's MidCap 400 Index (a market-value weighted index of 400 midcap
domestic issues). The Fund's performance figures include the maximum sales
charges paid by investors. The indices' performance figures do not include
commissions or sales charges that would be paid by investors purchasing the
securities represented by those indices. Average annual total returns are shown
for the periods ended December 31, 1998 (the most recently completed calendar
year prior to the date of this prospectus). Remember that the past performance
of the Fund is not indicative of its future performance.

Standard & Poor's
500 Stock Index 28.58% 28.23%(2)

Standard & Poor's
MidCap 400 Index 19.11% 23.37%(2)
............................................................
Van Kampen MidCap
Value Fund -- Class B
Shares 7.55% 19.65%(1)

Standard & Poor's
500 Stock Index 28.58% 28.23%(2)

Standard & Poor's
MidCap 400 Index 19.11% 23.37%(2)
............................................................
Van Kampen MidCap
Value Fund -- Class C
Shares 11.54% 20.23%(1)

Standard & Poor's
500 Stock Index 28.58% 28.23%(2)

Standard & Poor's
MidCap 400 Index 19.11% 23.37%(2)
............................................................
</TABLE>

Inception dates: (1) 12/27/95, (2) 12/31/95.

4
<PAGE> 63

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

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

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

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees(1) 0.75% 0.75% 0.75%
..............................................................
Distribution and/or
Service (12b-1) 0.25% 1.00%(3) 1.00%(3)
Fees(2)
..............................................................
Other Expenses(1) 9.52% 8.77% 8.77%
..............................................................
Total Annual Fund 10.52% 10.52% 10.52%
Operating Expenses(1)
..............................................................
</TABLE>

(2) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and Class C Shares are each subject to a combined annual distribution
and service fee of up to 1.00% of the average daily net assets attributable
to such class of shares. See "Purchase of Shares."
(3) Because Distribution and/or Service (12b-1) Fees are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.

Example:

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,539 $3,311 $4,892 $8,142
.........................................................................
Class B Shares $1,523 $3,203 $4,730 $8,029*
.........................................................................
Class C Shares $1,123 $2,903 $4,580 $8,029
.........................................................................
</TABLE>

5
<PAGE> 64

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,539 $3,311 $4,892 $8,142
.........................................................................
Class B Shares $1,023 $2,903 $4,580 $8,029*
.........................................................................
Class C Shares $1,023 $2,903 $4,580 $8,029
.........................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

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

The Fund's investment adviser seeks to achieve the investment objective by
investing primarily in common stocks and other equity securities of
medium-capitalization companies that the Fund's investment adviser believes are
selling below their intrinsic values and offer the opportunity for significant
capital growth. Under normal market conditions, the Fund invests at least 65% of
the Fund's total assets in securities of issuers of medium-capitalization
companies. The Fund's investment adviser, under normal market conditions,
generally defines medium-capitalization companies by reference to those
companies with equity capitalizations in the range of the companies represented
in the Standard & Poor's MidCap 400 Index (which consists of companies in the
capitalization range of approximately $244 million to $22 billion as of June 30,
1999). Investments in such companies may offer greater opportunities for capital
growth than larger companies, but also may involve special risks. Because prices
of common stocks and other equity securities fluctuate, the value of an
investment in the Fund will vary based upon the Fund's investment performance.

In selecting securities for investment, the Fund emphasizes a "value" style of
investing focusing on companies with strong fundamentals, promising growth
prospects and attractive valuations. The Fund seeks to identify those companies
that are undervalued relative to their market values and other financial
measurements of intrinsic worth such as future earnings or are undervalued and
have identifiable factors that might lead to improved valuation such as more
effective management or changes in corporate structure.

While the fund invests primarily in common stocks, the Fund may invest in
preferred stocks and securities convertible into common stocks or other equity
securities. 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 ability of common stocks and preferred stocks to
generate income is dependent on the earnings and continuing declaration of
dividends by the issuers of such securities. A convertible security is a bond,
debenture, note, preferred stock, warrant 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 different issuer within a particular period of
time at a specified price or formula. A convertible security generally entitles
the holder to receive interest paid or accrued on debt securities or the
dividend paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, convertible securities
generally have characteristics similar to both debt and equity securities. The
value of convertible securities tends to decline as interest rates rise and,
because of the conversion feature, tends to vary with fluctuations in the market
value of

6
<PAGE> 65

the underlying equity security. Convertible securities ordinarily provide a
stream of income with generally higher yields than those of common stock of the
same or similar issuers. Convertible securities generally rank senior to common
stock in a corporation's capital structure but are usually subordinated to
comparable nonconvertible securities. Convertible securities generally do not
participate directly in any dividend increases or decreases of the underlying
equity security although the market prices of convertible securities may be
affected by any such dividend changes or other changes in the underlying equity
security. For more information on the types of convertible securities in which
the Fund may invest, see "Investment Objective and Policies -- Types of
Convertible Securities" in the Statement of Additional Information.

The Fund also may invest in debt securities of various maturities considered
"investment-grade" at the time of investment. A subsequent reduction in rating
does not require the Fund to dispose of a security. Investment-grade securities
are securities rated BBB or higher by Standard & Poor's ("S&P") or Baa or higher
by Moody's Investors Service, Inc. ("Moody's") or comparably rated by any other
nationally recognized statistical rating organization or, if unrated, determined
by the Fund's investment adviser to be of comparable quality. Securities rated
BBB by S&P or rated Baa by Moody's are in the lowest of the four
investment-grade categories and are considered by the rating agencies to be
medium-grade obligations which possess speculative characteristics so that
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than in the case of
higher-rated securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall and such changes may be greater among
debt securities with longer durations.

The Fund's primary approach is to seek securities that the Fund's investment
adviser believes are selling below their intrinsic values and offer attractive
growth opportunities. The Fund's investment adviser believes securities have
unrecognized intrinsic value when they sell at a substantial discount relative
to a company's 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; it is
the amount an investor is willing to pay for the entire company given its
management, financial health and growth potential. 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 intrinsic value, the Fund's investment adviser may consider
factors including historical and expected growth rates of earnings, economic
earnings, expected levels of free cash flow, evidence of financial strength,
predictability of future prospects, quality of management and other identifiable
factors that might lead to improved valuation such as more effective management
or changes in corporate structure. The Fund's style of investing presents the
risk that the valuations never improve or that the returns on such securities
are less than returns on other styles of investing or the overall stock market.

The Fund primarily invests in medium-sized companies. The securities of
medium-sized companies may be subject to more abrupt or erratic market movements
than securities of larger companies or the market averages in general. In
addition, such companies typically are subject to a greater degree of change in
earnings and business prospects than are larger companies. Thus, the Fund may be
subject to greater investment risk than that assumed through investment in
larger companies.

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

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

7
<PAGE> 66

war or other instability, expropriation of assets, nationalization and
confiscatory taxation), the imposition of foreign exchange limitations
(including currency blockage), withholding taxes on income or capital
transactions or other restrictions, higher transaction costs (including higher
brokerage, custodial and settlement costs and currency translation costs) and
difficulty in enforcing contractual obligations or taking judicial action. In
addition, there often is less publicly available information about many foreign
issuers, and issuers of foreign securities are subject to different, often less
comprehensive, auditing, accounting, financial reporting and disclosure
requirements than domestic issuers. Such securities may be less liquid than the
securities of domestic issuers. Such securities may also be subject to greater
fluctuations in price than securities of domestic issuers. There is generally
less government regulation of stock exchanges, brokers and listed companies
abroad than in the U. S., and, with respect to certain foreign countries, there
is a possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of exchanges, brokers and
dealers than there is in the U.S., the Fund may experience settlement
difficulties or delays not usually encountered in the U.S. The risks of foreign
investments should be considered carefully by an investor in the Fund.

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 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 generally seeks to use Strategic Transactions as a portfolio management or
hedging technique to protect against possible adverse changes in the market
value of securities held in or to be purchased for the Fund's portfolio, protect
the Fund's unrealized gains, facilitate the sale of certain securities for
investment purposes, protect against changes in currency exchange rates, or
establish positions in the derivatives markets as a temporary substitute for
purchasing or selling particular securities.

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the Fund's investment adviser's ability to predict pertinent market movements,
which cannot be assured. Thus, the use of such Strategic Transactions may result
in losses greater than if they had not been used, may require the Fund to sell
or purchase portfolio securities at inopportune times or for prices other than
current market values, may limit the amount of appreciation the Fund can
otherwise realize on an investment, or may 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 the imposition of exchange controls, suspension
of settlements or the inability to deliver or receive a specified currency.
Additionally, amounts paid as premiums and cash or other assets held in margin
accounts with respect to Strategic Transactions are not otherwise available to
the Fund for investment purposes.

OTHER INVESTMENTS AND RISK FACTORS

The Fund may purchase and sell securities on a "when-issued" and "delayed
delivery" basis. The

8
<PAGE> 67

Fund accrues no income on such securities until the Fund actually takes delivery
of such securities. These transactions are subject to market fluctuation; the
value of the securities at delivery may be more or less than their purchase
price. The value or yield generally available on comparable securities when
delivery occurs may be higher than the value or yield on the securities obtained
pursuant to such transactions. Because the Fund relies on the buyer or seller to
consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. The Fund will engage in when-issued and
delayed delivery transactions for the purpose of acquiring securities consistent
with the Fund's investment objective and policies and not for the purpose of
investment leverage.

The Fund may lend its portfolio securities in an amount up to 50% of its total
assets to broker-dealers, banks or other recognized institutional borrowers of
securities. Such loans must be callable at any time and the borrower at all
times during the loan must maintain cash or liquid securities as collateral or
provide to the Fund an irrevocable letter of credit equal in value to at least
100% of the value of the securities loaned. During the time portfolio securities
are on loan, the Fund receives any dividends or interest paid on such securities
and receives the interest earned on the collateral which is invested in
short-term instruments or receives an agreed-upon amount of interest income from
the borrower who has delivered the collateral or a letter of credit. As with any
extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities fail
financially.

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

Although the Fund does not intend to engage in substantial short-term trading,
it may sell securities without regard to the length of time they have been held
in order to take advantage of new investment opportunities or when the Fund's
investment adviser believes the potential for income or capital growth has
lessened or otherwise. The Fund's portfolio turnover is shown under the heading
"Financial Highlights." The portfolio turnover rate may be expected to vary from
year to year. A high portfolio turnover rate (100% or more) increases the Fund's
transactions costs, including brokerage commissions or dealer costs, and may
result in the realization of more short-term capital gains than if the Fund had
lower portfolio turnover. Increases in the Fund's transaction costs would impact
the Fund's performance. The turnover rate will not be a limiting factor,
however, if the Fund's investment adviser considers portfolio changes
appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital growth on these securities will tend to be lower than the potential
for capital growth on other securities that may be owned by the Fund. The Fund
may not achieve its investment objective if it takes a defensive position.

9
<PAGE> 68

liquidity issues. In addition, corporate and governmental data processing errors
may result in production problems for individual companies or issuers and
overall economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which Act may limit the legal rights
regarding the use of such statements in the case of a dispute.

INVESTMENT ADVISORY SERVICES

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.75% of the Fund's average daily net assets for the Fund's
fiscal period ended March 31, 1999.

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").

10
<PAGE> 69

PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by James
Gilligan, Senior Portfolio Manager. 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. Portfolio
Managers Scott Carroll and James O. Roeder are the co-managers for the
day-to-day management of the Fund's investment portfolio, Mr. Carroll since July
1997 and Mr. Roeder since May 1999. 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.

Mr. Roeder has been Portfolio Manager and Vice President of the Adviser since
May 1999. Prior to May 1999, Mr. Roeder was a business services and special
situations analyst with Midwest Research. Prior to July 1996, he was a retail
industry equity analyst with Duff & Phelps.

PURCHASE OF SHARES

GENERAL

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchase or redemption orders are
received, or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset value and adjust the public offering price more frequently than once a day
if deemed desirable. Net asset value per share for each class is determined by
dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest) attributable to such class, less all liabilities
(including accrued expenses) attributable to such class, by the total number of
shares of the class outstanding. Such computation is made by using prices as of
the close of trading on the Exchange and (i) valuing securities listed or traded
on a national securities exchange at the last sale price, or if there has been
no sale that day, at the mean between the bid and asked prices, (ii) valuing
unlisted securities by quotations provided by market makers or by estimates from
yield data of comparable securities 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 Adviser in accordance with procedures
established by the Board of Trustees. Securities with remaining maturity of 60
days or less are valued on an amortized cost basis, which approximates market
value.

The Fund has adopted a distribution plan (the "Distribution Plan") with respect
to each class of its

11
<PAGE> 70

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.
Under the Distribution Plan and the Service Plan, the Fund pays distribution
fees in connection with the sale and distribution of its shares and service fees
in connection with the provision of ongoing services to shareholders of each
class.

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

12
<PAGE> 71

CLASS A SHARES

SALES CHARGE SCHEDULE

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

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

13
<PAGE> 72

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class B Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class B Shares for the
ongoing provision of services to Class B shareholders of such shares by the
Distributor and by brokers, dealers or financial intermediaries and for the
maintenance of such shareholders' accounts.

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

CONVERSION FEATURE

Class B Shares and any dividend reinvestment plan Class B Shares received on
such 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 value per share, without the imposition
of any sales load, fee or other charge. The conversion schedule applicable to a
share of the Fund acquired through the exchange privilege from another Van
Kampen fund participating in the exchange program is determined by reference to
the Van Kampen fund from which such share was originally purchased.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

14
<PAGE> 73

QUANTITY DISCOUNTS

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

OTHER PURCHASE PROGRAMS

15
<PAGE> 74

conditions that apply to the program, should contact their authorized dealer or
the Distributor.

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

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

16
<PAGE> 75

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, 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, plus 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.

REDEMPTION OF
SHARES

17
<PAGE> 76

circumstances, be paid wholly or in part by a distribution-in-kind of portfolio
securities. If the shares to be redeemed have been recently purchased by check,
Investor Services may delay the payment of redemption proceeds until it confirms
the purchase check has cleared, which may take up to 15 days. A taxable gain or
loss will be recognized by the shareholder upon redemption of shares.

18
<PAGE> 77

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.

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

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

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

SHAREHOLDER SERVICES

19
<PAGE> 78

asset value, or that both dividends and capital gains distributions be paid in
cash.

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

When Class B Shares and Class C Shares are exchanged among Participating Funds,
the holding period for purposes of computing the contingent deferred sales
charge is based upon the date of the initial purchase of such shares from a
Participating Fund. If such Class B Shares or Class C Shares are redeemed and
not exchanged for shares of another Participating Fund, Class B Shares and Class
C Shares are subject to the contingent deferred sales charge schedule imposed by
the Participating Fund from which such shares were originally purchased.
Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes. If the shares exchanged have been held for less than 91
days, the sales charge paid on such shares is carried over and included in the
tax basis of the shares acquired.

20
<PAGE> 79

FEDERAL INCOME TAXATION

21
<PAGE> 80

U.S. tax advisers concerning the tax consequences to them of an investment in
shares.

22
<PAGE> 81

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
Class A Shares December 27, 1995
Nine Month Years Ended June 30, (Commencement of
Period Ended --------------------- Investment Operations)
March 31, 1999 1998 1997(a) to June 30, 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of the
Period............................ $13.719 $14.321 $11.409 $10.000
-------- -------- -------- -------
Net Investment Income/Loss........ (0.013) (0.032) (0.014) 0.018
Net Realized and Unrealized
Gain/Loss....................... (0.027) 1.633 3.559 1.391
-------- -------- -------- -------
Total from Investment Operations.... (0.040) 1.601 3.545 1.409
-------- -------- -------- -------

Less:
Distributions in Excess of Net
Investment Income............... 0.027 0.103 0.017 -0-
Distributions from Net Realized
Gain............................ 0.706 2.100 0.616 -0-
-------- -------- -------- -------
Total Distributions................. 0.733 2.203 0.633 -0-
-------- -------- -------- -------
Net Asset Value, End of the
Period............................ $12.946 $13.719 $14.321 $11.409
======== ======== ======== =======
Total Return*(a).................... (0.19%)** 13.06% 32.39% 14.00%**
Net Assets at End of the Period (In
thousands)........................ $1,428.1 $1,430.7 $1,315.0 $117.2
Ratio of Expenses to Average Net
Assets*(b)........................ 1.54% 1.44% 1.48% 1.38%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.26%) (0.36%) (.31%) 0.38%
Portfolio Turnover.................. 70%** 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)....................... 10.52% 7.76% 17.19% 17.57%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (9.24%) (6.69%) (16.01%) (15.81%)

<CAPTION>
Class B Shares December 27, 1995
Nine Month Years Ended June 30, (Commencement of
Period Ended --------------------- Investment Operations)
March 31, 1999 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $13.724 $14.327 $11.410 $10.000
------- ------- ------- -------
Net Investment Income/Loss........ (0.014) (0.027) (0.017) 0.024
Net Realized and Unrealized
Gain/Loss....................... (0.027) 1.626 3.567 1.386
------- ------- ------- -------
Total from Investment Operations.... (0.041) 1.599 3.550 1.410
------- ------- ------- -------
Less:
Distributions in Excess of Net
Investment Income............... 0.027 0.102 0.017 -0-
Distributions from Net Realized
Gain............................ 0.706 2.100 0.616 -0-
------- ------- ------- -------
Total Distributions................. 0.733 2.202 0.633 -0-
------- ------- ------- -------
Net Asset Value, End of the
Period............................ $12.950 $13.724 $14.327 $11.410
======= ======= ======= =======
Total Return*(a).................... (0.19%)** 12.98% 32.48% 14.00%**
Net Assets at End of the Period (In
thousands)........................ $105.0 $105.3 $93.1 $74.2
Ratio of Expenses to Average Net
Assets*(b)........................ 1.54% 1.44% 1.48% 1.38%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.26%) (0.36%) (.14%) 0.44%
Portfolio Turnover.................. 70%** 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)....................... 10.52% 7.76% 17.19% 17.57%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (9.24%) (6.69%) (15.79%) (15.75%)

<CAPTION>
Class C Shares December 27, 1995
Nine Month Years Ended June 30, (Commencement of
Period Ended --------------------- Investment Operations)
March 31, 1999 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $13.726 $14.327 $11.410 $10.000
------- ------- ------- -------
Net Investment Income/Loss........ (0.014) (0.026) (0.017) 0.024
Net Realized and Unrealized
Gain/Loss....................... (0.026) 1.627 3.567 1.386
------- ------- ------- -------
Total from Investment Operations.... (0.040) 1.601 3.550 1.410
------- ------- ------- -------
Less:
Distributions in Excess of Net
Investment Income............... 0.027 0.102 0.017 -0-
Distributions from Net Realized
Gain............................ 0.706 2.100 0.616 -0-
------- ------- ------- -------
Total Distributions................. 0.733 2.202 0.633 -0-
------- ------- ------- -------
Net Asset Value, End of the
Period............................ $12.953 13.726 $14.327 $11.410
======= ======= ======= =======
Total Return*(a).................... (0.26%)** 13.06% 32.48% 14.00%**
Net Assets at End of the Period (In
thousands)........................ $105.1 $105.3 $93.1 $74.2
Ratio of Expenses to Average Net
Assets*(b)........................ 1.54% 1.44% 1.48% 1.38%
Ratio of Net Investment Income/Loss
to Average Net Assets*............ (0.26%) (0.36%) (.14%) 0.44%
Portfolio Turnover.................. 70%** 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)....................... 10.52% 7.76% 17.19% 17.57%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (9.24%) (6.68%) (15.79%) (15.75%)
</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 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 0.24%, 0.14%, 0.18% and 0.08% for
the periods ended on March 31, 1999, June 30, 1998, June 30, 1997 and June
30, 1996, respectively.

See Notes to Financial Statements

23
<PAGE> 82

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

VAN KAMPEN MID CAP VALUE FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Mid Cap Value Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO Box 1713
Boston, MA 02105-1713
Attn: Van Kampen Mid Cap Value Fund

Legal Counsel

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

Independent Accountants

KPMG LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 83

VAN KAMPEN
MID CAP VALUE FUND

PROSPECTUS

JULY 29, 1999

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

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

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-4805.
<PAGE> 84

VAN KAMPEN
GREAT AMERICAN
COMPANIES FUND

Van Kampen Great American Companies Fund is a
mutual fund with an investment objective to
seek long-term growth of capital. The Fund's
management seeks to achieve the investment
objective by investing primarily in a
diversified portfolio of common stocks and
other equity securities of U.S. companies.

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

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 85

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 9
Purchase of Shares................................. 10
Redemption of Shares............................... 17
Distributions from the Fund........................ 18
Shareholder Services............................... 19
Federal Income Taxation............................ 20
Financial Highlights............................... 22
</TABLE>

<PAGE> 86

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek long-term growth
of capital. Any ordinary income received from the investment of portfolio
securities is incidental to the Fund's objective.

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's management seeks to achieve the
investment objective by investing primarily in a diversified portfolio of common
stocks and other equity securities of U.S. companies that, in the Fund's
investment adviser's view, have achieved or will achieve leading and sustainable
positions within their U.S. industrial sectors. The Fund focuses on those
companies that exhibit competitive and financial superiority. In selecting
portfolio investments, the Fund's investment 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 markets. The Fund may invest in certain derivatives, such as options
and futures, which may subject the Fund to additional risks.

INVESTMENT RISKS

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

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

INVESTOR PROFILE

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

- - Seek growth of capital over the long term.

- - Do not seek current income from their investment.

- - Can withstand substantial price volatility in the value of their shares of the
Fund.

- - Wish to add to their personal investment portfolio a fund that emphasizes a
'growth' style of investing in common stocks and other equity securities of
leading U.S. companies.

3
<PAGE> 87

about 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.

ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1996' 29.84
'1997' 29.95
'1998' 27.96
</TABLE>

During the three-year period shown in the bar chart, the highest quarterly
return was 27.96% (for the quarter ended December 31, 1998) and the lowest
quarterly return was -14.38% (for the quarter ended September 30, 1998).

COMPARATIVE PERFORMANCE

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
Van Kampen Great
American
Companies Fund-
Class B Shares 22.96% 28.88%(1)

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
Van Kampen Great
American
Companies Fund-
Class C Shares 26.96% 29.38%(1)

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Growth
Fund Index 25.69% 23.67%(2)
.............................................
</TABLE>

Inception dates: (1) 12/27/95, (2) 12/31/95.

4
<PAGE> 88

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

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

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

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees(1) 0.70% 0.70% 0.70%
..............................................................
Distribution and/or
Service (12b-1) 0.00% 0.00% 0.00%
Fees(2)
..............................................................
Other Expenses(1) 8.19% 8.19% 8.19%
..............................................................
Total Annual Fund
Operating Expenses(1) 8.89% 8.89% 8.89%
..............................................................
</TABLE>

(1) The Fund's investment adviser is currently waiving or reimbursing a portion
of the Fund's Management Fees and Other Expenses such that the actual Total
Annual Fund Operating Expenses were 1.37% for Class A Shares, Class B Shares
and Class C Shares. The fee waivers or expense reimbursements can be
terminated at any time.
(2) No 12b-1 or service fees were accrued by the Fund for the period ended March
31, 1999 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 March 31, 1999, 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. Class A Shares are subject to an annual service fee of
up to 0.25% of the average daily net assets attributable to such class of
shares. Class B Shares and Class C Shares are each subject to a combined
annual distribution and service fee of up to 1.00% of the average daily net
assets attributable to such class of shares. See "Purchase of Shares."

Example:

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,397 $2,945 $4,376 $7,492
.........................................................................
Class B Shares $1,372 $2,815 $4,182 $7,339*
.........................................................................
Class C Shares $ 972 $2,515 $4,032 $7,339
.........................................................................
</TABLE>

5
<PAGE> 89

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,397 $2,945 $4,376 $7,492
.........................................................................
Class B Shares $ 872 $2,515 $4,032 $7,339*
.........................................................................
Class C Shares $ 872 $2,515 $4,032 $7,339
.........................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

Under normal market conditions, the Fund's investment adviser seeks to achieve
the investment objective by investing primarily in a diversified portfolio of
common stocks and other equity securities of U.S. companies that, in the Fund's
investment adviser's view, have achieved or will achieve leading and sustainable
positions within their U.S. industrial sectors. The Fund's investment adviser
focuses on those companies that 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.
The Fund emphasizes a "growth" style of investing seeking those companies with
established records of growth in sales or earnings. The Fund focuses on
companies with competitive and financial strength that have reasonable
valuations relative to the overall market. The Fund generally will not invest in
securities that the Fund's investment adviser believes are overvalued. 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.

In selecting common stocks for investment, the Fund generally focuses on common
stocks of "growth" companies which generally include those companies with
established records of growth or sales or earnings that the Fund's investment
adviser believes offer above average potential for capital growth. Stocks of
different types, such as "growth" stocks or "value" stocks, tend to shift in and
out of favor depending on market and economic conditions. Thus, the value of the
Fund's investments in "growth" stocks will vary and may at times be lower or
higher than that of other types of investments. The Fund's investment adviser
seeks to identify companies it believes to have achieved leading and sustainable
market positions within their industrial sectors. The Fund's investment adviser
believes that such companies are those that exhibit competitive and financial
superiority 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 Fund's investment adviser will employ
traditional valuation measures, such as price/earnings and price/cash flow
ratios to determine whether such securities have reasonable valuations relative
to the overall market. The Fund generally will not invest in common stocks or
other equity securities that the Fund's investment adviser believes are
overvalued.

6
<PAGE> 90

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. A convertible security is a bond, debenture, note,
preferred stock, warrant 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 generally 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 generally have characteristics similar
to both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying equity security although the
market prices of convertible securities may be affected by any such dividend
changes or other changes in the underlying equity security. Generally, warrants
are securities that may be exchanged for a prescribed amount of common stock or
other equity security of the issuer within a particular period of time at a
specified price or in accordance with a specified formula. Warrants do not carry
with them the right to dividends and they do not represent any rights in the
assets of the issuer. As a result, any such investments may be considered to be
more speculative than most other types of equity investments.

The Fund also may invest in debt securities of various maturities considered
"investment-grade" at the time of investment. A subsequent reduction in rating
does not require the Fund to dispose of a security. Investment-grade securities
are securities rated BBB or higher by Standard & Poor's ("S&P") or rated Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or comparably rated by
another nationally recognized statistical rating organization or, if unrated,
are considered by the Fund's investment adviser to be of comparable quality.
Securities rated BBB by S&P or Baa by Moody's are in the lowest of the four
investment-grade categories and are considered by the rating agencies to be
medium-grade obligations which possess speculative characteristics so that
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than in the case of
higher-rated securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall. The market prices of longer-term debt
securities generally tend to fluctuate more in response to changes in interest
rates than shorter-term debt securities.

STRATEGIC TRANSACTIONS

7
<PAGE> 91

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the Fund's investment adviser's ability to predict pertinent market movements,
which cannot be assured. Thus, the use of such Strategic Transactions may result
in losses greater than if they had not been used, may require the Fund to sell
or purchase portfolio securities at inopportune times or for prices other than
current market values, may limit the amount of appreciation the Fund can
otherwise realize on an investment, or may cause the Fund to hold a security it
might otherwise sell. The use of currency transactions can result in the Fund
incurring losses because of the imposition of exchange controls, suspension of
settlements or the inability of the Fund to deliver or receive a specified
currency. Additionally, amounts paid as premiums and cash or other assets held
in margin accounts with respect to Strategic Transactions are not otherwise
available to the Fund for investment purposes.

OTHER INVESTMENTS AND RISK FACTORS

The Fund may purchase and sell securities on a "when-issued" and "delayed
delivery" basis. The Fund accrues no income on such securities until the Fund
actually takes delivery of such securities. These transactions are subject to
market fluctuation; the value of the securities at delivery may be more or less
than their purchase price. The value or yield generally available on comparable
securities when delivery occurs may be higher than value or yield on the
securities obtained pursuant to such transactions. Because the Fund relies on
the buyer or seller to consummate the transaction, failure by the other party to
complete the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. The Fund will engage
in when-issued and delayed delivery transactions for the purpose of acquiring
securities consistent with the Fund's investment objective and policies and not
for the purpose of investment leverage.

The Fund may lend its portfolio securities in an amount of up to 50% of its
total assets to broker-dealers, banks or other recognized institutional
borrowers of securities. Such loans must be callable at any time and the
borrower at all times during the loan must maintain cash or liquid securities as
collateral or provide the Fund an irrevocable letter of credit equal to at least
100% of the value of the securities loaned (including accrued interest). During
the time portfolio securities are on loan, the Fund receives any dividends or
interest paid on such securities and receives the interest earned on the
collateral which is invested in short-term instruments or receives an
agreed-upon amount of interest income from the borrower who has delivered the
collateral or letter of credit. As with any extensions of credit, there are
risks of delay in recovery and in some cases even loss of rights in the
collateral should the borrower of the securities fail financially.

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

8
<PAGE> 92

including brokerage commissions or dealer costs, and may result in the
realization of more short-term capital gains than if the Fund had lower
portfolio turnover. Increases in the Fund's transaction costs would impact the
Fund's performance. The turnover rate will not be a limiting factor, however, if
the Fund's investment adviser considers portfolio changes appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital growth on these securities will tend to be lower than the potential
for capital growth on other securities that may be owned by the Fund. The Fund
may not achieve its investment objective if it takes a defensive position.

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 investment 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 Fund's investment 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 assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which Act may limit the legal rights
regarding the use of such statements in the case of a dispute.

INVESTMENT ADVISORY SERVICES

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
- -----------------------------------------------
<S> <C> <C> <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>

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.70% of the Fund's average daily net assets for the Fund's
fiscal period ended March 31, 1999.

9
<PAGE> 93

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's Portfolio management team is headed by Jeff
New. Mr. New has been primarily responsible for managing the Fund's investment
portfolio since its inception. Mr. New has been Senior Vice President and Senior
Portfolio Manager of the Adviser and 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 December 1994, he was Associate Portfolio
Manager of the Adviser. He joined the Adviser in 1990.

Michael Davis and Mary Jayne Maly are the portfolio managers responsible for the
day-to-day management of the Fund's investment portfolio. Mr. Davis has been
Vice President and Portfolio Manager of the Adviser and Asset Management since
March 1998. Prior to March 1998 he was the owner of Davis Equity Research, a
stock research company. Mr. Davis has been an investment professional since
1983. Mr. Davis has been a co-manager of the Fund since March 1998.

Ms. Maly has been Vice President and Portfolio Manager of the Adviser since July
1998. From July 1997 to June 1998, she was a Vice President at Morgan Stanley
Asset Management Inc. and assisted in the management of the Morgan Stanley
Institutional Real Estate Funds and the Van Kampen Real Estate Securities Fund.
Prior to July 1997, she was a Vice President and Portfolio Manager of the
Adviser and Asset Management. Prior to November 1992, she was a Vice President
and Senior Equity Analyst at Texas Commerce Investment Management Company. Ms.
Maly has been a co-manager of the Fund since July 1998.

PURCHASE OF SHARES

GENERAL

10
<PAGE> 94

(v) certain classes of shares have different shareholder service options
available.

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchases or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset value per share and adjust the offering price more frequently than once a
day if deemed desirable. Net asset value per share for each class is determined
by dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest) attributable to such class, less all liabilities
(including accrued expenses) attributable to such class, by the total number of
shares of the class outstanding. Such computation is made by using prices as of
the close of trading on the Exchange and (i) valuing securities listed or traded
on a national securities exchange at the last sale price, or if there has been
no sale that day, at the mean between the bid and asked prices, (ii) valuing
unlisted securities by quotations provided by market makers or by estimates from
yield data of comparable securities 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 Adviser using methods determined by the Board
of Trustees. Securities with remaining maturity of 60 days or less are valued on
an amortized cost basis, which approximates market value.

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

11
<PAGE> 95

CLASS A SHARES

SALES CHARGE SCHEDULE

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

Under the Distribution Plan and Service Plan, the Fund may spend a total of
0.25% per year of the average daily net assets with respect to the Class A
Shares of the Fund. From such amount under the Service Plan, the Fund may spend
up to 0.25% per year of the Fund's average daily net assets with respect to the
Class A Shares for the ongoing provision of services to Class A shareholders by
the Distributor and by brokers, dealers or financial intermediaries and for the
maintenance of such shareholders' accounts.

12
<PAGE> 96

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

CONVERSION FEATURE

Class B Shares and any dividend reinvestment plan Class B Shares received on
such 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

13
<PAGE> 97

asset values per share, without the imposition of any sales load, fee or other
charge. The conversion schedule applicable to a share of the Fund acquired
through the exchange privilege from another Van Kampen fund participating in the
exchange program is determined by reference to the Van Kampen fund from which
such share was originally purchased.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

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

QUANTITY DISCOUNTS

14
<PAGE> 98

an amount equal to at least 5% of the minimum total purchase amount of the level
selected. If trades not initially made under a Letter of Intent subsequently
qualify for a lower sales charge through the 90-day backdating provisions, an
adjustment will be made at the time of the expiration of the Letter of Intent to
give effect to the lower charge. Such adjustment in sales charge will be used to
purchase additional shares for the shareholder at the applicable discount
category. The Fund initially will escrow shares totaling 5% of the dollar amount
of the Letter of Intent to be held by Investor Services in the name of the
shareholder. In the event the Letter of Intent goal is not achieved within the
specified period, the investor must pay the difference between the sales charge
applicable to the purchases made and the reduced sales charge previously paid.
Such payments may be made directly to the Distributor or, if not paid, the
Distributor will liquidate sufficient escrowed shares to obtain the difference.

OTHER PURCHASE PROGRAMS

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

15
<PAGE> 99

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

16
<PAGE> 100

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

REDEMPTION OF
SHARES

AUTHORIZED DEALER REDEMPTION REQUESTS. Shareholders may place redemption
requests through

17
<PAGE> 101

an authorized dealer. Orders sent through authorized dealers must be at least
$500 (unless transmitted by your authorized dealer via the FUNDSERV network).
The redemption price for such shares is the net asset value per share next
calculated after an order in proper form is received by an authorized dealer
provided such order is transmitted to the Distributor prior to the Distributor's
close of business on such day. It is the responsibility of authorized dealers to
transmit redemption requests received by them to the Distributor so they will be
received prior to such time. Redemptions completed through an authorized dealer
may involve additional fees charged by the dealer.

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

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

18
<PAGE> 102

SHAREHOLDER SERVICES

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

19
<PAGE> 103

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 Van Kampen Investments, Investor
Services nor the Fund will be liable for following telephone instructions which
it reasonably believes to be genuine. If the exchanging shareholder does not
have an account in the fund whose shares are being acquired, a new account will
be established with the same registration, dividend and capital gains options
(except dividend diversification) and authorized dealer of record as the account
from which shares are exchanged, unless otherwise specified by the shareholder.
In order to establish a systematic withdrawal plan for the new account or
reinvest dividends from the new account into another fund, however, an
exchanging shareholder must submit a specific request. The Fund reserves the
right to reject any order to acquire its shares through exchange. In addition,
the Fund and other Participating Funds may restrict exchanges by shareholders
engaged in excessive trading by limiting or disallowing the exchange privileges
to such shareholders. For further information on these restrictions see the
Statement of Additional Information. The Fund may modify, restrict or terminate
the exchange privilege at any time on 60 days' notice to its shareholders of any
termination or material amendment.

FEDERAL INCOME TAXATION

20
<PAGE> 104

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

21
<PAGE> 105

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance since inception. Certain information reflects financial
results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by KPMG LLP, independent accountants, whose report, along with the
Fund's financial statements, is included in the Statement of Additional
Information and may be obtained by shareholders without charge by calling the
telephone number on the back cover of this prospectus. This information should
be read in conjunction with the financial statements and notes thereto included
in the Statement of Additional Information.

<TABLE>
<CAPTION>
Class A Shares Class B Shares
December 27, 1995
(Commencement of
Nine Month Investment Nine Month
Period Ended Year Ended June 30, Operations) Period Ended
March 31, 1999 1998 1997 to June 30, 1996 March 31, 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $16.128.... $14.235 $11.622 $10.000 $16.129
-------- -------- -------
Net Investment Income/Loss (0.040).. (0.009) (0.003) 0.019 (0.036)
Net Realized and Unrealized
Gain 2.680...... 3.784 3.535 1.603 2.676
-------- -------- -------
Total from Investment Operations 2.640...... 3.775 3.532 1.622 2.640
-------- -------- -------
Less:
Distributions from and in
Excess of Net Investment
Income 0.028...... 0.142 0.019 -- 0.028
Distributions from Net Realized
Gain 1.698...... 1.740 0.900 -- 1.698
-------- -------- -------
Total Distributions 1.726...... 1.882 0.919 -- 1.726
-------- -------- -------
Net Asset Value, End of the
Period $17.042.... $16.128 $14.235 $11.622 $17.043
======== ======== ======== ======= ========
Total Return* (a) 18.45%**. 29.08% 32.29% 16.10%** 18.52%**
Net Assets at End of the Period
(In thousands) $1,928.5... $1,627.7 $1,260.8 $81.4 $141.5
Ratio of Expenses to Average Net
Assets* (b) 1.37%...... 1.51% 1.59% 1.37% 1.37%
Ratio of Net Investment
Income/Loss to Average Net
Assets* (0.58%).. (0.21%) (0.08%) 0.33% (0.58%)
Portfolio Turnover 74%**. 150% 100% 48%** 74%

* 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) 8.89%...... 8.41% 17.82% 18.46% 8.89%
Ratio of Net Investment
Income/Loss to Average Net
Assets (8.09%).. (7.11%) (16.31%) (16.76%) (8.09%)

<CAPTION>
Class B Shares
December 27, 1995
(Commencement of
Investment Nine Month
Year Ended June 30, Operations) Period Ended
1998 1997 to June 30, 1996 March 31, 1999
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $14.237 $11.622 $10.000 $16.131
-------- -------- -------
Net Investment Income/Loss (0.004) (0.007) 0.019 (0.036)
Net Realized and Unrealized
Gain 3.778 3.541 1.603 2.676
-------- -------- -------
Total from Investment Operations 3.774 3.534 1.622 2.640
-------- -------- -------
Less:
Distributions from and in
Excess of Net Investment
Income 0.142 0.019 -- 0.028
Distributions from Net Realized
Gain 1.740 0.900 -- 1.698
-------- -------- -------
Total Distributions 1.882 0.919 -- 1.726
-------- -------- -------
Net Asset Value, End of the
Period $16.129 $14.237 $11.622 $17.045
======== ======== ======= ========
Total Return* (a) 29.08% 32.29% 16.10%** 18.52%**
Net Assets at End of the Period
(In thousands) $119.5 $92.5 $75.5 $141.6
Ratio of Expenses to Average Net
Assets* (b) 1.51% 1.59% 1.37% 1.37%
Ratio of Net Investment
Income/Loss to Average Net
Assets* (0.21%) (0.05%) 0.33% (0.58%)
Portfolio Turnover 150% 100% 48%** 74%**
* 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% 8.89%
Ratio of Net Investment
Income/Loss to Average Net
Assets (7.11%) (16.28%) (16.76%) (8.09%)

<CAPTION>
Class C Shares
December 27, 1995
(Commencement of
Investment
Year Ended June 30, Operations)
1998 1997 to June 30, 1996
<S> <C> <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 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%
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 0.12% for the nine months ended
March 31, 1999 and 0.26%, 0.34% and 0.13% for the periods ended June 30,
1998, 1997 and 1996, respectively.

22
<PAGE> 106

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

VAN KAMPEN GREAT AMERICAN COMPANIES FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Great American Companies Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO Box 1713
Boston, MA 02105-1713
Attn: Van Kampen Great American Companies Fund

Legal Counsel

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

Independent Accountants

KPMG LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 107

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-4805.

VAN KAMPEN
GREAT AMERICAN
COMPANIES FUND

PROSPECTUS

JULY 29, 1999

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

VAN KAMPEN
PROSPECTOR FUND

Van Kampen Prospector Fund is a mutual fund
with an investment objective to seek capital
growth and income. The Fund's management seeks
to achieve the investment objective by
investing primarily in a diversified portfolio
of equity securities, including
dividend-paying common and preferred stocks
and income securities convertible into common
or preferred stocks.

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

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 109

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 9
Purchase of Shares................................. 10
Redemption of Shares............................... 17
Distributions from the Fund........................ 18
Shareholder Services............................... 19
Federal Income Taxation............................ 20
Financial Highlights............................... 22
</TABLE>

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek capital growth
and income.

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's management seeks to achieve the
investment objective by investing primarily in a diversified portfolio of equity
securities, including dividend-paying common and preferred stocks and income
securities convertible into common or preferred stocks. The Fund emphasizes a
"value" style of investing seeking companies that the Fund's investment adviser
believes are undervalued relative to historical norms and to future earnings
prospects. The Fund may invest up to 25% of its total assets in securities of
foreign issuers. The Fund may invest in certain derivatives, such as options and
futures, which may subject the Fund to additional risks.

INVESTMENT RISKS

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

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

INVESTOR PROFILE

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

- - Seek growth of capital over the long term.

- - Seek current income.

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

- - Wish to add to their personal investment portfolio a fund that emphasizes a
"value" style of investing in equity securities.

3
<PAGE> 111

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

ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1996' 28.64
'1997' 33.15
'1998' 23.34
</TABLE>

During the three-year period shown in the bar chart, the highest quarterly
return was 15.79% (for the quarter ended December 31, 1998) and the lowest
quarterly return was -4.76% (for the quarter ended September 30, 1998).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Standard & Poor's 500-Stock
Index, a broad-based market index (consisting of 500 widely held common stocks)
that the Fund's management believes is an applicable benchmark for the Fund, and
with the Lipper Equity Income Fund Index, an index of funds with similar
investment objectives. The Fund's performance figures include the maximum sales
charges paid by investors. The indices' performance figures do not include
commissions or sales charges that would be paid by investors purchasing the
securities represented by those indices. Average annual total returns are shown
for the periods ended December 31, 1998 (the most recently completed calendar
year prior to the date of this prospectus). Remember that the past performance
of the Fund is not indicative of its future performance.

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Equity
Income Fund Index 11.78% 18.80%(2)
.............................................
Van Kampen
Prospector Fund--
Class B Shares 18.44% 27.86%(1)

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Equity
Income Fund Index 11.78% 18.80%(2)
.............................................
Van Kampen
Prospector Fund--
Class C Shares 22.36% 28.37%(1)

Standard & Poor's
500-Stock Index 28.58% 28.23%(2)

Lipper Equity
Income Fund Index 11.78% 18.80%(2)
.............................................
</TABLE>

Inception dates: (1) 12/27/95, (2) 12/31/95.

4
<PAGE> 112

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

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

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

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees(1) 0.70% 0.70% 0.70%
..............................................................
Distribution and/or
Service (12b-1) 0.00% 0.00% 0.00%
Fees(2)
..............................................................
Other Expenses(1) 7.87% 7.87% 7.87%
..............................................................
Total Annual Fund
Operating Expenses(1) 8.57% 8.57% 8.57%
..............................................................
</TABLE>

(1) The Fund's investment adviser is currently waiving or reimbursing a portion
of the Fund's Management Fees and Other Expenses such that the actual Total
Annual Fund Operating Expenses were 1.41% for Class A, B and C Shares.
(2) No 12b-1 or service fees were accrued by the Fund for the period ended March
31, 1999 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 March 31, 1999, 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. Class A Shares are subject to an annual service fee of
up to 0.25% of the average daily net assets attributable to such class of
shares. Class B Shares and Class C Shares are each subject to a combined
annual distribution and service fee of up to 1.00% of the average daily net
assets attributable to such class of shares. See "Purchase of Shares."

Example:

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,368 $2,871 $4,268 $7,348
.........................................................................
Class B Shares $1,342 $2,736 $4,069 $7,186*
.........................................................................
Class C Shares $ 942 $2,436 $3,919 $7,186
.........................................................................
</TABLE>

5
<PAGE> 113

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $1,368 $2,871 $4,268 $7,348
.........................................................................
Class B Shares $842 $2,436 $3,919 $7,186*
.........................................................................
Class C Shares $842 $2,436 $3,919 $7,186
.........................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

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

Under normal market conditions, the Fund's investment adviser seeks to achieve
the investment objective by investing primarily in a diversified portfolio of
equity securities, including dividend-paying common and preferred stocks and
income securities convertible into common or preferred stocks. The Fund
emphasizes a "value" style of investing, seeking companies that the Fund's
investment adviser believes are selling at low valuations relative to historical
norms and to future earnings prospects. The Fund generally focuses on
undervalued companies with characteristics for improved valuations. Because
prices of equity securities fluctuate, the value of an investment in the Fund
will vary based upon the Fund's investment performance.

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. 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 ability of common stocks and preferred stocks to
generate income is dependent on the earnings and continuing declaration of
dividends by the issuers of such securities. 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 generally 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 generally have characteristics similar
to both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity security.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying equity security although the
market prices of convertible securities may be affected by any such dividend
changes or other changes in the underlying security.

While the Fund invests primarily in equity securities, the Fund also may invest
in debt securities of various maturities considered "investment-grade" at the
time of investment. A subsequent reduction in rating does not require the Fund
to dispose of a security. Investment-grade securities are securities rated BBB
or higher by Standard & Poor's ("S&P") or rated Baa or higher by Moody's
Investors Service, Inc. ("Moody's") or comparably rated by another nationally
recognized statistical rating organization or, if unrated, are considered by the
Fund's investment adviser to be of comparable quality. Securities rated BBB by
S&P or Baa by Moody's are in the lowest of the four investment-grade categories
and are considered by the rating agencies to be medium-grade obligations which
possess speculative characteristics so that changes in economic conditions or
other circumstances are more likely to lead to a weakened

6
<PAGE> 114

capacity to make principal and interest payments than in the case of
higher-rated securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall. The market price of longer-term debt
securities generally tends to fluctuate more in response to changes in interest
rates than shorter-term debt securities.

The Fund invests in companies of any capitalization range including securities
of small- and medium-sized companies. The securities of small- or medium-sized
companies may be subject to more abrupt or erratic market movements than
securities of larger companies or the market averages in general. In addition,
such companies typically are subject to a greater degree of change in earnings
and business prospects than are larger companies. Thus, to the extent the Fund
invests in small- and medium-sized companies it may be subject to greater
investment risk than that assumed through its investments in larger companies.

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

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 25% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign currency exchange rates, political and
economic developments (including war or other instability, expropriation of
assets, nationalization and confiscatory taxation), the imposition of foreign
exchange limitations (including currency blockage), withholding taxes on income
or capital transactions or other restrictions, higher transaction costs
(including higher brokerage, custodial and settlement costs and currency
translation costs) and difficulty in enforcing contractual obligations or taking
judicial action. In addition, there often is less publicly available information
about many foreign issuers, and issuers of foreign securities are subject to
different, often less comprehensive, auditing, accounting, financial reporting
and disclosure requirements. Such securities may be less liquid than the
securities of domestic issuers. Such securities may also be subject to greater
fluctuations in price than securities of domestic issuers. There is generally
less government regulation of stock exchanges, brokers and listed companies
abroad than in the U.S., and, with respect to certain foreign countries, there
is a possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of exchanges, brokers and
dealers than there is in the U.S., the Fund may experience settlement
difficulties or delays not usually encountered in the U.S. The risks of foreign
investments should be considered carefully by an investor in the Fund.

STRATEGIC TRANSACTIONS

7
<PAGE> 115

derivatives markets as a temporary substitute for purchasing or selling
particular securities.

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the Fund's investment adviser's ability to predict pertinent market movements,
which cannot be assured. Thus, the use of such Strategic Transactions may result
in losses greater than if they had not been used, may require the Fund to sell
or purchase portfolio securities at inopportune times or for prices other than
current market values may limit the amount of appreciation the Fund can
otherwise realize on an investment, or may cause the Fund to hold a security
that it might otherwise sell. The use of currency transactions can result in the
Fund incurring losses because of the imposition of exchange controls, suspension
of settlements or the inability of the Fund to deliver or receive a specified
currency. Additionally, amounts paid as premiums and cash or other assets held
in margin accounts with respect to Strategic Transactions are not otherwise
available to the Fund for investment purposes.

OTHER INVESTMENTS AND RISK FACTORS

The Fund may purchase and sell securities on a "when-issued" and "delayed
delivery" basis. The Fund accrues no income on such securities until the Fund
actually takes delivery of such securities. These transactions are subject to
market fluctuation; the value of the securities at delivery may be more or less
than their purchase price. The value or yield generally available on comparable
securities when delivery occurs may be higher than value or yield on the
securities obtained pursuant to such transactions. Because the Fund relies on
the buyer or seller to consummate the transaction, failure by the other party to
complete the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. The Fund will engage
in when-issued and delayed delivery transactions for the purpose of acquiring
securities consistent with the Fund's investment objective and policies and not
for the purpose of investment leverage.

In order to generate additional income, the Fund may lend its portfolio
securities in an amount up to 50% of its total assets to broker-dealers, banks
or other recognized institutional borrowers of securities. Such loans must be
callable at any time and the borrower at all times during the loan must maintain
cash or liquid securities as collateral or provide the Fund an irrevocable
letter of credit equal to at least 100% of the value of the securities loaned
(including accrued interest). During the time portfolio securities are on loan,
the Fund receives any dividends or interest paid on such securities and interest
earned on the collateral which is invested in short-term instruments or receives
an agreed-upon amount of interest income from the borrower who has delivered the
collateral or letter of credit. As with any extensions of credit, there are
risks of delay in recovery and in some cases even loss of rights in the
collateral should the borrower of the securities fail financially.

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

8
<PAGE> 116

expected to vary from year to year. A high portfolio turnover rate (100% or
more) increases the Fund's transactions costs, including brokerage commissions
or dealer costs, and may result in the realization of more short-term capital
gains than if the Fund had lower portfolio turnover. Increases in the Fund's
transaction costs would impact the Fund's performance. The turnover rate will
not be a limiting factor, however, if the Fund's investment adviser considers
portfolio changes appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital growth and income on these securities will tend to be lower than the
potential for capital growth and income on other securities that may be owned by
the Fund. The Fund may not achieve its investment objective if it takes a
defensive position.

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 investment 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 Fund's investment 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 assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which Act may limit the legal rights
regarding the use of such statements in the case of a dispute.

INVESTMENT ADVISORY SERVICES

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.70% of the

9
<PAGE> 117

Fund's average daily net assets for the Fund's fiscal period ended March 31,
1999.

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 B.
Robert Baker, Jr., Senior Portfolio Manager. Mr. Baker has been primarily
responsible for managing the Fund's investment portfolio since its inception.
Mr. Baker has been a Senior Vice President since March 1999 and a Vice President
and a Portfolio Manager of the Adviser and Asset Management since June 1995.
Prior to June 1995, Mr. Baker was an Associate Portfolio Manager of Asset
Management.

Portfolio Managers Jason Leder and Edie Terreson have been responsible as
co-managers for the day-to-day management of the Fund's investment portfolio.
Mr. Leder has been co-manager of the Fund since its inception and Ms. Terreson
has been co-manager of the Fund since May 1997. Mr. Leder has been a Vice
President since March 1999 and an Assistant Vice President of the Adviser and
Asset Management since October 1996. Prior to October 1996, Mr. Leder was an
Associate Portfolio Manager of Asset Management. Prior to February 1995, Mr.
Leder was a Securities Analyst with Salomon Brothers, Inc.

Ms. Terreson has been a Vice President since March 1999 and an Assistant Vice
President of the Adviser and Asset Management since December 1997. Prior to
December 1997, Ms. Terreson was an 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.

PURCHASE OF SHARES

GENERAL

10
<PAGE> 118

(described below) pursuant to which its distribution fee or service fee is paid,
(iii) each class of shares has different exchange privileges, (iv) certain
classes of shares are subject to a conversion feature and (v) certain classes of
shares have different shareholder service options available.

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading, except on any day on which no purchase or redemption orders are
received, or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset value and adjust the public offering price more frequently than once a day
if deemed desirable. Net asset value per share for each class is determined by
dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest) attributable to such class, less all liabilities
(including accrued expenses) attributable to such class, by the total number of
shares of the class outstanding. Such computation is made by using prices as of
the close of trading on the Exchange and (i) valuing securities listed or traded
on a national securities exchange at the last sale price, or if there has been
no sale that day, at the mean between the last reported bid and asked prices,
(ii) valuing unlisted securities by quotations provided by market makers or
estimates from yield data of comparable securities 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 Adviser in accordance
with procedures established by the Board of Trustees. Securities with remaining
maturity of 60 days or less are valued on an amortized cost basis, which
approximates market value.

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

11
<PAGE> 119

authorized dealers distributing the Fund's shares are entitled to receive
compensation for selling such shares and may receive differing compensation for
selling Class A Shares, Class B Shares or Class C Shares.

CLASS A SHARES

SALES CHARGE SCHEDULE

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

12
<PAGE> 120

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

CONVERSION FEATURE

Class B Shares and any dividend reinvestment plan Class B Shares received on
such shares, automatically convert to Class A Shares eight years after the end
of

13
<PAGE> 121

the calendar month in which the shares were purchased. Such conversion will be
on the basis of the relative net asset values per share, without the imposition
of any sales load, fee or other charge. The conversion schedule applicable to a
share of the Fund acquired through the exchange privilege from another Van
Kampen fund participating in the exchange program is determined by reference to
the Van Kampen fund from which such share was originally purchased.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

QUANTITY DISCOUNTS

14
<PAGE> 122

purchased and still owned. An investor may elect to compute the 13-month period
starting up to 90 days before the date of execution of a Letter of Intent. Each
investment made during the period receives the reduced sales charge applicable
to the total amount of the investment goal. The initial purchase must be for an
amount equal to at least 5% of the minimum total purchase amount of the level
selected. If trades not initially made under a Letter of Intent subsequently
qualify for a lower sales charge through the 90-day backdating provisions, an
adjustment will be made at the time of the expiration of the Letter of Intent to
give effect to the lower charge. Such adjustment in sales charge will be used to
purchase additional shares for the shareholder at the applicable discount
category. The Fund initially will escrow shares totaling 5% of the dollar amount
of the Letter of Intent to be held by Investor Services in the name of the
shareholder. In the event the Letter of Intent goal is not achieved within the
specified period, the investor must pay the difference between the sales charge
applicable to the purchases made and the reduced sales charge previously paid.
Such payments may be made directly to the Distributor or, if not paid, the
Distributor will liquidate sufficient escrowed shares to obtain the difference.

OTHER PURCHASE PROGRAMS

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

15
<PAGE> 123

tion's employees; provided that such purchases are otherwise permitted by
such institutions.

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

16
<PAGE> 124

$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.

REDEMPTION OF
SHARES

17
<PAGE> 125

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

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

18
<PAGE> 126

SHAREHOLDER SERVICES

19
<PAGE> 127

cation 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 Van
Kampen Investments, Investor Services nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. If the
exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gains options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privileges to such shareholders. For further
information on these restrictions see the Statement of Additional Information.
The Fund may modify, restrict or terminate the exchange privilege at any time on
60 days' notice to its shareholders of any termination or material amendment.

FEDERAL INCOME TAXATION

20
<PAGE> 128

after such adjusted tax basis is reduced to zero, will constitute capital gains
to such holder (assuming such shares are held as a capital asset). Although
distributions generally are treated as taxable in the year they are paid,
distributions declared in October, November or December, payable to shareholders
of record on a specified date in such month and paid during January of the
following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31st prior to the date of payment.
The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year.

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

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

21
<PAGE> 129

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflect
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, independent accountants, whose report,
along with the Fund's financial statements, is included in the Statement of
Additional Information and may be obtained by shareholders without charge by
calling the telephone number on the back cover of this prospectus. This
information should be read in conjunction with the financial statements and
notes thereto included in the Statement of Additional Information.

<TABLE>
<CAPTION>
Class A Shares
December 27, 1995
(Commencement of
Nine Month Investment
Period Ended Year Ended June 30, Operations)
March 31,1999 1998 1997(a) to June 30, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $ 15.974 $ 13.473 $ 11.285 $10.000
-------- -------- -------- -------
Net Investment Income 0.140 0.131 0.115 0.072
Net Realized and Unrealized
Gain 1.315 3.924 2.996 1.239
-------- -------- -------- -------
Total from Investment Operations 1.455 4.055 3.111 1.311
-------- -------- -------- -------
Less:
Distributions from and in
Excess of Net Investment
Income 0.210 0.275 0.143 0.026
Distributions from Net Realized
Gain 3.312 1.279 0.780 0.000
-------- -------- -------- -------
Total Distributions 3.522 1.554 0.923 0.026
-------- -------- -------- -------
Net Asset Value, End of the
Period $ 13.907 $ 15.974 $ 13.473 $11.285
======== ======== ======== =======
Total Return*(b) 9.49%** 31.65% 29.11% 13.10%**
Net Assets at End of the Period
(In thousands) $1,771.9 $1,619.1 $1,229.0 $78.9
Ratio of Expenses to Average Net
Assets*(c) 1.41% 1.28% 1.55% 1.33%
Ratio of Net Investment Income to
Average Net Assets* 0.70% 0.74% 1.19% 1.34%
Portfolio Turnover 103%** 132% 104% 69%**
- ----------------
* 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(c) 8.57% 7.40% 18.41% 20.75%
Ratio of Net Investment Income
to Average Net Assets (6.47)% (5.38)% (15.97)% (18.07)%

<CAPTION>
Class B Shares
December 27, 1995
(Commencement of
Nine Month Investment
Period Ended Year Ended June 30, Operations)
March 31, 1999 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $15.973 $13.473 $11.285 $10.000
------- ------- ------- -------
Net Investment Income 0.140 0.131 0.113 0.072
Net Realized and Unrealized
Gain 1.315 3.923 3.020 1.239
------- ------- ------- -------
Total from Investment Operations 1.455 4.054 3.133 1.311
------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income 0.210 0.275 0.165 0.026
Distributions from Net Realized
Gain 3.312 1.279 0.780 0.000
------- ------- ------- -------
Total Distributions 3.522 1.554 0.945 0.026
------- ------- ------- -------
Net Asset Value, End of the
Period $13.906 $15.973 $13.473 $11.285
======= ======= ======= =======
Total Return*(b) 9.49%** 31.65% 29.11% 13.19%**
Net Assets at End of the Period
(In thousands) $126.9 $116.0 $88.0 $73.4
Ratio of Expenses to Average Net
Assets*(c) 1.41% 1.28% 1.55% 1.33%
Ratio of Net Investment Income to
Average Net Assets* 0.69% 0.74% 0.86% 1.34%
Portfolio Turnover 103%** 132% 104% 69%**
- ----------------
* 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(c) 8.57% 7.40% 18.41% 20.75%
Ratio of Net Investment Income
to Average Net Assets (6.47)% (5.38)% (16.30)% (18.07)%

<CAPTION>
Class C Shares
December 27, 1995
(Commencement of
Nine Month Investment
Period Ended Year Ended June 30, Operations)
March 31, 1999 1998 1997(a) to June 30, 1996
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period $15.973 $13.473 $11.285 $10.000
------- ------- ------- -------
Net Investment Income 0.140 0.131 0.113 0.072
Net Realized and Unrealized
Gain 1.315 3.923 3.020 1.239
------- ------- ------- -------
Total from Investment Operations 1.455 4.054 3.133 1.311
------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income 0.210 0.275 0.165 0.026
Distributions from Net Realized
Gain 3.312 1.279 0.780 0.000
------- ------- ------- -------
Total Distributions 3.522 1.554 0.945 0.026
------- ------- ------- -------
Net Asset Value, End of the
Period $13.906 $15.973 $13.473 $11.285
======= ======= ======= =======
Total Return*(b) 9.49%** 31.65% 29.11% 13.19%**
Net Assets at End of the Period
(In thousands) $126.9 $116.0 $88.0 $73.4
Ratio of Expenses to Average Net
Assets*(c) 1.41% 1.28% 1.55% 1.33%
Ratio of Net Investment Income to
Average Net Assets* 0.69% 0.74% 0.86% 1.34%
Portfolio Turnover 103%** 132% 104% 69%**
- ----------------
* 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(c) 8.57% 7.40% 18.41% 20.75%
Ratio of Net Investment Income
to Average Net Assets (6.47)% (5.38)% (16.30)% (18.07)%
</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.

(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 0.16% for the nine months ended
March 31, 1999 and 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

22
<PAGE> 130

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

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

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Prospector Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO 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 LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 131

VAN KAMPEN
PROSPECTOR FUND

PROSPECTUS

JULY 29, 1999

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

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-4805.
<PAGE> 132

VAN KAMPEN
AGGRESSIVE GROWTH FUND

Van Kampen Aggressive Growth Fund is a mutual fund with an investment objective
to seek capital growth. The Fund's management seeks to achieve the investment
objective by investing primarily in common stocks and other equity securities of
small- and medium-sized growth companies.

This prospectus is dated JULY 29, 1999.

[VAN KAMPEN FUNDS LOGO]
<PAGE> 133

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 6
Investment Advisory Services....................... 11
Purchase of Shares................................. 12
Redemption of Shares............................... 18
Distributions from the Fund........................ 20
Shareholder Services............................... 20
Federal Income Taxation............................ 22
Financial Highlights............................... 24
</TABLE>

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with an investment objective to seek capital growth.
Any income received from the investment of portfolio securities is incidental to
the Fund's investment objective.

INVESTMENT STRATEGIES

Under normal market conditions, the Fund's management seeks to achieve the
investment objective by investing at least 65% of the Fund's total assets in
common stocks or other equity securities of companies that the Fund's investment
adviser believes have an above-average potential for capital growth. The Fund's
management uses a "bottom-up" approach to stock selection focusing on those
companies that exhibit rising earnings expectations and rising valuations. The
Fund focuses primarily on equity securities of small- and medium-sized
companies, although the Fund may invest in securities of larger-sized companies
that the Fund's investment adviser believes have an above-average potential for
capital growth. The Fund may invest up to 20% of its total assets in securities
of foreign issuers. The Fund may invest in certain derivatives, such as options
and futures, which may subject the Fund to additional risks.

INVESTMENT RISKS

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

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. Market risk may affect a single issuer,
industry, sector of the economy, or the market as a whole. Investments in common
stocks and other equity securities generally are affected by changes in the
stock markets, which fluctuate substantially over time, sometimes suddenly and
sharply. Different types of stocks tend to shift in and out of favor depending
on market and economic conditions. Thus, the value of the Fund's investments
will vary and at times may be lower or higher than that of other types of
investments. The Fund emphasizes a "growth" style of investing and focuses
primarily on small- and medium-sized companies. The market values of such
securities may be more volatile than other types of investments. The returns on
such securities may or may not move in tandem with the returns on other styles
of investing or the overall stock markets. During an overall market decline,
stock prices of small- and medium-sized companies often fluctuate more and may
fall more than prices of larger-sized, more established companies. It is
possible that the stocks of small- and medium-sized companies will be more
volatile and underperform the overall stock market. Historically, stocks of
small- and medium-sized companies have sometimes gone through extended periods
when they did not perform as well as stocks of larger-sized companies. The Fund
may from time to time emphasize certain sectors of the market. To the extent the
Fund invests a significant portion of its assets in securities of companies in
the same sector of the market, it is more susceptible to economic, political,
regulatory and other occurrences influencing those sectors.

RISKS OF AGGRESSIVE GROWTH STOCKS. Companies that the Fund's management believes
have significant growth potential are often companies with new, limited or
cyclical product lines, markets or financial resources and the management of
such companies may be dependent upon one or a few key people. The stocks of such
companies can therefore be subject to more abrupt or erratic market movements
than stocks of larger, more established companies or the stock market in
general.

3
<PAGE> 135

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

INVESTOR PROFILE

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

- - Seek capital growth over the long term.

- - Do not seek current income from their investment.

- - Are willing to take on the increased risks of investing in smaller- and
medium-sized companies in exchange for potentially higher capital growth.

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

- - Wish to add to their personal investment portfolio a fund that invests
primarily in common stocks of smaller- and medium-sized growth companies.

ANNUAL PERFORMANCE

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

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1997' 13.67
'1998' 35.4
</TABLE>

During the two-year period shown in the bar chart, the highest quarterly return
was 32.72% (for the quarter ended December 31, 1998) and the lowest quarterly
return was -19.16% (for the quarter ended March 31, 1997).

4
<PAGE> 136

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with three broad-based market indices:
the Standard & Poor's 500-Stock Index* (an index of 500 widely held U.S. common
stocks), the Russell 2000 Stock Index** (a small capitalization company index),
and the Russell 2500 Growth Index** (a small-capitalization index of companies
in the Russell 2500 Index** with higher price-to-book ratios and higher
forecasted growth values). The Fund's performance figures include the maximum
sales charges paid by investors. The indices' performance figures do not include
commissions or sales charges that would be paid by investors purchasing the
securities represented by those indices. Average annual total returns are shown
for the periods ended December 31, 1998 (the most recently completed calendar
year prior to the date of this prospectus). Remember that the past performance
of the Fund is not indicative of its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns
for the
Periods Ended Past Since
December 31, 1998 1 Year Inception
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Van Kampen Aggressive
Growth Fund--Class A Shares 27.67% 20.90%(1)
Standard & Poor's
500-Stock Index 28.58% 28.83%(2)
Russell 2000 Stock Index 1.23% 2.39%(2)
Russell 2500 Growth Index 3.07% 6.52%(2)
..........................................................
Van Kampen Aggressive Growth
Fund--Class B Shares 29.42% 19.99%(1)
Standard & Poor's
500-Stock Index 28.58% 28.83%(2)
Russell 2000 Stock Index 1.23% 2.39%(2)
Russell 2500 Growth Index 3.07% 6.52%(2)
..........................................................
Van Kampen Aggressive Growth
Fund--Class C Shares 33.48% 20.05%(1)
Standard & Poor's
500-Stock Index 28.58% 28.83%(2)
Russell 2000 Stock Index 1.23% 2.39%(2)
Russell 2500 Growth Index 3.07% 6.52%(2)
..........................................................
</TABLE>

Inception dates: (1) 5/29/96, (2) 5/31/96.

*The Standard & Poor's 500-Stock Index is a broad-based index that reflects the
general performance of the U.S. stock market and was initially selected as a
benchmark for the Fund's performance. Based on the Fund's asset composition,
management believes the Russell 2500 Growth Stock Index provides a more
accurate narrow-based benchmark for the Fund. The Standard & Poor's 500 Stock
Index will not be shown in future reports.

**The Russell 2000 Stock Index, the Russell 2500 Growth Index and the Russell
2500 Index are subsets of the Russell 3000 Index, an index of the 3000 largest
U.S. companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market.

FEES AND EXPENSES
OF THE FUND

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

SHAREHOLDER FEES

(fees paid directly from your investment)

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

(1) Reduced for purchases of $50,000 and over. See "Purchase of Shares -- Class
A Shares."

(3) The maximum deferred sales charge is 5.00% in the first year after purchase
and declining thereafter as follows:

Year 1-5.00%
Year 2-4.00%
Year 3-3.00%
Year 4-2.50%
Year 5-1.50%
After-None
See "Purchase of Shares -- Class B Shares."
(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter. See "Purchase of Shares -- Class C Shares."

5
<PAGE> 137

ANNUAL FUND

OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
..............................................................
Distribution and/or
Service (12b-1) 0.25% 1.00%(2) 1.00%(2)
Fees(1)
..............................................................
Other Expenses 0.56% 0.58% 0.58%
..............................................................
Total Annual Fund
Operating Expenses 1.56% 2.33% 2.33%
..............................................................
</TABLE>

Example:

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $725 $1,039 $1,376 $2,325
.......................................................................
Class B Shares $736 $1,027 $1,395 $2,474*
.......................................................................
Class C Shares $336 $ 727 $1,245 $2,666
.......................................................................
</TABLE>

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $725 $1,039 $1,376 $2,325
.......................................................................
Class B Shares $236 $ 727 $1,245 $2,474*
.......................................................................
Class C Shares $236 $ 727 $1,245 $2,666
.......................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

Under normal market conditions, the Fund's investment adviser seeks to achieve
the investment objective by investing at least 65% of the Fund's total assets in
common stocks or other equity securities that the Fund's investment adviser
believes have an above-average potential for capital growth. In selecting
securities for investment, the Fund focuses primarily on equity securities of
small- and medium-sized companies, although the Fund may invest its assets in
securities of larger-sized companies that the Adviser believes have an above-
average potential for capital growth. Under current market conditions, the
Fund's investment adviser generally defines small-and medium-sized companies by
reference to those companies within or below the capitalization range of
companies represented in the Standard & Poor's MidCap 400 Index (which consists
of companies in the capitalization range of approximately $244 million to $22
billion as of June 30, 1999). Investments in such companies may offer greater
opportunities for capital growth than larger, more established companies, but
also may involve special risks. The Fund's investment adviser uses a "bottom-up"
investment approach seeking attractive growth opportunities on

6
<PAGE> 138

an individual company basis. The Fund may invest in securities that have
above-average volatility of price movement. Because prices of common stocks and
other equity securities fluctuate, the value of an investment in the Fund will
vary based upon the Fund's investment performance.

While the Fund invests primarily in common stocks, the Fund may invest in
preferred stocks and securities convertible into common stocks or other equity
securities. 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. A convertible security is a bond, debenture, note,
preferred stock, warrant 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 generally 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 generally have characteristics similar
to both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying equity securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases in the underlying equity security although the
market prices of convertible securities may be affected by any such dividend
changes or other changes in the underlying security. Generally, warrants are
securities that may be exchanged for a prescribed amount of common stock or
other equity security of the issuer within a particular period of time at a
specified price or in accordance with a specified formula. Warrants do not carry
with them the right to dividends and they do not represent any rights in the
assets of the issuer. As a result, any such investments may be considered to be
more speculative than most other types of equity investments.

The Fund also may invest in debt securities of various maturities considered
"investment grade" at the time of investment. A subsequent reduction in rating
does not require the Fund to dispose of a security. Investment grade securities
are securities rated BBB or higher by Standard & Poor's ("S&P") or rated Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or comparably rated by any
other nationally recognized statistical rating organization or, if unrated, are
considered by the Fund's investment adviser to be of comparable quality.
Securities rated BBB by S&P or Baa by Moody's are in the lowest of the four
investment grade categories and are considered by the rating agencies to be
medium-grade obligations which possess speculative characteristics so that
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than in the case of
higher-rated securities. The market prices of debt securities generally
fluctuate inversely with changes in interest rates so that the value of
investments in such securities can be expected to decrease as interest rates
rise and increase as interest rates fall.

The Fund's primary approach is to seek what the Fund's investment adviser
believes to be attractive growth opportunities on an individual company basis.
The Fund's investment adviser uses a "bottom-up" disciplined style of investing.
The Fund focuses on those companies that exhibit rising earnings expectations
and rising valuations. In selecting securities for investment, the Fund
generally seeks 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 markets or industry conditions. The Fund's
investment adviser expects that many of the companies in which the Fund invests
will, at the time of investment, be experiencing high rates of earnings growth.
The securities of such companies may trade at higher prices to earnings ratios
relative to more

7
<PAGE> 139

established companies and rates of earnings growth may be higher than the market
average. Stock prices of these companies may tend to be more volatile.

The companies and industries in which the Fund invests will change over time
depending on the Fund's investment adviser's assessment of growth opportunities.
Although the Fund will limit its investments to 25% of its total assets in any
single industry, a significant portion of the Fund's assets may be invested in
securities of companies in the same sector of the market. This may occur, for
example, when the Fund's investment 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 does not limit its investments to any single group or type of security.
The Fund may invest in unseasoned issuers and in securities involving special
situations or unusual developments, such as initial public offerings, new
management or management reliant on one or a few key people, special products
and techniques, limited or cyclical product lines, markets or resources,
mergers, liquidations or leveraged buyouts. Investments in unseasoned companies
and special situations often involve much greater risks than are inherent in
other types of investments because securities of such companies may be more
likely to experience unexpected fluctuations in price. In addition, investments
made in anticipation of future events may, if delayed or never achieved, cause
stock prices to fall.

Although the Fund may invest in companies of any size, the Fund focuses
primarily on small- and medium-sized companies. The securities of small- or
medium-sized companies may be subject to more abrupt or erratic market movements
and may have lower trading volumes or more erratic trading than securities of
larger-sized companies or the market averages in general. In addition, such
companies typically are subject to a greater degree of change in earnings and
business prospects than are larger-sized, more established companies. Thus, the
Fund may be subject to greater investment risk than that assumed through
investment in the securities of larger-sized, more established companies. In
periods of increased market volatility, the Fund may invest a greater portion of
its assets in the equity securities of larger-sized companies.

The Fund may dispose of a security whenever, in the opinion of the Fund's
investment adviser, factors indicate it is desirable to do so. The Fund
generally sells securities when earnings expectations or valuations flatten or
decline. Other factors may include changes in the company's fundamentals or
relative market performance or appreciation possibilities offered by individual
securities, a change in the market trend or other factors affecting an
individual security, a change in economic or market factors in general or with
respect to a particular industry, and other circumstances bearing on the
desirability of a given investment. In addition, if an individual stock position
appreciates to a point where it begins to account for a larger percentage of the
Fund's assets, the Fund's investment adviser may sell a portion of the position
held.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 20% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign currency exchange rates, political and
economic developments (including war or other instability, expropriation of
assets, nationalization and confiscatory taxation), the imposition of foreign
exchange limitations (including currency blockage), withholding taxes on income
or capital transactions or other restrictions, higher transaction costs
(including higher brokerage, custodial and settlement costs and currency
translation costs) and difficulty in enforcing contractual obligations or taking
judicial action. In addition, there often is less publicly available information
about many foreign issuers, and issuers of foreign securities are subject to
different, often less comprehensive auditing, accounting, financial reporting
and disclosure requirements than domestic issuers. Such securities may be less
liquid than the securities of domestic issuers. Such securities may also be
subject to greater fluctuations in price than securities of domestic issuers.
There is generally less government regulation of stock exchanges, brokers and
listed companies abroad than in the U. S., and, with respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation, or
diplomatic

8
<PAGE> 140

developments which could affect investment in those countries. Because there is
usually less supervision and governmental regulation of exchanges, brokers and
dealers than there is in the U.S., the Fund may experience settlement
difficulties or delays not usually encountered in the U.S. The risks of foreign
investments should be considered carefully by an investor in the Fund.

STRATEGIC TRANSACTIONS

Strategic Transactions have risks including the imperfect correlation between
the value of such instruments and the underlying assets, the possible default of
the other party to the transaction or illiquidity of the derivative instrument.
Furthermore, the ability to successfully use Strategic Transactions depends on
the Fund's investment adviser's ability to predict pertinent market movements,
which cannot be assured. Thus, the use of Strategic Transactions may result in
losses greater than if they had not been used, may require the Fund to sell or
purchase portfolio securities at inopportune times or for prices other than
current market values, may limit the amount of appreciation the Fund can
otherwise realize on an investment, or may cause the Fund to hold a security
that it might otherwise sell. The use of currency transactions can result in the
Fund incurring losses because of the imposition of exchange controls, suspension
of settlements or the inability of the Fund to deliver or receive a specified
currency. Additionally, amounts paid as premiums and cash or other assets held
in margin accounts with respect to Strategic Transactions are not otherwise
available to the Fund for investment purposes.

OTHER INVESTMENTS AND RISK FACTORS

For cash management purposes, the Fund may engage in repurchase agreements with
banks and broker-dealers to earn a return on temporarily available cash. Such
transactions are subject to the risk of default by the other party. It is
currently the policy of the Fund not to invest more than 25% of its total assets
at the time of purchase in securities subject to repurchase agreements.

The Fund may lend its portfolio securities in an amount up to 50% of its total
assets to

9
<PAGE> 141

broker-dealers, banks or other recognized institutional borrowers of securities.
Such loans must be callable at any time and the borrower at all times during the
loan must maintain cash or liquid securities as collateral or provide the Fund
an irrevocable letter of credit equal to at least 100% of the value of the
securities loaned (including accrued interest). During the time portfolio
securities are on loan, the Fund receives any dividends or interest paid on such
securities and receives the interest earned on the collateral which is invested
in short-term instruments or receives an agreed-upon amount of interest income
from the borrower who has delivered the collateral or letter of credit. As with
any extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities fail
financially.

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

Although the Fund does not intend to engage in substantial short-term trading,
it may sell securities without regard to the length of time they have been held
in order to take advantage of new investment opportunities or when the Fund's
investment adviser believes the potential for capital growth has lessened or
otherwise. The Fund's portfolio turnover is shown under the heading "Financial
Highlights." The portfolio turnover rate may be expected to vary from year to
year. A high portfolio turnover rate (100% or more) increases the Fund's
transactions costs, including brokerage commissions or dealer costs, and may
result in the realization of more short-term capital gains than if the Fund had
lower portfolio turnover. Increases in the Fund's transaction costs would impact
the Fund's performance. The turnover rate will not be a limiting factor,
however, if the Fund's investment adviser considers portfolio changes
appropriate.

TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks and in investment
grade corporate debt securities. Under normal market conditions, the potential
for capital growth on these securities will tend to be lower than the potential
for capital growth on other securities that may be owned by the Fund. The Fund
may not achieve its investment objective if it takes a defensive position.

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 investment 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 Fund's investment 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 assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which Act may limit the legal rights
regarding the use of such statements in the case of a dispute.

10
<PAGE> 142

INVESTMENT ADVISORY SERVICES

Applying this fee schedule, the Fund paid the Adviser an advisory fee at the
effective rate of 0.75% of the Fund's average daily net assets for the Fund's
fiscal period ended March 31, 1999.

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's portfolio management team is headed by Gary M.
Lewis, Senior Portfolio Manager. Mr. Lewis has been Senior Vice President of the
Adviser since June 1995 and of Asset Management since October 1995. Prior to
that time, Mr. Lewis was Vice President and Portfolio Manager of Asset
Management. Mr. Lewis has been primarily responsible for managing the Fund's
investment portfolio since its inception.

Portfolio Managers Dudley Brickhouse, Janet Luby and David Walker are
responsible as co-managers for the day-to-day management of the Fund's
investment portfolio. Mr. Brickhouse, a Portfolio Manager and Vice President of
the Adviser and Asset Management since January 1999, was an Associate Portfolio
Manager of the Adviser and Asset Management since September 1997. Prior to
September 1997, Mr. Brickhouse was with NationsBank Investment

11
<PAGE> 143

Management. Mr. Brickhouse has been a co-manager of the Fund since September
1997.

Ms. Luby, a Portfolio Manager and Vice President of the Adviser and Asset
Management since January 1999, was an Assistant Vice President of the Adviser
and Asset Management since January 1997. Prior to January 1997, Ms. Luby was
Associate Portfolio Manager of Asset Management. Prior to July 1995, Ms. Luby
was with AIM Capital Management, Inc. Ms. Luby has been a co-manager of the Fund
since May 1996.

Mr. Walker, a Portfolio Manager and Vice President of the Adviser and Asset
Management since January 1999, was an Assistant Vice President of the Adviser
and Asset Management since June 1995. Prior to June 1995, Mr. Walker was a
Quantitative Analyst of Asset Management. Mr. Walker has been a co-manager of
the Fund since May 1996.

PURCHASE OF SHARES

GENERAL

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day on which no purchase or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund's Board of Trustees reserves the right to calculate the net
asset values per share and adjust the offering price more frequently than once a
day if deemed desirable. Net asset value per share for each class is determined
by dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest) attributable to such class, less all liabilities
(including accrued expenses) attributable to such class, by the total number of
shares of the class outstanding. Such computation is made by using prices as of
the close of trading on the Exchange and (i) valuing securities listed or traded
on a national securities exchange at the last reported sale price, or if there
has been no sale that day, at the mean between the last reported bid and asked
prices, (ii) valuing over-the-counter securities at the last reported sale price
from the National Association of Securities Dealer's Automated Quotations
("NASDAQ"), (iii) valuing unlisted securities at the last quoted bid price and
(iv) valuing any securities for which market quotations are not readily
available and any other assets at fair value as determined in good faith by the
Adviser in accordance with procedures established by the Board of Trustees.
Securities with remaining maturity of 60 days or less are valued on an amortized
cost basis, which approximates market value.

12
<PAGE> 144

13
<PAGE> 145

CLASS A SHARES

SALES CHARGE SCHEDULE

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

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

14
<PAGE> 146

CLASS C SHARES

Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.

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

CONVERSION FEATURE

Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment
plan Class B Shares received on such shares, 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 Class B Shares received on such shares, 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 Class C Shares received on such shares, 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 value per share, without the imposition of any sales load, fee or
other charge. The conversion schedule applicable to a share of the Fund acquired
through the exchange privilege from another Van Kampen fund participating in the
exchange program is determined by reference to the Van Kampen fund from which
such share was originally purchased.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

15
<PAGE> 147

credit for any contingent deferred sales charge if the reinvestment is within
180 days after the redemption. For a more complete description of contingent
deferred sales charge waivers, please refer to the Fund's Statement of
Additional Information or contact your authorized dealer.

QUANTITY DISCOUNTS

OTHER PURCHASE PROGRAMS

16
<PAGE> 148

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 authorized dealer, if any, through which such participation in the
qualifying program was initiated 0.50% of the offering price as a dealer
concession or agency commission. Persons desiring more information with respect
to this program, including the terms and conditions that apply to the program,
should contact their authorized dealer or the Distributor.

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

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

17
<PAGE> 149

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, 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, plus 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.

REDEMPTION OF
SHARES

18
<PAGE> 150

19
<PAGE> 151

the Fund's other redemption procedure previously described. Requests received by
Investor Services prior to 4:00 p.m., New York time, will be processed at the
next determined net asset value per share. These privileges are available for
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.

DISTRIBUTIONS FROM THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains dividends.

SHAREHOLDER SERVICES

20
<PAGE> 152

(800) 341-2911 ((800) 421-2833 for the hearing impaired) or by 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.

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

21
<PAGE> 153

the security upon which the highest sales charge rate was previously paid is
deemed exchanged first.

FEDERAL INCOME
TAXATION

22
<PAGE> 154

required certifications or who are otherwise subject to backup withholding.

23
<PAGE> 155

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Class A Shares May 29, 1996
Nine Month Year Ended June (Commencement of
Period Ended 30, Investment Operations)
March 31, 1999(b) 1998 1997 to June 30, 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period............... $13.676 $9.948 $9.118 $9.430
------- ------- ------ ------
Net Investment
Loss............... (.125) (.135) (.065) (.002)
Net Realized and
Unrealized
Gain/Loss.......... 4.445 3.863 .895 (.310)
------- ------- ------ ------
Total from Investment
Operations........... 4.320 3.728 .830 (.312)
------- ------- ------ ------
Less Distributions from
Net Realized Gain.... .859 -0- -0- -0-
------- ------- ------ ------
Net Asset Value, End of
the Period........... $17.137 $13.676 $9.948 $9.118
------- ------- ------ ------
Total Return(a)........ 33.72%** 37.49% 9.10% (3.29%)**
======= ======= ====== ======
Net Assets at End of
the Period (In
millions)............ $242.6 $117.5 $84.0 $30.3
Ratio of Expenses to
Average Net
Assets*.............. 1.56% 1.44% 1.30% 1.29%
Ratio of Net Investment
Loss to Average Net
Assets*.............. (1.22%) (1.09%) (.81%) (.50%)
Portfolio Turnover..... 126%** 185% 186% 4%**
* 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........... N/A 1.61% 1.61% 2.05%
Ratio of Net
Investment Loss
to Average Net
Assets........... N/A (1.26%) (1.12%) (1.25%)

<CAPTION>
Class B Shares May 29, 1996
Nine Month Period Year Ended June (Commencement of
Ended 30, Investment Operations)
March 31, 1999(b) 1998 1997 to June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period............... $13.461 $9.867 $9.112 $9.430
------- ------- ------ ------
Net Investment
Loss............... (.197) (.204) (.105) (.006)
Net Realized and
Unrealized
Gain/Loss.......... 4.342 3.798 .860 (.312)
------- ------- ------ ------
Total from Investment
Operations........... 4.145 3.594 .755 (.318)
------- ------- ------ ------
Less Distributions from
Net Realized Gain.... .859 -0- -0- -0-
------- ------- ------ ------
Net Asset Value, End of
the Period........... $16.747 $13.461 $9.867 $9.112
------- ------- ------ ------
Total Return(a)........ 32.99%** 36.37% 8.34% (3.39%)**
======= ======= ====== ======
Net Assets at End of
the Period (In
millions)............ $231.8 $148.4 $94.2 $25.5
Ratio of Expenses to
Average Net
Assets*.............. 2.33% 2.20% 2.05% 2.06%
Ratio of Net Investment
Loss to Average Net
Assets*.............. (1.99%) (1.85%) (1.55%) (1.28%)
Portfolio Turnover..... 126%** 185% 186% 4%**
* 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........... N/A 2.37% 2.35% 2.81%
Ratio of Net
Investment Loss
to Average Net
Assets........... N/A (2.02%) (1.86%) (2.04%)

<CAPTION>
Class C Shares May 29, 1996
Nine Month Period Year Ended June (Commencement of
Ended 30, Investment Operations)
March 31, 1999(b) 1998 1997 to June 30, 1996
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period............... $13.470 $9.869 $9.113 $9.430
------- ------- ------ ------
Net Investment
Loss............... (.197) (.203) (.103) (.006)
Net Realized and
Unrealized
Gain/Loss.......... 4.348 3.804 .859 (.311)
------- ------- ------ ------
Total from Investment
Operations........... 4.151 3.601 .756 (.317)
------- ------- ------ ------
Less Distributions from
Net Realized Gain.... .859 -0- -0- -0-
------- ------- ------ ------
Net Asset Value, End of
the Period........... $16.762 $13.470 $9.869 $9.113
------- ------- ------ ------
Total Return(a)........ 32.96%** 36.47% 8.34% (3.39%)**
======= ======= ====== ======
Net Assets at End of
the Period (In
millions)............ $27.4 $16.4 $10.8 $3.9
Ratio of Expenses to
Average Net
Assets*.............. 2.33% 2.20% 2.05% 2.05%
Ratio of Net Investment
Loss to Average Net
Assets*.............. (1.98%) (1.85%) (1.54%) (1.28%)
Portfolio Turnover..... 126%** 185% 186% 4%**
* 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........... N/A 2.36% 2.35% 2.81%
Ratio of Net
Investment Loss
to Average Net
Assets........... N/A (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.

(b) Based on average shares outstanding.

N/A = Not applicable.

See Notes to Financial Statements.

24
<PAGE> 156

FOR MORE INFORMATION

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

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

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

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

WEB SITE
www.vankampen.com

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

Investment Adviser

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor

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

Transfer Agent

VAN KAMPEN INVESTOR SERVICES INC.

PO Box 218256

Kansas City, MO 64121-8256

Attn: Van Kampen Aggressive Growth Fund

Custodian

STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO 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 LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 157

VAN KAMPEN
AGGRESSIVE GROWTH FUND

PROSPECTUS

JULY 29, 1999

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

[VAN KAMPEN FUNDS LOGO]
The Fund's Investment Company Act
File No. is 811-4805.
AGG PRO
7/99
<PAGE> 158

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
UTILITY FUND

Van Kampen Utility Fund (the "Fund") is a mutual fund with an investment
objective to seek to provide its shareholders with capital appreciation and
current income. The Fund's management seeks to achieve the investment objective
by investing primarily in a diversified portfolio of common stocks and income
securities issued by companies engaged in the utilities industry.

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

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-3
Strategic Transactions...................................... B-9
Investment Restrictions..................................... B-16
Trustees and Officers....................................... B-18
Investment Advisory Agreement............................... B-27
Other Agreements............................................ B-27
Distribution and Service.................................... B-28
Transfer Agent.............................................. B-31
Portfolio Transactions and Brokerage Allocation............. B-31
Shareholder Services........................................ B-33
Redemption of Shares........................................ B-35
Contingent Deferred Sales Charge-Class A.................... B-35
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-36
Taxation.................................................... B-37
Fund Performance............................................ B-41
Other Information........................................... B-43
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-11
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 159

GENERAL INFORMATION

The Trust is an unincorporated business trust established under the laws of
the State of Delaware by an Agreement and Declaration of Trust (the "Declaration
of Trust") dated May 10, 1995. The Declaration of Trust permits the Trustees to
create one or more separate investment portfolios and issue a series of shares
for each portfolio, such as the Fund. The Trustees can further sub-divide each
series of shares into one or more classes of shares for each portfolio.

The Trust was originally organized in 1987 under the name Van Kampen
Merritt Equity Trust as a Massachusetts business trust (the "Massachusetts
Trust"). The Massachusetts Trust was reorganized into the Trust under the name
Van Kampen American Capital Equity Trust on July 31, 1995. The Trust was created
for the purpose of facilitating the Massachusetts Trust reorganization into a
Delaware business trust. On July 14, 1998, the Trust adopted its current name.

The Fund was originally organized as a sub-trust of the Massachusetts Trust
under the name Van Kampen Merritt Utility Fund. The Fund was reorganized as a
series of the Trust under the name Van Kampen American Capital Utility Fund on
July 31, 1995. On July 14, 1998, the Fund adopted its current name.

Van Kampen Investment Advisory Corp. (the "Adviser" or "Advisory Corp."),
Van Kampen Funds Inc. (the "Distributor"), and Van Kampen Investor Services Inc.
("Investor Services") are wholly owned subsidiaries of Van Kampen Investments
Inc. ("Van Kampen Investments"), which is an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. ("Morgan Stanley Dean Witter"). The principal
office of the Fund, the Adviser, the Distributor and Van Kampen Investments is
located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555.

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

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

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

B-2
<PAGE> 160

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

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

The Trustees may amend the Declaration of Trust (including with respect to
any series) in any manner without shareholder approval, except that the Trustees
may not adopt any amendment adversely affecting the rights of shareholders of
any series without approval by a majority of the shares of each affected series
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.

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

As of July 8, 1999, no person was known by the Fund to own beneficially or
to hold of record 5% or more of the outstanding Class A Shares, Class B Shares
or Class C Shares of the Fund, except as follows:

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Trust Company............................ 395,666.71 A 11.10%
2800 Post Oak Blvd. 468,921.42 B 9.94%
Houston, TX 77056 23,198.62 C 6.59%
Merrill Lynch Pierce Fenner & Smith Inc............. 32,065.46 C 9.07%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
</TABLE>

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

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

INVESTMENT OBJECTIVE AND POLICIES

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

UTILITIES INDUSTRY

The utilities industry has experienced significant changes in recent years.
Many companies in the utilities industry 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.

B-3
<PAGE> 161

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. It is anticipated that
telecommunications legislation also will have a significant impact on the
telecommunications industry. Competition and technological advances may over
time provide better-positioned utility companies with opportunities for enhanced
profitability although increased competition. However, other structural changes
could adversely affect the profitability of such utilities or other negative
factors affecting the utilities industry could develop in the future.

Gas and electric utility companies continue to be affected by changes in
fuel prices and interest rates. There has been a convergence of gas utilities
and electric utilities, 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
appear to have developed more of the business practices necessary to operate in
a non-monopoly environment. Electric utilities, generally new to deregulation,
may be more likely to experience significant changes than gas companies which
may increase the risk of investing in electric utilities.

Other utility companies securities appear to be 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.

RISKS OF INVESTING IN PUBLIC UTILITIES.

Utility companies that issue 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. Utility companies often 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 utility companies 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. Utility companies are often 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 utility
companies to service principal, interest and dividend payments. Because of the
Fund's policy of investing at least 80% of its total assets in securities issued
by companies engaged in the utilities industry, the Fund is more susceptible
than an investment company without such a policy to economic, political,
environmental or regulatory occurrences affecting companies engaged in the
utilities industry. See "Investment Objective and Policies" in the Prospectus.

Electric Utilities. Certain 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 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

B-4
<PAGE> 162

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 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.

RISKS OF INVESTING IN LOWER-GRADE INCOME SECURITIES

The Fund may invest up to 20% of its assets in lower-grade securities,
which securities are commonly known as "junk bonds." Securities which are in the
lower-grade categories generally offer a higher current yield than is offered by
higher-grade securities of similar maturities, but they also generally involve
greater risks, such as greater credit risk, greater market risk and volatility,
greater liquidity concerns and potentially greater manager risk. Investors
should carefully consider the risks of owning shares of a portfolio which
invests in lower-grade securities before investing in the Fund. The Fund will
not invest in securities that are in default or are in bankruptcy or
reorganization.

Credit risk relates to the issuer's ability to make timely payment of
interest and principal when due. Lower-grade securities are considered more
susceptible to nonpayment of interest and principal or default than higher-grade
securities. Increases in interest rates or changes in the economy may
significantly affect the ability of issuers of lower-grade debt securities to
pay interest and to repay principal, to meet projected financial goals or to
obtain additional financing. In the event that an issuer of securities held by
the Fund experiences difficulties in the timely payment of principal and
interest and such issuer seeks to restructure the terms of its borrowings, the
Fund may incur additional expenses and may determine to invest additional assets
with respect to such issuer or the project or projects to which the Fund's
securities relate. Further, the Fund may incur additional expenses to the extent
that it is required to seek recovery upon a default in the payment of interest
or the repayment of principal on its portfolio holdings, and the Fund may be
unable to obtain full recovery on such amounts.

Market risk relates to changes in market value of a security that occur as
a result of variation in the level of prevailing interest rates and yield
relationships in the debt securities market and as a result of real or perceived
changes in credit risk. The value of the Fund's investments can be expected to
fluctuate over time. When interest rates decline, the value of a portfolio
invested in fixed income securities generally can be expected to rise.
Conversely, when interest rates rise, the value of a portfolio invested in fixed
income securities generally can be expected to decline. Debt securities with
longer maturities, which may have higher yields, may increase or decrease in
value more than debt securities with shorter maturities. However, the secondary
market prices of lower-grade debt securities generally are less sensitive to
changes in interest rate and are more sensitive to general adverse economic
changes or specific developments with respect to the particular issuers than are
the secondary market prices of higher-grade debt securities. A significant
increase in interest rates or a general economic downturn could severely disrupt
the market for lower-grade securities and adversely affect the market value of
such securities. Such events also could lead to a higher incidence of

B-5
<PAGE> 163

default by issuers of lower-grade securities as compared with higher-grade
securities. In addition, changes in credit risks, interest rates, the credit
markets or periods of general economic uncertainty can be expected to result in
increased volatility in the market price of the lower-grade securities in the
Fund and thus in the net asset value of the Fund. Adverse publicity and investor
perceptions, whether or not based on rational analysis, may affect the value,
volatility and liquidity of lower-grade securities.

The markets for lower-grade securities may be less liquid than the markets
for higher-grade securities. 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. To the extent that there is no established retail market for some of
the lower-grade securities in which the Fund may invest, trading in such
securities may be relatively inactive. Prices of lower-grade securities may
decline rapidly in the event a significant number of holders decide to sell.
Changes in expectations regarding an individual issuer of lower-grade securities
generally could reduce market liquidity for such securities and make their sale
by the Fund more difficult, at least in the absence of price concessions. The
effects of adverse publicity and investor perceptions may be more pronounced for
securities for which no established retail market exists as compared with the
effects on securities for which such a market does exist. An economic downturn
or an increase in interest rates could severely disrupt the market for such
securities and adversely affect the value of outstanding securities or the
ability of the issuers to repay principal and interest. Further, the Fund may
have more difficulty selling such securities in a timely manner and at their
stated value than would be the case for securities for which an established
retail market does exist.

The Fund's investment adviser is responsible for determining the net asset
value of the Fund, subject to the supervision of the Fund's Board of Trustees.
During periods of reduced market liquidity or in the absence of readily
available market quotations for lower-grade securities held in the Fund's
portfolio, the ability of the Fund's investment adviser to value the Fund's
securities becomes more difficult and the judgment of the Fund's investment
adviser may play a greater role in the valuation of the Fund's securities due to
the reduced availability of reliable objective data.

Many lower-grade debt securities generally are not listed for trading on
any national securities exchange, and many issuers of lower-grade debt
securities choose not to have a rating assigned to their obligations by any
nationally recognized statistical rating organization. As a result, the Fund's
portfolio may consist of a higher portion of unlisted or unrated securities as
compared with an investment company that invests primarily in higher-grade
securities. Unrated securities are usually not as attractive to as many buyers
as are rated securities, a factor which may make unrated securities less
marketable. These factors may have the effect of limiting the availability of
the securities for purchase by the Fund and may also limit the ability of the
Fund to sell such securities at their fair value either to meet redemption
requests or in response to changes in the economy or the financial markets.
Further, to the extent the Fund owns or may acquire illiquid or restricted
lower-grade securities, these securities may involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

The Fund will rely on its Adviser's judgment, analysis and experience in
evaluating the creditworthiness of an issue. The amount of available information
about the financial condition of certain lower-grade issuers may be less
extensive than other issuers. In its analysis, the Adviser may consider the
credit ratings of S&P and Moody's in evaluating securities although the Adviser
does not rely primarily on these ratings. Ratings evaluate only the safety of
principal and interest payments, not the market value risk. Additionally,
ratings are general and not absolute standards of quality, and credit ratings
are subject to the risk that the creditworthiness of an issuer may change and
the rating agencies may fail to change such ratings in a timely fashion. A
rating downgrade does not require the Fund to dispose of a security. The Adviser
continuously monitors the issuers of securities held in the Fund. Because of the
number of investment considerations involved in investing in lower-grade
securities, achievement of the Fund's investment objectives may be more
dependent upon the Adviser's credit analysis than is the case with investing in
higher-grade securities.

New or proposed laws may have an impact on the market for lower-grade
securities. The Adviser is unable at this time to predict what effect, if any,
legislation may have on the market for lower-grade securities.

Special tax considerations are associated with investing in certain
lower-grade securities, such as zero coupon or pay-in-kind securities. The Fund
accrues income on these securities prior to the receipt of cash
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payments. The Fund must distribute substantially all of its income to its
shareholders to qualify for pass-through treatment under federal income tax law
and may, therefore, have to dispose of its portfolio securities to satisfy
distribution requirements.

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. The Fund may invest an
amount up to 20% of its total assets at the time of purchase in securities
subject to repurchase agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a
security and the seller agrees to repurchase the obligation at a future time and
set price, thereby determining the yield during the holding period. Repurchase
agreements involve certain risks in the event of default by the other party. The
Fund will enter into repurchase agreements with banks or broker-dealers, deemed
to be creditworthy by the Adviser under guidelines approved by the Trustees. The
Fund will not invest in repurchase agreements maturing in more than seven days
if any such investment, together with any other illiquid securities held by the
Fund, would exceed the Fund's limitation on illiquid securities described below.
In the event of the bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible lack of access to income on the underlying security during
this period; and (c) expenses of enforcing its rights.

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

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

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund
also may borrow an amount up to 5% of the Fund's total assets for temporary
purposes. The Fund has no current intention to borrow other then for temporary
purposes.

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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 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.

Reverse repurchase agreements involve sales by the Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. During the reverse repurchase agreement period, the
Fund continues to receive principal and interest payments on these securities.
The Fund will establish a segregated account with its custodian in which it will
maintain cash or liquid securities equal in value to its obligations in respect
of reverse repurchase agreements and, accordingly, the Fund will not treat such
obligations as senior securities for purposes of the 1940 Act. 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.

LENDING OF SECURITIES

Consistent with applicable regulatory requirements, the Fund may lend its
portfolio securities to broker-dealers and other financial institutions provided
that such loans are at all times secured by collateral that is at least equal to
the market value, determined daily, of the loaned securities and such loans are
callable at any time by the Fund. The advantage of such loans is that the Fund
continues to receive the interest or dividends on the loaned securities, while
at the same time earning interest on the collateral which is invested in
short-term obligations. The Fund may pay reasonable finders', administrative and
custodial fees in connection with loans of its securities. There is no assurance
as to the extent to which securities loans can be effected.

If the borrower fails to return the borrowed securities or maintain the
requisite amount of collateral, the loan automatically terminates, and the Fund
could use the collateral to replace the securities while holding the borrower
liable for any excess of replacement cost over collateral. As with any
extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities fail
financially. However, these loans of portfolio securities will only be made to
firms deemed by the Fund's management to be creditworthy and when the
consideration which can be earned from such loans is believed to justify the
attendant risks. On termination of the loan, the borrower is required to return
the securities to the Fund; any gains or loss in the market price during the
loan would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan.

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

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buyer in such a transaction, however, it will maintain, in a segregated account
with its custodian, cash or portfolio securities having an aggregate value equal
to the amount of such purchase commitments until payment is made. The Fund will
make commitments to purchase securities on such basis only with the intention of
actually acquiring these securities, but the Fund may sell such securities prior
to the settlement date if such sale is considered to be advisable. To the extent
the Fund engages in "when-issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objectives and policies and not for the
purpose of investment leverage.

PORTFOLIO TURNOVER

The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Fund's portfolio securities during such fiscal year. The
turnover rate may vary greatly from year to year as well as within a year. The
Fund's portfolio turnover rate (the lesser of the value of the securities
purchased or securities sold divided by the average value of the securities held
in the Fund's portfolio excluding all securities whose maturities at acquisition
were one year or less) is shown in the table of "Financial Highlights" in the
Prospectus. A high portfolio turnover rate (100% or more) 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 a lower
portfolio turnover. The turnover rate will not be a limiting factor, however, if
the Adviser deems portfolio changes appropriate.

ILLIQUID SECURITIES

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

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, use various investment strategies as
described below to facilitate portfolio management and mitigate risks. Such
strategies are generally accepted under modern portfolio management and are
regularly used 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.

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In the course of pursuing these investment strategies, the Fund may
purchase and sell derivative securities such as exchange-listed and
over-the-counter put and call options on securities, financial futures, equity,
fixed-income and interest rate indices and other financial instruments, 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 or options on currency or currency futures
(collectively, all the above are called "Strategic Transactions"). Among other
things, Strategic Transactions may be used to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
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,
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 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
these futures contracts 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.

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."

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.

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.

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 U.S.
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 ("S&P") or "P-1" from Moody's Investors Service, Inc. ("Moody's") or an
equivalent rating from any other nationally recognized statistical rating
organization ("NRSRO"). Certain OTC options may be illiquid and subject to the
Fund's limitation on illiquid securities.

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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 or put options on securities, including
U.S. Treasury and agency securities, foreign sovereign debt, mortgage-backed
securities, corporate debt securities, Eurodollar instruments and foreign debt
securities that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets and related futures on such securities, indices,
currencies and futures. 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 put options, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price above the market price.

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

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

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

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other instrument except that, rather than settling by physical delivery of the
underlying instrument, they settle by cash settlement, i.e., an option on an
index gives the holder the right to receive, upon exercise of the option, an
amount of cash if the closing level of the index upon which the option is based
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option (except if, in the case of an OTC option, physical
delivery is specified). This amount of cash is equal to the excess of the
closing price of the index over the exercise price of the option, which also may
be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount. The gain or
loss on an option on an index depends on price movements in the instruments
making up the market, market segment, industry or other composite on which the
underlying index is based, rather than price movements in individual securities,
as is the case with respect to options on securities.

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

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

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

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and to buy U.S. dollars. The amount of the contract
would not exceed the value of the Fund's securities denominated in linked
currencies. For example, if the Adviser considers the Austrian schilling is
linked to the German deutschemark (the "D-mark"), the Fund holds securities
denominated in Austrian schillings and the Adviser believes that the value of
schillings will decline against the U.S. dollar, the Adviser may enter into a
contract to sell D-marks and buy dollars. 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.

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

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

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

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

B-14
<PAGE> 172

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 guarantees, and are subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities, currencies and other
instruments. The value of such positions also could be adversely affected by:
(i) other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lower trading volume
and liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions,
in addition to other requirements, require that the Fund segregate cash or
liquid securities with its custodian to the extent Fund obligations are not
otherwise "covered" through ownership of the underlying security, financial
instrument or currency. In general, either the full amount of any obligation by
the Fund to pay or deliver securities or assets must be covered at all times by
the securities, instruments or currency required to be delivered, or, 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. 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,
currency, 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, 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.

B-15
<PAGE> 173

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 or liquid
securities.

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 also may 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 also may be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.

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

INVESTMENT RESTRICTIONS

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

1. With respect to 75% of its total assets, purchase any securities (other
than obligations guaranteed by the U.S. 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.

B-16
<PAGE> 174

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. Invest in securities issued by other investment companies except as part
of a merger, reorganization or other acquisition and except as 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.

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.

B-17
<PAGE> 175

TRUSTEES AND OFFICERS

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

TRUSTEES

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of the
1632 Morning Mountain Road funds in the Fund Complex. Co-founder, and prior to
Raleigh, NC 27614 August 1996, Chairman, Chief Executive Officer and
Date of Birth: 07/14/32 President, MDT Corporation (now known as
Getinge/Castle, Inc., a subsidiary of Getinge
Industrier AB), a company which develops,
manufactures, markets and services medical and
scientific equipment.
Jerry D. Choate........................... Director of Amgen Inc., a biotechnological company.
Barrington Place, Building 4 Trustee/Director of each of the funds in the Fund
18 E. Dundee Road, Suite 101 Complex. Prior to January 1999, Chairman and Chief
Barrington, IL 60010 Executive Officer of The Allstate Corporation
Date of Birth: 09/16/38 ("Allstate") and Allstate Insurance Company. Prior to
January 1995, President and Chief Executive Officer of
Allstate. Prior to August 1994, Mr. Choate held
various management positions at Allstate.
Richard M. DeMartini*..................... Chairman and Chief Executive Officer of International
Two World Trade Center Private Client Group, a division of Morgan Stanley
66th Floor Dean Witter. Director of Dean Witter Reynolds Inc.
New York, NY 10048 Chairman and Director of Dean Witter Capital
Date of Birth: 10/12/52 Corporation. Chairman, Chief Executive Officer,
President and Director of Dean Witter Alliance Capital
Corporation, Director of the National Healthcare
Resources, Inc., Dean Witter Realty Inc., Dean Witter
Reynolds Venture Equities Inc., DW Window Covering
Holding, Inc. and is a member of the Morgan Stanley
Dean Witter Management Committee. Trustee of the
TCW/DW Funds, Director of the Morgan Stanley Dean
Witter Funds and Trustee/Director of other funds in
the Fund Complex. Prior to March 1999, Chairman, Chief
Executive Officer, President and Director of Morgan
Stanley Dean Witter Distributors, Inc. Prior to
January 1999, Chairman of Dean Witter Futures &
Currency Management Inc. and Demeter Management
Corporation. Prior to December 1998, President and
Chief Operating Officer of Morgan Stanley Dean Witter
Individual Asset Management and Director of Morgan
Stanley Dean Witter Trust FSB. 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.
</TABLE>

B-18
<PAGE> 176

<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. Trustee/Director of each of the funds in
233 South Wacker Drive the Fund Complex. Prior to 1997, Partner, Ray &
Suite 7000 Berndtson, Inc., an executive recruiting and
Chicago, IL 60606 management consulting firm. Formerly, Executive Vice
Date of Birth: 06/03/48 President of ABN AMRO, N.A., a Dutch bank holding
company. Prior to 1992, Executive Vice President of La
Salle National Bank. Trustee on the University of
Chicago Hospitals Board, Vice Chair of the Board of
The YMCA of Metropolitan Chicago and a member of the
Women's Board of the University of Chicago. Prior to
1996, Trustee of The International House Board.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Trustee/Director of each of the funds
Washington, D.C. 20016 in the Fund Complex. Formerly, advisor to the Dennis
Date of Birth: 02/29/52 Trading Group Inc. Prior to 1992, President and Chief
Executive Officer, Director and Member of the
Investment Committee of the Joyce Foundation, a
private foundation.
Jack E. Nelson............................ President and owner, Nelson Investment Planning
423 Country Club Drive Services, Inc., a financial planning company and
Winter Park, FL 32789 registered investment adviser. President and owner,
Date of Birth: 02/13/36 Nelson Ivest Brokerage Services Inc., a member of the
National Association of Securities Dealers, Inc. and
Securities Investors Protection Corp. Trustee/Director
of each of the funds in the Fund Complex.
Don G. Powell*............................ Currently a member of the Board of Governors and
2800 Post Oak Blvd. Executive Committee for the Investment Company
Houston, TX 77056 Institute, and a member of the Board of Trustees of
Date of Birth: 10/19/39 the Houston Museum of Natural Science.
Trustee/Director of certain open-end investment
companies in the Fund Complex and Trustee/Managing
General Partner of other funds advised by the Advisers
or Van Kampen Management Inc. Immediate past Chairman
of the Investment Company Institute. Prior to January
1999, Chairman and Director of Van Kampen Investments,
the Advisers, the Distributor, and Investor Services
and Director or officer of certain other subsidiaries
of Van Kampen Investments. Prior to July 1998,
Director and Chairman of VK/AC Holding, Inc. Prior to
November 1996, President, Chief Executive Officer and
Director of VK/AC Holding, Inc.
Phillip B. Rooney......................... Vice Chairman and Director of The ServiceMaster
One ServiceMaster Way Company, a business and consumer services company.
Downers Grove, IL 60515 Director of Illinois Tool Works, Inc., a manufacturing
Date of Birth: 07/08/44 company and the Urban Shopping Centers Inc., a retail
mall management company. Trustee, University of Notre
Dame. Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of Stone Smurfit
Container Corp., a paper manufacturing company.
Formerly, President, Chief Executive Officer and Chief
Operating Officer of Waste Management, Inc., an
environmental services company.

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.
</TABLE>

B-19
<PAGE> 177

<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,
333 West Wacker Drive Meagher & Flom (Illinois), legal counsel to the funds
Chicago, IL 60606 in the Fund Complex, and other open-end and closed-end
Date of Birth: 08/22/39 funds advised 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.

Suzanne H. Woolsey, Ph.D.................. Chief Operating Officer of the National Academy of
2101 Constitution Ave., N.W. Sciences/ National Research Council, an independent,
Room 206 federally chartered policy institution. Director of
Washington, D.C. 20418 Neurogen Corporation, a pharmaceutical company.
Date of Birth: 12/27/41 Director and former Chairman of the German Marshall
Fund of the United States Trustee of Colorado College,
Vice Chair of the Board of the Council for Excellence
in Government. Trustee/Director of each of the funds
in the Fund Complex. Prior to 1993, Executive Director
of the Commission on Behavioral and Social Sciences
and Education at the National Academy of
Sciences/National Research Council. Prior to 1989,
Partner of Coopers & Lybrand.

Paul G. Yovovich.......................... Private investor. Director of 3Com Corporation, which
Sears Tower provides information access products and network
233 South Wacker Drive system solutions, COMARCO, Inc., a wireless
Suite 9700 communications products company and APAC Customer
Chicago, IL 60606 Services, Inc., a provider of outsourced customer
Date of Birth: 10/29/53 contact services. Trustee/Director of each of the
funds in the Fund Complex. Prior to May 1996,
President of Advance Ross Corporation, an
international transaction services and pollution
control equipment manufacturing company.
</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
current or former positions with Morgan Stanley Dean Witter or its affiliates.

B-20
<PAGE> 178

OFFICERS

Messrs. Powers, McDonnell, Smith, Hegel, Sullivan, Wood and Wetherell are
located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, IL 60181-5555. 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>
Richard F. Powers III................ President and Chief Executive Officer of Van Kampen
Date of Birth: 02/02/46 Investments. President of each of the Funds in the Fund
President Complex. Prior to May 1998, Executive Vice President and
Director of Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and Dean Witter
Realty. Prior to 1996, Director of Dean Witter Reynolds
Inc.
Dennis J. McDonnell.................. Executive Vice President and Director of Van Kampen
Date of Birth: 05/20/42 Investments. President, Chief Operating Officer and
Chief Investment Officer and Director of the Advisers, Van Kampen Advisors Inc., and
Executive Vice President Van Kampen Management Inc. Chief Investment Officer and
Executive Vice 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 Van Kampen Management
Inc. Prior to July 1998, Director and Executive Vice
President of VK/AC Holding, Inc. Prior to April 1998,
President and Director of Van Kampen Merritt Equity
Advisors Corp. Prior to April 1997, Mr. McDonnell was
Director of Van Kampen Merritt Equity Holdings Corp. Prior
to September 1996, Mr. McDonnell was Chief Executive
Officer and Director of MCM Group, Inc. and McCarthy,
Crisanti & Maffei, Inc. a financial research firm, and
Chairman and Director of MCM Asia Pacific Company, Limited
and MCM (Europe) Limited.
A. Thomas Smith III.................. Executive Vice President, General Counsel, Secretary and
Date of Birth: 12/14/56 Director of Van Kampen Investments, the Advisers, Van
Vice President and Secretary Kampen Advisors Inc., Van Kampen Management Inc., the
Distributor, American Capital Contractual Services, Inc.,
Van Kampen Exchange Corp., Van Kampen Recordkeeping
Services Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System Inc. Vice
President and Secretary of each of the funds in the Fund
Complex and certain other investment companies advised by
the Advisers or their affiliates. Prior to January 1999,
counsel to New York Life Insurance Company ("New York
Life"), and prior to March 1997, Vice President and
Associate General Counsel of New York Life. Prior to
December 1993, Assistant General Counsel of The Dreyfus
Corporation. Prior to August 1991, Senior Associate,
Willkie Farr & Gallagher. Prior to January 1989, Mr. Smith
was a Staff Attorney at the Securities and Exchange
Commission, Division of Investment Management, Office of
Chief Counsel.
</TABLE>

B-21
<PAGE> 179

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Peter W. Hegel....................... Executive Vice President of the Advisers, Van Kampen
Date of Birth: 06/25/56 Management Inc. and Van Kampen Advisors Inc. Vice
Vice President President of each of the funds in the Fund Complex and
certain other investment companies advised by the Advisers
or their affiliates. Prior to September 1996, Director of
McCarthy, Crisanti & Maffei, Inc, a financial research
company.
Stephen L. Boyd...................... Vice President and Chief Investment Officer for equity
Date of Birth: 11/16/40 investments at the Advisers. Vice President of each of the
Vice President funds in the Fund Complex and certain other investment
companies advised by the Advisers or their affiliates.
Prior to October 1998, Vice President, Senior Portfolio
Manager with AIM Capital Management, Inc. Prior to
February 1998, Senior Vice President of Van Kampen
American Capital Asset Management, Inc., Van Kampen
American Capital Investment Advisory Corp. and Van Kampen
American Capital Management, Inc.
John L. Sullivan..................... Senior Vice President of Van Kampen Investments and the
Date of Birth: 08/20/55 Advisers. Treasurer, Vice President and Chief Financial
Treasurer, Vice President and Chief Officer of each of the funds in the Fund Complex and
Financial Officer 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.
Edward C. Wood III................... Senior Vice President of the Advisers, Van Kampen
Date of Birth: 01/11/56 Investments and Van Kampen Management Inc. Senior Vice
Vice President President and Chief Operating Officer of the Distributor.
Vice President of each of the funds in the Fund Complex
and certain other investment companies advised by the
Advisers or their affiliates.
Tanya M. Loden....................... Vice President of Van Kampen Investments and the Advisers.
Date of Birth: 11/19/59 Controller of each of the funds in the Fund Complex and
Controller other investment companies advised by the Advisers or
their affiliates.
</TABLE>

B-22
<PAGE> 180

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Weston B. Wetherell.................. Vice President, Deputy General Counsel and Assistant
Date of Birth: 06/15/56 Secretary of Van Kampen Investments, the Advisers, the
Assistant Secretary Distributor, Van Kampen Management Inc. 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.
Michael Robert Sullivan.............. Assistant Vice President of Van Kampen Investments, the
Date of Birth: 03/30/33 Advisers and Van Kampen Management Inc. Assistant
Assistant Controller Controller of each of the funds in the Fund Complex and
other investment companies advised by the Advisers or
their affiliates.
</TABLE>

Each trustee/director who is not an affiliated person of Van Kampen
Investments, the Advisers or the Distributor (each a "Non-Affiliated Trustee")
holds the same position with each of the funds in the Fund Complex. Messrs.
DeMartini and Powell hold the same position with each of the Funds in the Fund
Complex except for the Van Kampen Technology Fund. As of the date of this
Statement of Additional Information, there are 66 operating funds in the Fund
Complex. Each 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 Van Kampen Series Fund,
Inc.) provides a deferred compensation plan to its Non-Affiliated Trustees that
allows trustees/directors to defer receipt of their compensation and earn a
return on such deferred amounts. Deferring compensation has the economic effect
as if the Non-Affiliated Trustee reinvested his or her compensation into the
funds. Each fund in the Fund Complex (except the money market series of the Van
Kampen Series Fund, Inc.) provides a retirement plan to its Non-Affiliated
Trustees that provides Non-Affiliated Trustees with compensation after
retirement, provided that certain eligibility requirements are met as more fully
described below.

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

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

may receive reduced retirement benefits from such Fund. Each trustee/director
has served as a member of the Board of Trustees of the Fund since he or she was
first appointed or elected in the year set forth below. The retirement plan
contains a Fund Complex retirement benefit cap of $60,000 per year.

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

COMPENSATION TABLE

<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Aggregate Estimated
Pension or Maximum Total
Aggregate Retirement Annual Compensation
Compensation Benefits Benefits from before
before Accrued as the Fund Deferral from
Deferral from Part of Upon Fund
Name(1) the Trust(2) Expenses(3) Retirement(4) Complex(5)
------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
J. Miles Branagan $5,456 $35,691 $60,000 $125,200
Jerry D. Choate(5) 0 0 60,000 0
Linda Hutton Heagy 5,456 3,861 60,000 112,800
R. Craig Kennedy 5,456 2,652 60,000 125,200
Jack E. Nelson 5,456 18,385 60,000 125,200
Phillip B. Rooney 4,256 6,002 60,000 125,200
Dr. Fernando Sisto 5,456 68,615 60,000 125,200
Wayne W. Whalen 5,456 12,658 60,000 125,200
Suzanne H. Woolsey(5) 0 0 60,000 0
Paul G. Yovovich(5) 2,834 0 60,000 25,300
</TABLE>

- ------------------------------------
(1) 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 operating series of the Trust with respect to the
Trust's fiscal period ended March 31, 1999. The details of aggregate
compensation before deferral for each series are shown in Table A below.
Certain trustees deferred compensation from the Trust during the fiscal
period ended March 31, 1999; the aggregate compensation deferred from all
six operating series of the Trust is as follows: Mr. Branagan, $5,456; Ms.
Heagy, $5,456; Mr. Kennedy, $2,730; Mr. Nelson, $5,456; Mr. Rooney, $4,256;
Dr. Sisto, $2,730; Mr. Whalen, $5,456 and Mr. Yovovich, $1,430. The details
of amounts deferred for each series are shown in Table B below. Amounts
deferred are retained by the respective 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 operating series of the Trust as of
the Trust's fiscal period ended March 31, 1999 is as follows: Mr. Branagan,
$33,086; Dr. Caruso, $465; Mr. Gaughan, $2,107; Ms. Heagy, $29,949; Mr.
Kennedy, $31,482; Mr. Miller, $18,270; Mr. Nelson, $59,582; Mr. Rees,
$4,276; Mr. Robinson, $38,377; Mr. Rooney, $18,730; Dr. Sisto, $13,897; Mr.
Whalen, $50,755; and Mr. Yovovich, $1,489. The details of cumulative
deferred compensation (including interest) for each series of the Trust are
shown in Table C. The deferred compensation plan is described above the
Compensation Table.

(3) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating investment companies in the Fund Complex
for each of the trustees for the Funds' respective fiscal years ended in
1998. The retirement plan is described above the Compensation Table.

B-24
<PAGE> 182

(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
Retirement Plan is described above the Compensation Table. Each
Non-Affiliated Trustee has served as a member of the Board of Trustees since
the year set forth in Table D below.

(5) Mr. Yovovich became a member of the Board of Trustees for the Fund and other
funds in the Fund Complex on October 22, 1998 and therefore does not have a
full calendar year of information to report. Mr. Choate and Ms. Woolsey
became members of the Board of Trustees for the Fund and other funds in the
Fund Complex on May 26, 1999 and therefore do not have any 1998 calendar
year information to report. The amounts shown in this column represent the
aggregate compensation paid by all funds in the Fund Complex as of December
31, 1998 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, 1998. 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
$285,825 during the calendar year ended December 31, 1998.

As of July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ----------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund.............. 3/31 $1,127 $0 $1,127 $1,127 $1,127 $ 927 $1,127 $1,127 $0
Great American Companies Fund....... 3/31 801 0 801 801 801 601 801 801 0
Growth Fund......................... 3/31 951 0 951 951 951 751 951 951 0
Mid Cap Value Fund.................. 3/31 801 0 801 801 801 601 801 801 0
Prospector Fund..................... 3/31 802 0 802 802 802 602 802 802 0
Small Cap Value Fund................ 3/31 ** 0 ** ** ** ** ** ** 0
Utility Fund........................ 3/31 974 0 974 974 974 774 974 974 0
------ -- ------ ------ ------ ------ ------ ------ --
Equity Trust Total................ $5,456 $0 $5,456 $5,456 $5,456 $4,256 $5,456 $5,456 $0

<CAPTION>
TRUSTEE
--------
FUND NAME YOVOVICH
--------- --------
<S> <C>
Aggressive Growth Fund.............. $ 620
Great American Companies Fund....... 400
Growth Fund......................... 495
Mid Cap Value Fund.................. 400
Prospector Fund..................... 401
Small Cap Value Fund................ **
Utility Fund........................ 518
------
Equity Trust Total................ $2,834
</TABLE>

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

* Each Fund recently changed its fiscal year-end from June 30 to March 31.
Accordingly, the information reported in this column represents information
for the nine-month fiscal period ended March 31, 1999. The Small Cap Value
Fund has not commenced investment operations as of March 31, 1999.

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

B-25
<PAGE> 183

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ----------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund.............. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0
Great American Companies Fund....... 3/31 801 0 801 401 801 601 401 801 0
Growth Fund......................... 3/31 951 0 951 476 951 751 476 951 0
Mid Cap Value Fund.................. 3/31 801 0 801 401 801 601 401 801 0
Prospector Fund..................... 3/31 802 0 802 401 802 602 401 802 0
Small Cap Value Fund................ 3/31 0 0 0 0 0 0 0 0 0
Utility Fund........................ 3/31 974 0 974 487 974 774 487 974 0
------ -- ------ ------ ------ ------ ------ ------ --
Equity Trust Total................ $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0

<CAPTION>
TRUSTEE
--------
FUND NAME YOVOVICH
--------- --------
<S> <C>
Aggressive Growth Fund.............. $ 321
Great American Companies Fund....... 200
Growth Fund......................... 250
Mid Cap Value Fund.................. 200
Prospector Fund..................... 200
Small Cap Value Fund................ 0
Utility Fund........................ 259
------
Equity Trust Total................ $1,430
</TABLE>

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

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
CURRENT TRUSTEES
FISCAL -----------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund... 3/31 $ 8,513 $0 $ 8,065 $3,763 $12,023 $ 4,418 $ 3,091 $10,063
Great American Companies
Fund.................... 3/31 3,651 0 2,543 2,534 5,695 2,130 1,331 4,975
Growth Fund.............. 3/31 6,400 0 5,121 4,047 8,966 4,106 2,557 7,753
Mid Cap Value Fund....... 3/31 3,651 0 2,543 2,534 5,695 2,130 1,331 4,975
Prospector Fund.......... 3/31 3,652 0 2,544 2,535 5,696 2,131 1,331 4,976
Small Cap Value Fund..... 3/31 0 0 0 0 0 0 0 0
Utility Fund............. 3/31 7,219 0 9,133 16,069 21,507 3,815 4,256 18,013
------- -- ------- ------- ------- ------- ------- -------
Equity Trust Total...... $33,086 $0 $29,949 $31,482 $59,582 $18,730 $13,897 $50,755

<CAPTION>
CURRENT TRUSTEES FORMER TRUSTEES
------------------ ----------------------------------------------
FUND NAME WOOLSEY YOVOVICH CARUSO GAUGHAN MILLER REES ROBINSON
--------- ------- -------- ------ ------- ------ ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund... $0 $ 335 $ 0 $ 0 $ 2,309 $ 0 $ 7,291
Great American Companies
Fund.................... 0 208 0 0 1,474 335 3,098
Growth Fund.............. 0 260 0 0 1,474 335 5,415
Mid Cap Value Fund....... 0 208 0 0 1,474 335 3,098
Prospector Fund.......... 0 208 0 0 1,474 335 3,098
Small Cap Value Fund..... 0 0 0 0 0 0 0
Utility Fund............. 0 270 465 2,107 10,065 2,936 16,377
-- ------ ---- ------ ------- ------ -------
Equity Trust Total...... $0 $1,489 $465 $2,107 $18,270 $4,276 $38,377
</TABLE>

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund.............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund....... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund......................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund.................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund..................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund................ 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund........................ 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>

B-26
<PAGE> 184

INVESTMENT ADVISORY AGREEMENT

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

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.65% on the first $500 million of
average daily net assets; 0.60% on the next $500 million of average daily net
assets; and 0.55% on the average daily net assets over $1 billion.

The Fund's average daily net assets are determined by taking the average of
all of the determinations of the net assets during a given calendar month. Such
fee is payable for each calendar month as soon as practicable after the end of
that month.

The Advisory Agreement also provides that, in the event the expenses of the
Fund for any fiscal year exceed the most restrictive expense limitation
applicable in the states where the Fund's shares are qualified for sale, the
compensation due the Adviser will be reduced by the amount of such excess and
that, if a reduction in and refund of the advisory fee is insufficient, the
Adviser will pay the Fund monthly an amount sufficient to make up the
deficiency, subject to readjustment during the year.

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

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, the Adviser received approximately $761,100, $939,100
and $937,500, respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the number of classes of securities issued per fund and
the remaining 75% of such costs based proportionally on their respective net
assets per fund.

B-27
<PAGE> 185

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Advisory Corp. received approximately $58,500, $54,100
and $30,200, respectively, in accounting services fees from the Fund.

Legal Services Agreement. The Fund and each of the other Van Kampen funds
advised by the Adviser and distributed by the Distributor have entered into
legal services agreements pursuant to which Van Kampen Investments provides
legal services, including without limitation: accurate maintenance of the fund's
minute books and records, preparation and oversight of the fund's regulatory
reports, and other information provided to shareholders, as well as responding
to day-to-day legal issues on behalf of the funds. Payment by the Fund for such
services is made on a cost basis for the salary and salary related benefits,
including but not limited to bonuses, group insurance 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
Investments. 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.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Van Kampen Investments received approximately $6,100,
$10,700 and $9,800, respectively, in legal services fees from the Fund.

DISTRIBUTION AND SERVICE

The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized dealers on a continuous basis. The Distributor's obligation is an
agency or "best efforts" arrangement under which the Distributor is required to
take and pay for only such shares of the Fund as may be sold to the public. The
Distributor is not obligated to sell any stated number of shares. The
Distributor bears the cost of printing (but not typesetting) prospectuses used
in connection with this offering and certain other costs including the cost of
supplemental sales literature and advertising. The Distribution and Service
Agreement is renewable from year to year if approved (a)(i) by the Fund's
Trustees or (ii) 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 last three fiscal periods are shown in the chart below.

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999.......................... $ 124,895 $ 17,776
Fiscal year ended June 30, 1998............................. $ 100,135 $ 15,982
Fiscal year ended June 30, 1997............................. $ 57,814 $ 10,057
</TABLE>

B-28
<PAGE> 186

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

CLASS A SHARES SALES CHARGE TABLE

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

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

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

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

In addition to reallowances or commissions described above, the Distributor
may from time to time implement programs under which an authorized dealer's
sales force may be eligible to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any authorized dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor, or participates in sales programs sponsored by the Distributor, an
amount not exceeding the total applicable sales charges on the sales generated
by the authorized dealer at the public offering price during such programs.
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 the Distributor, pay fees to, and sponsor business
seminars for, qualifying authorized dealers for certain services or activities
which are primarily intended to result in sales of shares of the Fund or other
Van Kampen funds. Fees may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In some instances
additional compensation or promotional incentives may be offered to brokers,
dealers or financial intermediaries that have sold or may sell significant
amounts of shares during specified periods of time. The Distributor may provide
additional compensation to Edward D. Jones & Co. or an affiliate thereof based
on a combination of its sales of shares and increases in assets under
management. All of the foregoing payments are made by the Distributor out of its
own assets. Such fees paid for such services and activities with respect to the

B-29
<PAGE> 187

Fund will not exceed in the aggregate 1.25% of the average total daily net
assets of the Fund on an annual basis. These programs will not change the price
an investor will pay for shares or the amount that a Fund will receive from such
sale.

Banks are currently prohibited under the Glass-Steagall Act from providing
certain underwriting or distribution services. If banking firms were prohibited
from acting in any capacity or providing any of the described services, the
Distributor would consider what action, if any, would be appropriate. The
Distributor does not believe that termination of a relationship with a bank
would result in any material adverse consequences to the Fund. State securities
laws regarding registration of banks and other financial institutions may differ
from the interpretations of federal law expressed herein, and banks and other
financial institutions may be required to register as dealers pursuant to
certain state laws.

The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan sometimes
are referred to herein as the "Plans". The Plans provide that the Fund may spend
a portion of the Fund's average daily net assets attributable to each class of
shares in connection with distribution of the respective class of shares and in
connection with the provision of ongoing services to shareholders of such class,
respectively. The Distribution Plan and the Service Plan are being implemented
through the Distribution and Service Agreement with the Distributor of each
class of the Fund's shares and 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 Distribution Plan and the purposes for which
such expenditures were made, together with such other information as from time
to time is reasonably requested by the Trustees. The Plans provide that they
will continue in full force and effect from year to year so long as such
continuance is specifically approved by a vote of the Trustees, and also by a
vote of the disinterested Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each of the Plans may not be amended to increase
materially the amount to be spent for the services described therein with
respect to any class of shares without approval by a vote of a majority of the
outstanding voting shares of such class, and all material amendments to either
of the Plans must be approved by the Trustees and also by the disinterested
Trustees. Each of the Plans may be terminated with respect to any class of
shares at any time by a vote of a majority of the disinterested Trustees or by a
vote of a majority of the outstanding voting shares of such class.

The Plans generally provide for the Fund to reimburse the lesser of (i) the
distribution and service fees at the rates specified in the Prospectus or (ii)
the amount of the Distributor's actual expenses incurred less any contingent
deferred sales charges it received. For Class A Shares, to the extent the
Distributor is not fully reimbursed in a given year, there is no carryover of
such unreimbursed amounts to succeeding years. For each of the Class B Shares
and Class C Shares, to the extent the Distributor is not fully reimbursed in a
given year, any unreimbursed expenses for such class will be carried forward and
paid by the Fund in future years so long as such Plans are 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 for
on a Fund level basis, in periods of extreme net asset value fluctuation such
amounts with respect to a particular Class B Share or Class C Share may be
greater or less than the amount of the initial commission (including carrying
cost) paid by the Distributor with respect to such share. In such circumstances,
a shareholder of a share may be deemed to incur expenses attributable to other
shareholders of such class. As of March 31, 1999, there were $1,633,936 and
$7,221 of unreimbursed

B-30
<PAGE> 188

distribution-related expenses with respect to Class B Shares and Class C Shares,
respectively, representing 1.94% and 0.10% of the Fund's net assets attributable
to Class B Shares and Class C Shares, respectively. If the Plans were terminated
or not continued, the Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund or recovered
through contingent deferred sales charges.

Because the Fund is a series of the Trust, amounts paid to the Distributor
as reimbursement for expenses of one series of the Trust may indirectly benefit
the other funds which are series of the Trust. The Distributor will endeavor to
allocate such expenses among such funds in an equitable manner. The Distributor
will not use the proceeds from the contingent deferred sales charge applicable
to a particular class of shares to defray distribution-related expenses
attributable to any other class of shares.

For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $116,249 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Fund
shareholders and for administering the Class A Share Plans. For the fiscal
period ended March 31, 1999, the Fund's aggregate expenses paid under the Plans
for Class B Shares were $605,201 or 1.00% of the Class B Shares' average daily
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $493,076 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B Shares of the Fund and
$112,125 for fees paid to financial intermediaries for servicing Class B
shareholders and administering the Class B Share Plans. For the fiscal period
ended March 31, 1999, the Fund's aggregate expenses paid under the Plans for
Class C Shares were $46,958 or 1.00% of the Class C Shares' average daily net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $13,763 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class C Shares of the Fund and $33,195 for
fees paid to financial intermediaries for servicing Class C shareholders and
administering the Class C Share Plans.

The Distributor has entered into agreements with the following firms: (i)
Merrill Lynch Pierce, Fenner & Smith Inc. and (ii) Norwest Bank Minnesota, N.A.
Shares of the Fund shall be offered pursuant to such firm's retirement plan
alliance program(s). Trustees and other fiduciaries of retirement plans seeking
to invest in multiple fund families through broker-dealer retirement plan
alliance programs should contact the firms mentioned above for further
information concerning the program(s) including, but not limited to, minimum
size and operational requirements.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating
approximately $148,300, $212,500 and $84,500, respectively for these services.
Prior to 1998, these services were provided at cost plus a profit. Beginning in
1998, the transfer agency prices are determined through negotiations with the
Fund's Board of Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

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

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

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

Effective October 31, 1996, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") became an affiliate of the Adviser. Effective May 31, 1997, Dean
Witter Reynolds, Inc. ("Dean Witter") became an affiliate of the Adviser. The
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
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.

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated
Brokers
-----------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999.......................... $ 54,163 $-0- $-0-
Fiscal year ended June 30, 1998............................. $108,173 $-0- $-0-
Fiscal year ended June 30, 1997............................. $ 85,572 $-0- $-0-
Fiscal 1999 Percentages:
Commissions with affiliate to total commissions........... 0% 0%
Value of brokerage transactions with affiliate to total
transactions........................................... 0% 0%
</TABLE>

During the fiscal period ended March 31, 1999, the Fund paid $31,225 in
brokerage commissions on transactions totaling $18,723,868 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

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

INVESTMENT ACCOUNT

Each shareholder has an investment account under which the investor's
shares of the Fund are held by Investor Services, the Fund's transfer agent.
Investor Services performs bookkeeping, data processing and administrative
services related to the maintenance of shareholder accounts. Except as described
in the Prospectus and this Statement of Additional Information, after each share
transaction in an account, the shareholder receives a statement showing the
activity in the account. Each shareholder who has an account in any of the
Participating Funds will receive statements 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 dealers 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 Investor Services, PO Box 418256, Kansas City, MO
64141-9256, requesting an "affidavit of loss" and obtain a Surety Bond in a form
acceptable to Investor Services. On the date the letter is received, Investor
Services will calculate 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

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<PAGE> 191

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.

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.

DIVIDEND DIVERSIFICATION

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

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, semiannual or
annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each withdrawal
constitutes a redemption of shares on which any capital gain or loss will be
recognized. The planholder may arrange for monthly, quarterly, semiannual 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 contingent deferred sales charge. Initial account balance
means the amount of the shareholder's investment at the time the election to
participate in the plan is made.

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under the plans 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 the purchase of additional shares
ordinarily will be disadvantageous to the shareholder because of the duplication
of sales charges. Any

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<PAGE> 192

gain or loss realized by the shareholder upon redemption of shares is a taxable
event. The Fund reserves the right to amend or terminate the systematic
withdrawal program on 30 days' notice to its shareholders.

EXCHANGE PRIVILEGE

The following information supplements the section in the Fund's Prospectus
under the same heading. Beginning December 1, 1999, all shareholders will be
limited to eight (8) exchanges per fund during a rolling 365-day period.

Exchange privileges will be suspended on a particular fund if more than
eight (8) exchanges out of that fund are made during a rolling 365-day period.
If exchange privileges are suspended, subsequent exchange requests will not be
processed. Exchange privileges will be restored when the account history shows
fewer than eight (8) exchanges in the rolling 365-day period.

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

REINSTATEMENT PRIVILEGE

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

REDEMPTION OF SHARES

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

Additionally, if the Board of Trustees determines that payment wholly or
partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. Shareholders may
incur brokerage charges upon the sale of portfolio securities so received in
payment of redemptions.

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

As described in the Prospectus under "Purchase of Shares -- Class A
Shares," there is no sales charge payable on Class A Shares at the time of
purchase on investments of $1 million or more, but a contingent deferred sales
charge ("CDSC -- Class A Shares") may be imposed on certain redemptions made
within one year of purchase. For purposes of the CDSC-Class A, when shares of
one fund are exchanged for shares of another fund, the purchase date for the
shares of the fund exchanged into will be assumed to be the date on which shares
were purchased in the fund from which the exchange was made. If the exchanged
shares themselves are acquired through an exchange, the purchase date is assumed
to carry over from the date of the original election to purchase shares subject
to a CDSC-Class A rather than a front-end load sales charge. In

B-35
<PAGE> 193

determining whether a CDSC-Class A is payable, it is assumed that shares held
the longest are the first to be redeemed.

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE
("CDSC-CLASS B AND C")

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

REDEMPTION UPON DEATH OR DISABILITY

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

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

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

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

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

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

B-36
<PAGE> 194

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

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

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

REINVESTMENT OF REDEMPTION PROCEEDS

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

REDEMPTION BY ADVISER

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

TAXATION

FEDERAL INCOME TAXATION

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 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 (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.

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
(the latter of which generally is computed on the basis of the one-year period
ending on October 31st of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.

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<PAGE> 195

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 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 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.

applies to the taxable year for which made and to all subsequent taxable years,
unless the Internal Revenue Service ("IRS") 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.

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.

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

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

Under Code Section 988, foreign currency gains or losses from certain
forward contracts not traded in the interbank market as well as certain other
gains or losses attributable to currency exchange rate fluctuations are
typically treated as ordinary income or loss. Such income or loss may increase
or decrease (or possibly eliminate) the Fund's income available for
distribution. If, under the rules governing the tax treatment of foreign
currency gains and losses, the Fund's income available for distribution is
decreased or eliminated, all or a portion of the dividends declared by the Fund
may be treated for federal income tax purposes as a return of capital or, in
some circumstances, as capital gain. Generally, a shareholder's tax basis in
Fund shares will be reduced to the extent that an amount distributed to such
shareholder is treated as a return of capital.

SALE OF SHARES

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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 the maximum
ordinary income tax rate for capital assets held for one year or less or (ii)
20% for capital assets held for more than one year. The maximum long-term
capital gains rate for corporations is 35%.

NON-U.S. SHAREHOLDERS

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

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

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

Final United States Treasury Regulations, effective for payments made after
December 31, 2000, may affect the procedures to be followed by Non-U.S.
Shareholders in establishing foreign status for purposes of the withholding,
backup withholding and information reporting rules. Prospective investors should
consult their tax advisors concerning the applicability and effect of such
Treasury Regulations on an investment in shares of the Fund.

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

BACKUP WITHHOLDING

B-40
<PAGE> 198

dividends if (i) the shareholder fails to furnish the Fund with its correct
taxpayer identification number, (ii) the IRS notifies the Fund that the
shareholder has failed to properly report certain interest and dividend income
to the IRS and to respond to notices to that effect or (iii) when required to do
so, the shareholder fails to certify that he or she is not subject to backup
withholding. Redemption proceeds may be subject to withholding under the
circumstances described in (i) above.

The Fund must report annually to the IRS and to each Non-U.S. Shareholder
the amount of dividends paid to such shareholder and the amount, if any, of tax
withheld pursuant to backup withholding rules with respect to such dividends.
This information may also be made available to the tax authorities in the
Non-U.S. Shareholder's country of residence.

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

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.

FUND PERFORMANCE

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

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

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

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 contingent deferred sales charge, and if any such contingent deferred sales
charge imposed at the time of redemption were reflected, it would reduce the
performance quoted.

B-41
<PAGE> 199

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

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

The Fund seeks to remain fully invested to achieve consistent long-term
performance. From time to time marketing materials may provide a portfolio
manager update, an Adviser update or discuss general economic conditions and
outlooks. The Fund's marketing materials may also show the Fund's asset class
diversification, top five sectors, ten largest holdings and other Fund asset
structures. The top 10 holdings of the Fund may also be listed in marketing
pieces. Materials may also mention how Van Kampen Investments believes the Fund
compares relative to other Van Kampen funds. 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 the
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 other than with a professional representative. The Fund may
also be marketed on the internet.

In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds with the Consumer Price Index, the Dow
Jones Industrial Average, Standard & Poor's indices, NASDAQ Composite Index,
other appropriate indices of investment securities, or with investment or
savings vehicles. The performance information may also include evaluations of
the Fund published by nationally recognized ranking services and by nationally
recognized financial publications. Such comparative performance information will
be stated in the same terms in which the comparative data or indices are stated.
Such advertisements and sales material may also include a yield quotation as of
a current period. In each case, such total return and yield information, if any,
will be calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. For these purposes, the
performance of the Fund, as well as the performance of other mutual funds or
indices, do not reflect sales charges, the inclusion of which would reduce the
Fund's performance. The Fund will include performance data for each class of
shares of the Fund in any advertisement or information including performance
data of the Fund.

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

B-42
<PAGE> 200

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

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was -5.61%, (ii) the five-year period ended March 31, 1999 was
11.98% and (iii) the approximately five-year, eight-month period since July 28,
1993, the commencement of distribution for Class A Shares of the Fund, through
March 31, 1999 was 9.57%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 67.98%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 78.20%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was -4.45%, (ii) the five-year period ended March
31, 1999 was 12.25% and (iii) the approximately five-year, eight-month period
since July 28, 1993, the commencement of distribution for Class B Shares of the
Fund, through March 31, 1999 was 9.77%.

The Class B Shares cumulative non-standardized total return, including
payment of the contingent deferred sales charge, with respect to the Class B
Shares from its inception to March 31, 1999 was 69.69%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 70.69%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was -1.54%, (ii) the five-year period ended March
31, 1999 was 12.46% and (iii) the approximately five-year, eight-month period
since August 13, 1993, the commencement of distribution for Class C Shares of
the Fund, through March 31, 1999 was 9.74%.

The Class C Shares cumulative non-standardized total return, including
payment of the contingent deferred sales charge, with respect to the Class C
Shares from its inception to March 31, 1999 was 68.74%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 68.74%.

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

OTHER INFORMATION

CUSTODY OF ASSETS

All securities owned by the Fund and all cash, including proceeds from the
sale of shares of the Fund and of securities in the Fund's investment portfolio,
are held by State Street Bank and Trust Company, 225 West Franklin Street,
Boston, Massachusetts 02110, as Custodian.

B-43
<PAGE> 201

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-44
<PAGE> 202

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
March 31, 1999, and the related statement of operations for the nine-month
period ended March 31, 1999 and the year ended June 30, 1998, the statement of
changes in net assets for the nine-month period ended March 31, 1999 and for
each of the years in the two-year period ended June 30, 1998, 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 March
31, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Utility Fund as of March 31, 1999, the results of its operations for the
nine-month period ended March 31, 1999 and the year ended June 30, 1998, the
changes in its net assets for the nine-month period ended March 31, 1999 and for
each of the years in the two-year period then ended June 30, 1998, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

KPMG LLP

Chicago, Illinois

May 6, 1999
F-1
<PAGE> 203

PORTFOLIO OF INVESTMENTS

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS 88.8%
CONSUMER SERVICES 1.0%
Quanta Services, Inc. (a)............................ 60,000 $ 1,526,250
------------
ELECTRIC UTILITIES 41.8%
Allegheny Energy, Inc................................ 47,000 1,386,500
BEC Energy........................................... 120,000 4,410,000
Calpine Corp. (a).................................... 50,750 1,849,203
Cinergy Corp......................................... 73,000 2,007,500
CMS Energy Group..................................... 99,800 3,998,237
Consolidated Edison, Inc............................. 40,000 1,812,500
DQE, Inc............................................. 120,800 4,635,700
DTE Energy Co........................................ 50,000 1,921,875
Edison International................................. 36,200 805,450
FirstEnergy Corp..................................... 138,000 3,855,375
Florida Progress Corp................................ 96,000 3,624,000
GPU, Inc............................................. 85,675 3,196,748
Illinova Corp........................................ 80,500 1,705,594
New Century Energies, Inc............................ 79,000 2,690,938
Niagara Mohawk Holdings, Inc. (a).................... 127,700 1,715,969
OGE Energy Corp...................................... 144,000 3,249,000
PECO Energy Co....................................... 60,300 2,788,875
Pinnacle West Capital Corp........................... 111,600 4,059,450
Public Service Co. of New Mexico..................... 110,000 1,870,000
Reliant Energy, Inc.................................. 114,800 2,991,975
Sierra Pacific Resources............................. 100,000 3,518,750
Southern Co.......................................... 87,100 2,030,519
Texas Utilities Co................................... 73,800 3,076,537
Texas Utilities Co. -- Convertible Preferred,
PRIDES............................................. 14,800 789,025
------------
63,989,720
------------
NATURAL GAS PIPELINE AND DISTRIBUTION 4.7%
National Fuel Gas Co. NJ............................. 31,000 1,216,750
Nicor, Inc........................................... 50,000 1,796,875
Southwest Gas Corp................................... 100,000 2,750,000
Wicor, Inc........................................... 72,000 1,458,000
------------
7,221,625
------------
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 204
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS PIPELINE AND DISTRIBUTION 7.1%
Coastal Corp......................................... 108,000 $ 3,564,000
Columbia Energy Group................................ 55,500 2,899,875
El Paso Energy Capital Trust I -- Convertible
Preferred.......................................... 41,750 2,009,219
Enron Corp........................................... 36,400 2,338,700
------------
10,811,794
------------
TELECOMMUNICATIONS 33.7%
Airtouch Communications, Inc. (a).................... 50,000 4,831,250
ALLTEL Corp.......................................... 49,300 3,075,088
Ameritech Corp....................................... 96,000 5,556,000
AT&T Corp............................................ 67,650 5,399,316
Bell Atlantic Corp................................... 39,900 2,062,331
BellSouth Corp....................................... 69,400 2,780,338
Cable & Wireless, PLC -- ADR (United Kingdom)........ 100,700 3,719,606
China Telecom -- ADR (China) (a)..................... 82,000 2,736,750
Cincinnati Bell, Inc................................. 41,000 919,938
Convergys Corp. (a).................................. 41,000 702,125
France Telecom -- ADR (France)....................... 20,000 1,613,750
Intermedia Communications, Inc. -- Convertible
Preferred Ser E.................................... 27,700 740,975
Nextlink Communications, Inc. -- Convertible
Preferred, 144A -- Private Placement (b)........... 21,500 1,510,375
SBC Communications, Inc.............................. 106,000 4,995,250
Sprint Corp.......................................... 23,400 2,296,125
Sprint Corp. PCS, Ser I (a).......................... 11,700 518,456
Tele Denmark A/S ADS (Denmark)....................... 50,000 2,450,000
Telstra, Ltd. -- ADR (Australia)..................... 11,700 1,234,350
U S West, Inc........................................ 81,000 4,460,062
------------
51,602,085
------------
TECHNOLOGY 0.5%
NorthEast Optic Network, Inc. (a).................... 60,000 847,500
------------
TOTAL COMMON AND PREFERRED STOCKS 88.8%....................... $135,998,974
------------
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 205
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FIXED INCOME SECURITIES 8.1%
CABLE TELEVISION 1.4%
$1,000 Continental Cablevision, Inc............. 8.300% 05/15/06 $ 1,097,440
1,000 Cox Communications, Inc.................. 6.875 06/15/05 1,036,601
------------
2,134,041
------------
ELECTRIC UTILITIES 1.4%
1,000 Texas Utilities Electric Co.............. 8.250 04/01/04 1,100,401
1,000 Union Electric Co........................ 7.375 12/15/04 1,070,196
------------
2,170,597
------------
OIL & GAS PIPELINE AND DISTRIBUTION 1.9%
1,000 Enron Corp............................... 7.125 05/15/07 1,045,575
500 Panhandle Eastern Pipeline Co............ 7.875 08/15/04 537,993
100 Texas Eastern Transmission Corp.......... 8.000 07/15/02 106,105
1,090 Texas Gas Transmission Corp.............. 8.625 04/01/04 1,205,170
------------
2,894,843
------------
TELECOMMUNICATIONS 3.4%
1,000 360 Communications....................... 7.125 03/01/03 1,041,115
1,000 Century Telephone Enterprises, Inc., Ser
F........................................ 6.300 01/15/08 1,001,528
900 GTE Corp................................. 9.375 12/01/00 952,968
1,000 Sprint Corp.............................. 8.125 07/15/02 1,060,938
1,000 Worldcom, Inc............................ 7.750 04/01/07 1,099,927
------------
5,156,476
------------
TOTAL FIXED INCOME SECURITIES........................................ 12,355,957
------------
TOTAL LONG-TERM INVESTMENTS 96.9%
(Cost $113,113,157)................................................ 148,354,931
SHORT-TERM INVESTMENTS 3.4%
(Cost $5,169,311).................................................. 5,169,311
------------
TOTAL INVESTMENTS 100.3%
(Cost $118,282,468)................................................ 153,524,242
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%)........................ (413,113)
------------
NET ASSETS 100.0%................................................... $153,111,129
============
</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.
ADR -- American Depository Receipts
ADS -- American Depository Shares
PRIDES -- Preferred redeemable increased dividend equity, traded in shares.

See Notes to Financial Statements

F-4
<PAGE> 206

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $118,282,468)....................... $153,524,242
Cash........................................................ 1,092
Receivables:
Fund Shares Sold.......................................... 473,794
Interest.................................................. 298,180
Dividends................................................. 242,295
Other....................................................... 24
------------
Total Assets.......................................... 154,539,627
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 746,755
Fund Shares Repurchased................................... 221,746
Distributor and Affiliates................................ 175,920
Investment Advisory Fee................................... 87,419
Trustees' Deferred Compensation and Retirement Plans........ 128,788
Accrued Expenses............................................ 67,870
------------
Total Liabilities..................................... 1,428,498
------------
NET ASSETS.................................................. $153,111,129
============
NET ASSETS CONSIST OF:
Capital..................................................... $115,790,576
Net Unrealized Appreciation................................. 35,241,774
Accumulated Net Realized Gain............................... 2,060,599
Accumulated Undistributed Net Investment Income............. 18,180
------------
NET ASSETS.................................................. $153,111,129
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $62,071,730 and 3,554,036 shares of
beneficial interest issued and outstanding)............. $ 17.47
Maximum sales charge (5.75%* of offering price)......... 1.07
------------
Maximum offering price to public........................ $ 18.54
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $84,082,737 and 4,821,994 shares of
beneficial interest issued and outstanding)............. $ 17.44
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $6,956,662 and 399,217 shares of
beneficial interest issued and outstanding)............. $ 17.43
============
</TABLE>

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

See Notes to Financial Statements

F-5
<PAGE> 207

STATEMENT OF OPERATIONS

For the Nine Months Ended March 31, 1999,
and the Year Ended June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1999 June 30, 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 3,340,479 $ 4,260,507
Interest.................................................. 789,039 1,219,948
----------- -----------
Total Income.......................................... 4,129,518 5,480,455
----------- -----------
EXPENSES:
Distribution (12b-1) and Services Fees (Attributed to
Classes A, B and C of $116,693, $657,434 and $46,844,
respectively, for the nine months ended 3/31/99 and
$139,079, $835,949 and $52,350, respectively, for the
year ended 6/30/98)..................................... 820,971 1,027,378
Investment Advisory Fee................................... 761,143 939,137
Shareholder Services...................................... 189,617 298,606
Trustees' Fees and Expenses............................... 27,467 34,021
Legal..................................................... 13,073 16,828
Custody................................................... 6,556 27,417
Amortization of Organizational Costs...................... 1,663 22,995
Other..................................................... 162,797 194,077
----------- -----------
Total Expenses........................................ 1,983,287 2,560,459
----------- -----------
NET INVESTMENT INCOME..................................... $ 2,146,231 $ 2,919,996
=========== ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain......................................... $ 3,971,978 $ 5,691,843
----------- -----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................. 39,245,899 12,907,034
End of the Period:
Investments........................................... 35,241,774 39,245,899
----------- -----------
Net Unrealized Appreciation/Depreciation During the
Period.................................................. (4,004,125) 26,338,865
----------- -----------
NET REALIZED AND UNREALIZED GAIN/LOSS..................... $ (32,147) $32,030,708
=========== ===========
NET INCREASE IN NET ASSETS FROM OPERATIONS................ $ 2,114,084 $34,950,704
=========== ===========
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 208

STATEMENT OF CHANGES IN NET ASSETS

For the Nine Months Ended March 31, 1999,
and the Years Ended June 30, 1998 and 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
March 31, 1999 June 30, 1998 June 30, 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.......................... $ 2,146,231 $ 2,919,996 $ 5,126,338
Net Realized Gain.............................. 3,971,978 5,691,843 10,817,404
Net Unrealized Appreciation/Depreciation
During the Period............................. (4,004,125) 26,338,865 1,002,087
------------ ------------ ------------
Change in Net Assets from Operations........... 2,114,084 34,950,704 16,945,829
------------ ------------ ------------
Distributions from Net Investment Income....... (2,070,469) (3,302,950) (4,918,449)
Distributions in Excess of Net Investment
Income........................................ -0- (58,293) -0-
------------ ------------ ------------
Distributions from and in Excess of Net
Investment Income*............................ (2,070,469) (3,361,243) (4,918,449)
------------ ------------ ------------
Distributions from Net Realized Gain........... (1,862,563) (13,156,292) (1,861,394)
Distributions in Excess of Net Realized Gain... -0- (125,726) -0-
------------ ------------ ------------
Distributions from and in Excess of Net
Realized Gain*................................ (1,862,563) (13,282,018) (1,861,394)
------------ ------------ ------------
Return of Capital Distribution*................ -0- (7,471,305) -0-
------------ ------------ ------------
Total Distributions............................ (3,933,032) (24,114,566) (6,779,843)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................... (1,818,948) 10,836,138 10,165,986
------------ ------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold...................... 25,006,965 33,570,538 50,324,196
Net Asset Value of Shares Issued Through
Dividend Reinvestment......................... 3,332,371 21,003,724 5,538,900
Cost of Shares Repurchased..................... (26,459,204) (53,035,786) (80,912,740)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................. 1,880,132 1,538,476 (25,049,644)
------------ ------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS.......... 61,184 12,374,614 (14,883,658)
NET ASSETS:
Beginning of the Period........................ 153,049,945 140,675,331 155,558,989
------------ ------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$18,180, $(57,582) and $382,954,
respectively)................................. $153,111,129 $153,049,945 $140,675,331
============ ============ ============
</TABLE>

<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
*Distributions by Class March 31, 1999 June 30, 1998 June 30, 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distributions from and in Excess
of Net Investment Income:
Class A Shares................... $ (1,031,678) $ (1,538,296) $ (2,064,034)
Class B Shares................... (970,381) (1,714,845) (2,700,742)
Class C Shares................... (68,410) (108,102) (153,673)
------------ ------------ ------------
$ (2,070,469) $ (3,361,243) $ (4,918,449)
============ ============ ============
Distributions from and in Excess
of Net Realized Gain:
Class A Shares................... $ (740,901) $ (5,310,506) $ (683,737)
Class B Shares................... (1,048,593) (7,494,154) (1,114,278)
Class C Shares................... (73,069) (477,358) (63,379)
------------ ------------ ------------
$ (1,862,563) $(13,282,018) $ (1,861,394)
============ ============ ============
Return of Capital Distribution:
Class A Shares................... $ -0- $ (2,987,603) $ -0-
Class B Shares................... -0- (4,215,072) -0-
Class C Shares................... -0- (268,630) -0-
------------ ------------ ------------
$ -0- $ (7,471,305) $ -0-
============ ============ ============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 209

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
From July 28, 1993,
Nine Months (Commencement
Ended Year Ended June 30, of Investment
March 31, ------------------------------------- Operations) to
Class A Shares 1999 1998 1997 1996 1995 June 30, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period............... $17.657 $16.441 $15.298 $13.386 $12.906 $ 14.300
------- ------- ------- ------- ------- ---------
Net Investment
Income............... .310 .429 .637 .538 .595 .479
Net Realized and
Unrealized
Gain/Loss............ .013 3.909 1.317 2.077 .485 (1.513)
------- ------- ------- ------- ------- ---------
Total from Investment
Operations........... .323 4.338 1.954 2.615 1.080 (1.034)
------- ------- ------- ------- ------- ---------
Less:
Distributions from
and in Excess of
Net Investment
Income............. .300 .480 .610 .703 .600 .323
Distributions from
and in Excess of
Net Realized
Gain............... .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution....... -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- ---------
Total Distributions.... .515 3.122 .811 .703 .600 .360
------- ------- ------- ------- ------- ---------
Net Asset Value, End of
the Period........... $17.465 $17.657 $16.441 $15.298 $13.386 $ 12.906
======= ======= ======= ======= ======= =========
Total Return (a)....... 1.72%* 28.17% 13.20% 19.93% 8.70% (7.38%)*
Net Assets at End of
the Period (In
millions)............ $ 62.1 $ 60.4 $ 52.5 $ 57.7 $ 50.4 $ 51.5
Ratio of Expenses to
Average Net
Assets (b)........... 1.24% 1.30% 1.41% 1.38% 1.34% 1.34%
Ratio of Net Investment
Income to Average Net
Assets (b)........... 2.29% 2.47% 4.03% 3.61% 4.55% 4.10%
Portfolio Turnover..... 13%* 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

F-8
<PAGE> 210
FINANCIAL HIGHLIGHTS -- CONTINUED

<TABLE>
<CAPTION>
From July 28, 1993,
Nine Months (Commencement
Ended Year Ended June 30, of Investment
March 31, ------------------------------------- Operations) to
Class B Shares 1999 1998 1997 1996 1995 June 30, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period.............. $17.632 $16.434 $15.296 $13.356 $12.880 $ 14.300
------- ------- ------- ------- ------- ---------
Net Investment
Income.............. .208 .309 .519 .426 .507 .394
Net Realized and
Unrealized
Gain/Loss........... .012 3.891 1.314 2.080 .461 (1.519)
------- ------- ------- ------- ------- ---------
Total from Investment
Operations.......... .220 4.200 1.833 2.506 .968 (1.125)
------- ------- ------- ------- ------- ---------
Less:
Distributions from
and in Excess of
Net Investment
Income............ .200 .360 .494 .566 .492 .258
Distributions from
and in Excess of
Net Realized
Gain.............. .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution...... -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- ---------
Total Distributions... .415 3.002 .695 .566 .492 .295
------- ------- ------- ------- ------- ---------
Net Asset Value, End
of the Period....... $17.437 $17.632 $16.434 $15.296 $13.356 $ 12.880
======= ======= ======= ======= ======= =========
Total Return (a)...... 1.21%* 27.20% 12.30% 19.08% 7.80% (8.02%)*
Net Assets at End of
the Period (In
millions)........... $ 84.1 $ 86.8 $ 83.3 $ 92.9 $ 81.0 $ 83.7
Ratio of Expenses to
Average Net
Assets (b).......... 1.99% 2.07% 2.17% 2.13% 2.05% 2.06%
Ratio of Net
Investment Income to
Average Net
Assets (b).......... 1.53% 1.74% 3.27% 2.86% 3.84% 3.36%
Portfolio Turnover.... 13%* 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

F-9
<PAGE> 211
FINANCIAL HIGHLIGHTS -- CONTINUED

<TABLE>
<CAPTION>
Nine Months From August 13, 1993,
Ended Year Ended June 30, (Commencement of
March 31, ------------------------------------- Distribution) to
Class C Shares 1999 1998 1997 1996 1995 June 30, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period............. $17.619 $16.426 $15.290 $13.356 $12.868 $14.460
------- ------- ------- ------- ------- -------
Net Investment
Income............. .209 .308 .503 .470 .482 .330
Net Realized and
Unrealized
Gain/Loss.......... .013 3.887 1.328 2.030 .498 (1.627)
------- ------- ------- ------- ------- -------
Total from Investment
Operations......... .222 4.195 1.831 2.500 .980 (1.297)
------- ------- ------- ------- ------- -------
Less:
Distributions from
and in Excess of
Net Investment
Income........... .200 .360 .494 .566 .492 .258
Distributions from
and in Excess of
Net Realized
Gain............. .215 1.691 .201 -0- -0- .037
Return of Capital
Distribution..... -0- .951 -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total
Distributions...... .415 3.002 .695 .566 .492 .295
------- ------- ------- ------- ------- -------
Net Asset Value, End
of the Period...... $17.426 $17.619 $16.426 $15.290 $13.356 $12.868
======= ======= ======= ======= ======= =======
Total Return (a)..... 1.22%* 27.14% 12.37% 19.00% 7.88% (9.11%)*
Net Assets at End of
the Period (In
millions).......... $ 7.0 $ 5.9 $ 4.9 $ 5.0 $ 1.3 $ 1.1
Ratio of Expenses to
Average
Net Assets (b)..... 1.99% 2.06% 2.17% 2.13% 2.09% 2.05%
Ratio of Net
Investment Income
to Average Net
Assets (b)......... 1.53% 1.73% 3.23% 2.78% 3.80% 3.38%
Portfolio Turnover... 13%* 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

F-10
<PAGE> 212

NOTES TO FINANCIAL STATEMENTS

March 31, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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. In July 1998, the Fund's Board of Trustees
approved a change in the Fund's fiscal year end from June 30 to March 31. As a
result, this financial report reflects the nine month period commencing on July
1, 1998, and ending on March 31, 1999.
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 March 31, 1999, there were no
when issued or delayed delivery purchase commitments.

F-11
<PAGE> 213
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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 were amortized on a
straight line basis over the 60-month period ending July 28, 1998.

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 March 31, 1999, for federal income tax purposes the cost of long- and
short-term investments is $118,282,468, the aggregate gross unrealized
appreciation is $37,999,562 and the aggregate gross unrealized depreciation is
$2,757,788, resulting in net unrealized appreciation on long- and short-term
investments of $35,241,774.

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

F-12
<PAGE> 214
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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.
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 have been
reclassified. For the year ended June 30, 1998, $77,621 has 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.

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 nine months ended March 31, 1999, and the year ended June 30, 1998,
the Fund recognized expenses of approximately $7,000 and $5,400, respectively,
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 nine months ended March 31, 1999, and the year ended June 30, 1998,
the Fund recognized expenses of approximately $64,600 and $64,700, respectively,
representing Van Kampen's cost of providing accounting and legal services to the
Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the nine months ended March 31,
1999, and the year ended June 30, 1998, the Fund recognized expenses of
approximately $148,300 and $212,500, respectively. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect

F-13
<PAGE> 215
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

to defer all or a portion of their compensation to a later date. Benefits under
the retirement plan are payable for a ten-year period and are based upon each
trustee's years of service to the Fund. The maximum annual benefit per Trustee
under the plan is $2,500.

3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At March 31, 1999, capital aggregated $48,192,293, $61,954,096 and
$5,644,187 for Classes A, B and C, respectively. For the nine months ended March
31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A...................................... 544,379 $ 9,808,618
Class B...................................... 673,415 12,063,204
Class C...................................... 174,359 3,135,143
---------- ------------
Total Sales.................................... 1,392,153 $ 25,006,965
========== ============
Dividend Reinvestment:
Class A...................................... 85,041 $ 1,531,265
Class B...................................... 95,052 1,711,764
Class C...................................... 4,958 89,342
---------- ------------
Total Dividend Reinvestment.................... 185,051 $ 3,332,371
========== ============
Repurchases:
Class A...................................... (496,899) $ (8,902,999)
Class B...................................... (867,572) (15,566,941)
Class C...................................... (113,012) (1,989,264)
---------- ------------
Total Repurchases.............................. (1,477,483) $(26,459,204)
========== ============
</TABLE>

F-14
<PAGE> 216
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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>

F-15
<PAGE> 217
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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>

F-16
<PAGE> 218
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 nine months ended March 31, 1999, and 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 $15,900 and $16,000, respectively,
and CDSC on redeemed shares of approximately $88,000 and $181,300, respectively.
Sales charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS
For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $20,270,111
and $21,078,042, respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds from sales of investments, excluding short-term
investments, were $32,564,835 and $51,249,647, respectively.

F-17
<PAGE> 219
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 nine months ended March 31, 1999, and the year ended June 30, 1998,
are payments retained by Van Kampen of approximately $511,188 and $643,300,
respectively.

F-18
<PAGE> 220

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
GROWTH FUND

Van Kampen Growth Fund (the "Fund") is a mutual fund with an investment
objective to seek capital growth. The Fund's management seeks to achieve the
investment objective by investing primarily in common stocks and other equity
securities of growth companies.

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-4
Strategic Transactions...................................... B-8
Investment Restrictions..................................... B-15
Trustees and Officers....................................... B-18
Investment Advisory Agreement............................... B-29
Other Agreements............................................ B-30
Distribution and Service.................................... B-31
Transfer Agent.............................................. B-35
Portfolio Transactions and Brokerage Allocation............. B-35
Shareholder Services........................................ B-37
Redemption of Shares........................................ B-40
Contingent Deferred Sales Charge-Class A.................... B-40
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-40
Taxation.................................................... B-42
Fund Performance............................................ B-47
Other Information........................................... B-51
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-11
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 221

GENERAL INFORMATION

The Fund was originally organized as a series of the Trust under the name
Van Kampen American Capital Growth Fund on September 7, 1995. On July 14, 1998,
the Fund adopted its current name.

The Fund currently offers three classes of shares, designated Class A
Shares, Class B Shares and Class C Shares. Other classes may be established from
time to time in

B-2
<PAGE> 222

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

The 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 Fund 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"), or rules or
regulations promulgated by the Securities and Exchange Commission ("SEC").

B-3
<PAGE> 223

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Trust Company................... 507,658.48 A 20.68%
2800 Post Oak Blvd. 515,932.59 B 17.21%
Houston, TX 77056
Merrill Lynch Pierce Fenner & Smith Inc.... 65,778.50 C 21.50%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Prudential Securities Inc. FBO............. 31,827.85 C 10.40%
Mr. Charles J. Greco
Equity Account
1155 Bodine Rd.
Chester Springs, PA 19425-2006
</TABLE>

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

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

INVESTMENT OBJECTIVE AND POLICIES

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. The Fund may invest an
amount up to 20% of its total assets in securities subject to repurchase
agreements. A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a security and the seller
agrees to repurchase the obligation at a future time and set price, thereby
determining the yield during the holding period. Repurchase agreements involve
certain risks in the event of default by the other party. The Fund may enter
into repurchase agreements with banks or broker-dealers deemed to be
creditworthy by the Adviser under guidelines approved by the Trustees. The Fund
will not invest in repurchase agreements maturing in more than seven days if any
such investment, together with any other illiquid securities held by the Fund,
would exceed the Fund's limitation on illiquid securities described below. In
the event of the bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible lack of

B-4
<PAGE> 224

access to income on the underlying security during this period; and (c) expenses
of enforcing its rights.

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund may
also borrow money in an amount up to 5% of the Fund's total assets 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 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

B-5
<PAGE> 225

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.

LENDING OF SECURITIES

B-6
<PAGE> 226

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

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

PORTFOLIO TURNOVER

ILLIQUID SECURITIES

B-7
<PAGE> 227

with procedures approved by the Fund's Trustees. Ordinarily, the Fund would
invest in restricted securities only when it receives the issuer's commitment to
register the securities without expense to the Fund. However, registration and
underwriting expenses (which may range from 7% to 15% of the gross proceeds of
the securities sold) may be paid by the Fund. Restricted securities which can be
offered and sold to qualified institutional buyers under Rule 144A under the
1933 Act ("144A Securities") and are determined to be liquid under guidelines
adopted by and subject to the supervision of the Fund's Board of Trustees are
not subject to the limitation on illiquid securities. Such 144A Securities are
subject to monitoring and may become illiquid to the extent qualified
institutional buyers become, for a time, uninterested in purchasing such
securities. Factors used to determine whether 144A Securities are liquid
include, among other things, a security's trading history, the availability of
reliable pricing information, the number of dealers making quotes or making a
market in such security and the number of potential purchasers in the market for
such security. For purposes hereof, investments by the Fund in securities of
other investment companies will not be considered investments in restricted
securities to the extent permitted by (i) the 1940 Act, as amended from time to
time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.

STRATEGIC TRANSACTIONS

B-8
<PAGE> 228

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

B-9
<PAGE> 229

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.

B-10
<PAGE> 230

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 U.S. 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 ("S&P") or "P-1" from Moody's Investors Service, Inc.
("Moody's") or an equivalent rating from any other nationally recognized
statistical rating organization ("NRSRO"). Certain OTC options may be illiquid
and subject to the Fund's limitation on illiquid securities.

B-11
<PAGE> 231

specified assets (initial margin) which initially is typically 1% to 10% of the
face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of options on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price nor that delivery will occur.

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

B-12
<PAGE> 232

have an equivalent rating from an NRSRO or (except for OTC options) are
determined to be of equivalent credit quality by the Adviser.

B-13
<PAGE> 233

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.

B-14
<PAGE> 234

the exercise price. 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.

INVESTMENT RESTRICTIONS

B-15
<PAGE> 235

securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy;
or (ii) more than 50% of the Fund's outstanding voting securities. The
percentage limitations contained in the restrictions and policies set forth
herein apply at the time of purchase of securities. These restrictions provide
that the Fund shall not:

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. 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.

B-16
<PAGE> 236

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. 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.

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.

B-17
<PAGE> 237

TRUSTEES AND OFFICERS

TRUSTEES

B-18
<PAGE> 238

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Richard M. DeMartini*..................... Chairman and Chief Executive Officer of
Two World Trade Center International Private Client Group, a
66th Floor division of Morgan Stanley Dean Witter.
New York, NY 10048 Director of Dean Witter Reynolds Inc.
Date of Birth: 10/12/52 Chairman and Director of Dean Witter Capital
Corporation. Chairman, Chief Executive
Officer, President and Director of Dean
Witter Alliance Capital Corporation, Director
of the National Healthcare Resources, Inc.,
Dean Witter Realty Inc., Dean Witter Reynolds
Venture Equities Inc., DW Window Covering
Holding, Inc. and is a member of the Morgan
Stanley Dean Witter Management Committee.
Trustee of the TCW/DW Funds, Director of the
Morgan Stanley Dean Witter Funds and
Trustee/Director of other funds in the Fund
Complex. Prior to March 1999, Chairman, Chief
Executive Officer, President and Director of
Morgan Stanley Dean Witter Distributors, Inc.
Prior to January 1999, Chairman of Dean
Witter Futures & Currency Management Inc. and
Demeter Management Corporation. Prior to
December 1998, President and Chief Operating
Officer of Morgan Stanley Dean Witter
Individual Asset Management and Director of
Morgan Stanley Dean Witter Trust FSB.
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.
Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of Chicago
Hospitals Board, Vice Chair of the Board of
The YMCA of Metropolitan Chicago and a member
of the Women's Board of the University of
Chicago. Prior to 1996, Trustee of The
International House Board.
R. Craig Kennedy.......................... President and Director, German Marshall Fund
11 DuPont Circle, N.W. of the United States. Trustee/Director of
Washington, D.C. 20016 each of the funds in the Fund Complex.
Date of Birth: 02/29/52 Formerly, advisor to the Dennis Trading Group
Inc. Prior to 1992, President and Chief
Executive Officer, Director and Member of the
Investment Committee of the Joyce Foundation,
a private foundation.
</TABLE>

B-19
<PAGE> 239

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President and owner, Nelson Investment
423 Country Club Drive Planning Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser.
Date of Birth: 02/13/36 President and owner, Nelson Ivest Brokerage
Services Inc., a member of the National
Association of Securities Dealers, Inc. and
Securities Investors Protection Corp.
Trustee/Director of each of the funds in the
Fund Complex.
Don G. Powell*............................ Currently a member of the Board of Governors
2800 Post Oak Blvd. and Executive Committee for the Investment
Houston, TX 77056 Company Institute, and a member of the Board
Date of Birth: 10/19/39 of Trustees of the Houston Museum of Natural
Science. Trustee/ Director of certain
open-end investment companies in the Fund
Complex and Trustee/Managing General Partner
of other funds advised by the Advisers or Van
Kampen Management Inc. Immediate past
Chairman of the Investment Company Institute.
Prior to January 1999, Chairman and Director
of Van Kampen Investments, the Advisers, the
Distributor, and Investor Services and
Director or officer of certain other
subsidiaries of Van Kampen Investments. Prior
to July 1998, Director and Chairman of VK/AC
Holding, Inc. Prior to November 1996,
President, Chief Executive Officer and
Director of VK/AC Holding, Inc.
Phillip B. Rooney......................... Vice Chairman and Director of The
One ServiceMaster Way ServiceMaster Company, a business and
Downers Grove, IL 60515 consumer services company. Director of
Date of Birth: 07/08/44 Illinois Tool Works, Inc., a manufacturing
company and the Urban Shopping Centers Inc.,
a retail mall management company. Trustee,
University of Notre Dame. Trustee/ Director
of each of the funds in the Fund Complex.
Prior to 1998, Director of Stone Smurfit
Container Corp., a paper manufacturing
company. Formerly, President, Chief Executive
Officer and Chief Operating Officer of Waste
Management, Inc., an environmental services
company.

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

B-20
<PAGE> 240

<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,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other open-end and closed-end funds advised
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.

Suzanne H. Woolsey, Ph.D.................. Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution. Director of Neurogen
Date of Birth: 12/27/41 Corporation, a pharmaceutical company.
Director and former Chairman of the German
Marshall Fund of the United States Trustee of
Colorado College, Vice Chair of the Board of
the Council for Excellence in Government.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1993, Executive
Director of the Commission on Behavioral and
Social Sciences and Education at the National
Academy of Sciences/ National Research
Council. Prior to 1989, Partner of Coopers &
Lybrand.

Paul G. Yovovich.......................... Private investor. Director of 3Com
Sears Tower Corporation, which provides information
233 South Wacker Drive access products and network system solutions,
Suite 9700 COMARCO, Inc., a wireless communications
Chicago, IL 60606 products company and APAC Customer Services,
Date of Birth: 10/29/53 Inc., a provider of outsourced customer
contact services. Trustee/Director of each of
the funds in the Fund Complex. Prior to May
1996, President of Advance Ross Corporation,
an international transaction services and
pollution control equipment manufacturing
company.
</TABLE>

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

B-21
<PAGE> 241

OFFICERS

Dennis J. McDonnell.................. Executive Vice President and Director of Van
Date of Birth: 05/20/42 Kampen Investments. President, Chief Operating
Chief Investment Officer and Officer and Director of the Advisers, Van Kampen
Executive Vice President Advisors Inc., and Van Kampen Management Inc.
Chief Investment Officer and Executive Vice
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
Van Kampen Management Inc. Prior to July 1998,
Director and Executive Vice President of VK/AC
Holding, Inc. Prior to April 1998, President and
Director of Van Kampen Merritt Equity Advisors
Corp. Prior to April 1997, Mr. McDonnell was
Director of Van Kampen Merritt Equity Holdings
Corp. Prior to September 1996, Mr. McDonnell was
Chief Executive Officer and Director of MCM
Group, Inc. and McCarthy, Crisanti & Maffei, Inc.
a financial research firm, and Chairman and
Director of MCM Asia Pacific Company, Limited and
MCM (Europe) Limited.
</TABLE>

B-22
<PAGE> 242

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Investments,
Vice President and Secretary the Advisers, Van Kampen Advisors Inc., Van
Kampen Management Inc., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary of each of the
funds in the Fund Complex and certain other
investment companies advised by the Advisers or
their affiliates. Prior to January 1999, counsel
to New York Life Insurance Company ("New York
Life"), and prior to March 1997, Vice President
and Associate General Counsel of New York Life.
Prior to December 1993, Assistant General Counsel
of The Dreyfus Corporation. Prior to August 1991,
Senior Associate, Willkie Farr & Gallagher. Prior
to January 1989, Mr. Smith was a Staff Attorney
at the Securities and Exchange Commission,
Division of Investment Management, Office of
Chief Counsel.

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

Stephen L. Boyd...................... Vice President and Chief Investment Officer for
Date of Birth: 11/16/40 equity investments at the Advisers. Vice
Vice President President of each of the funds in the Fund
Complex and certain other investment companies
advised by the Advisers or their affiliates.
Prior to October 1998, Vice President, Senior
Portfolio Manager with AIM Capital Management,
Inc. Prior to February 1998, Senior Vice
President of Van Kampen American Capital Asset
Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American
Capital Management, Inc.

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

B-23
<PAGE> 243

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Curtis W. Morell..................... Senior Vice President of the Advisers, Vice
Date of Birth: 08/04/46 President and Chief Accounting Officer of each of
Vice President and Chief Accounting the funds in the Fund Complex and certain other
Officer investment companies advised by the Advisers or
their affiliates.

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

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

Weston B. Wetherell.................. Vice President, Deputy General Counsel and
Date of Birth: 06/15/56 Assistant Secretary of Van Kampen Investments,
Assistant Secretary the Advisers, the Distributor, Van Kampen
Management Inc. 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.

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

B-24
<PAGE> 244

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.

B-25
<PAGE> 245

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

COMPENSATION TABLE

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table.

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<PAGE> 246

Trust are shown in Table C. The deferred compensation plan is described
above the Compensation Table.

As of July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

B-27
<PAGE> 247

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $1,127 $1,127 $ 927 $1,127 $1,127 $0 $ 620
Great American Companies
Fund.................. 3/31 801 0 801 801 801 601 801 801 0 400
Growth Fund............. 3/31 951 0 951 951 951 751 951 951 0 495
Mid Cap Value Fund...... 3/31 801 0 801 801 801 601 801 801 0 400
Prospector Fund......... 3/31 802 0 802 802 802 602 802 802 0 401
Small Cap Value Fund.... 3/31 ** 0 ** ** ** ** ** ** 0 **
Utility Fund............ 3/31 974 0 974 974 974 774 974 974 0 518
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $5,456 $5,456 $4,256 $5,456 $5,456 $0 $2,834
</TABLE>

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

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0 $ 321
Great American Companies
Fund.................. 3/31 801 0 801 401 801 601 401 801 0 200
Growth Fund............. 3/31 951 0 951 476 951 751 476 951 0 250
Mid Cap Value Fund...... 3/31 801 0 801 401 801 601 401 801 0 200
Prospector Fund......... 3/31 802 0 802 401 802 602 401 802 0 200
Small Cap Value Fund.... 3/31 0 0 0 0 0 0 0 0 0 0
Utility Fund............ 3/31 974 0 974 487 974 774 487 974 0 259
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0 $1,430
</TABLE>

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

B-28
<PAGE> 248

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund...... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund........................ 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund.................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund............... 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund....................... 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>

INVESTMENT ADVISORY AGREEMENT

B-29
<PAGE> 249

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.75% on the first $500 million of
average daily net assets; 0.70% on the next $500 million of average daily net
assets; and 0.65% on the average daily net assets over $1 billion.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, the Adviser received approximately $698,900, $628,500
and $0, respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the respective number of classes of securities issued
per fund and the remaining 75% of such costs based proportionally on their
respective net assets per fund.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Advisory Corp. received approximately $55,800, $39,500
and $19,600, respectively, in accounting services fees from the Fund.

B-30
<PAGE> 250

without limitation: accurate maintenance of the fund's minute books and records,
preparation and oversight of the fund's regulatory reports, and other
information provided to shareholders, as well as responding to day-to-day legal
issues on behalf of the funds. Payment by the Fund for such services is made on
a cost basis for the salary and salary related benefits, including but not
limited to bonuses, group insurance 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
Investments. 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.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Van Kampen Investments received approximately $6,300,
$10,600 and $0, respectively, in legal services fees from the Fund.

DISTRIBUTION AND SERVICE

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999..................... $ 109,154 $ 15,228
Fiscal year ended June 30, 1998........................ $ 236,777 $ 38,227
Fiscal year ended June 30, 1997........................ $1,336,549 $204,700
</TABLE>

B-31
<PAGE> 251

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

CLASS A SHARES SALES CHARGE TABLE

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

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

B-32
<PAGE> 252

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

B-33
<PAGE> 253

year so long as such continuance is specifically approved by a vote of the
Trustees, and also by a vote of the disinterested Trustees, cast in person at a
meeting called for the purpose of voting on the Plans. Each of the Plans may not
be amended to increase materially the amount to be spent for the services
described therein with respect to any class of shares without approval by a vote
of a majority of the outstanding voting shares of such class, and all material
amendments to either of the Plans must be approved by the Trustees and also by
the disinterested Trustees. Each of the Plans may be terminated with respect to
any class of shares at any time by a vote of a majority of the disinterested
Trustees or by a vote of a majority of the outstanding voting shares of such
class.

For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $107,393 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Fund
shareholders and for administering the Class A Share Plans. For the fiscal
period ended March 31, 1999, the Fund's aggregate expenses paid under the Plans
for Class B Shares were $516,530 or 1.00% of the Class B Shares' average daily
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $383,413 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B Shares of the Fund and
$133,117 for fees paid to financial intermediaries for servicing Class B
shareholders and administering the Class B

B-34
<PAGE> 254

Share Plans. For the fiscal period ended March 31, 1999, the Fund's aggregate
expenses paid under the Plans for Class C Shares were $56,158 or 1.00% of the
Class C Shares' average daily net assets. Such expenses were paid to reimburse
the Distributor for the following payments: $16,287 for commissions and
transaction fees paid to financial intermediaries in respect of sales of Class C
Shares of the Fund and $39,871 for fees paid to financial intermediaries for
servicing Class C shareholders and administering the Class C Share Plans.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating
$305,800, $412,300 and $215,900, respectively for these services. Prior to 1998,
these services were provided at cost plus a profit. Beginning in 1998, the
transfer agency prices are determined through negotiations with the Fund's Board
of Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker/dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser to the Fund and still must be analyzed
and reviewed by its staff, the receipt of research information is not expected
to reduce its expenses materially. The investment advisory fee is not reduced as
a result of the Adviser's receipt of such research services. Services provided
may include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities

B-35
<PAGE> 255

transactions and performing functions incidental thereto (such as clearance,
settlement and custody). Research services furnished by firms through which the
Fund effects its securities transactions may be used by the Adviser in servicing
all of its advisory accounts; not all of such services may be used by the
Adviser in connection with the Fund. The Adviser also may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Fund, the Adviser or the Distributor and with brokerage firms
participating in the distribution of the Fund's shares if it reasonably believes
that the quality of execution and the commission are comparable to that
available from other qualified firms. Similarly, to the extent permitted by law
and subject to the same considerations on quality of execution and comparable
commission rates, the Adviser may direct an executing broker to pay a portion or
all of any commissions, concessions or discounts to a firm supplying research or
other services or to a firm participating in the distribution of the Fund's
shares.

B-36
<PAGE> 256

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated
Brokers
-----------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999................. $ 224,275 $-0- $-0-
Fiscal year ended June 30, 1998.................... $ 259,035 $-0- $-0-
Fiscal year ended June 30, 1997.................... $ 131,274 $116 $-0-
Fiscal 1999 Percentages:
Commissions with affiliate to total
commissions................................... 0% 0%
Value of brokerage transactions with affiliate to
total
transactions.................................. 0% 0%
</TABLE>

During the fiscal period ended March 31, 1999, the Fund paid $185,642 in
brokerage commissions on transactions totaling $58,484,287 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

B-37
<PAGE> 257

shareholder must write to Van Kampen Funds, c/o Investor Services, PO Box
418256, Kansas City, MO 64141-9256, requesting an "affidavit of loss" and obtain
a Surety Bond in a form acceptable to Investor Services. On the date the letter
is received, Investor Services will calculate 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.

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

DIVIDEND DIVERSIFICATION

B-38
<PAGE> 258

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGE PRIVILEGE

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

REINSTATEMENT PRIVILEGE

B-39
<PAGE> 259

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

REDEMPTION OF SHARES

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC-CLASS B
AND C")

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge.

B-40
<PAGE> 260

The CDSC-Class B and C is waived on redemptions of Class B Shares and Class C
Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the plan, a dollar
amount of a

B-41
<PAGE> 261

participating shareholder's investment in the Fund will be redeemed
systematically by the Fund on a periodic basis, and the proceeds mailed to the
shareholder. The amount to be redeemed and frequency of the systematic
withdrawals will be specified by the shareholder upon his or her election to
participate in the plan. The CDSC-Class B and C will be waived on redemptions
made under the plan.

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

REINVESTMENT OF REDEMPTION PROCEEDS

REDEMPTION BY ADVISER

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

TAXATION

FEDERAL INCOME TAXATION

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

B-42
<PAGE> 262

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.

B-43
<PAGE> 263

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.

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 ("IRS")
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.

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

B-44
<PAGE> 264

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.

B-45
<PAGE> 265

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

NON-U.S. SHAREHOLDERS

B-46
<PAGE> 266

are corporations may also be subject to an additional "branch profits tax" with
respect to income from the Fund that is effectively connected with a United
States trade or business.

BACKUP WITHHOLDING

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

GENERAL

FUND PERFORMANCE

From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one year,

B-47
<PAGE> 267

five year and ten year periods. Other total return quotations, aggregate or
average, over other time periods may also be included.

B-48
<PAGE> 268

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.

The Fund seeks to remain fully invested and diversified across many
industries to achieve consistent long-term performance. From time to time
marketing materials may provide a portfolio manager update, an Adviser update or
discuss general economic conditions and outlooks. The Fund's marketing materials
may also show the Fund's asset class diversification, top five sectors, ten
largest holdings and other Fund asset structures. The top 10 holdings of the
Fund may also be listed in marketing pieces. Materials may also mention how Van
Kampen Investments believes the Fund compares relative to other Van Kampen
funds. 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 the 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 other than with a professional representative.
The Fund may also be marketed on the internet.

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. The Fund may, from time to time, reopen
and close the offering of its shares to new investors as market conditions
permit. Prior to February 3, 1997, the Fund had not engaged in a broad
continuous public offering

B-49
<PAGE> 269

of its shares, had sold shares to only a limited number of investors and had not
been subject to redemption requests. One factor impacting the Fund's 1996
performance was the Fund's investments in initial public offerings (IPOs). These
investments had a greater effect on Fund's 1996 performance than similar
investments made in subsequent years, in part because of the smaller size of the
Fund in 1996. There is no assurance that the Fund's future investments in IPOs
will have the same affect on performance as the IPOs did in 1996. The Fund's
investment results are based on historical performance and are not intended to
indicate future performance.

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was 1.28% and (ii) the approximately three-year, three-month
period since December 27, 1995, the commencement of investment operations for
Class A Shares of the Fund, through March 31, 1999 was 32.22%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 148.57%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 163.74%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 1.66% and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class B Shares of the Fund, through March 31, 1999 was 33.52%.

B-50
<PAGE> 270

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 159.11%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 5.62%, and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class C Shares of the Fund, through March 31, 1999 was 33.91%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 159.11%.

OTHER INFORMATION

CUSTODY OF ASSETS

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-51
<PAGE> 271

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
March 31, 1999, and the related statement of operations for the nine-month
period ended March 31, 1999 and the year then ended June 30, 1998, the statement
of changes in net assets for the nine-month period ended March 31, 1999 and for
each of the years in the two year period ended June 30, 1998, 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 March
31, 1999, by correspondence with the custodian and brokers and by the
application of alternative auditing procedures where broker replies were not
received. 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 March 31, 1999, the results of its operations for the
nine-month period ended March 31, 1999 and the year ended June 30, 1998, the
changes in its net assets for the nine-month period ended March 31, 1999 and for
each of the years in the two year period then ended June 30, 1998, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

KPMG LLP

Chicago, Illinois

May 5, 1999
F-1
<PAGE> 272

PORTFOLIO OF INVESTMENTS

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 97.6%
CONSUMER DISTRIBUTION 28.3%
Abercrombie & Fitch Co., Class A (a)............... 22,000 $ 2,024,000
AmeriSource Health Corp., Class A (a).............. 36,200 1,237,587
Ames Department Stores, Inc. (a)................... 40,000 1,485,000
AnnTaylor Stores Corp. (a)......................... 60,000 2,651,250
Bindley Western Industries, Inc. .................. 77,000 2,199,313
BJ's Wholesale Club, Inc. (a)...................... 58,000 1,533,375
Chico's Fas, Inc. (a).............................. 99,000 2,128,500
Hollywood Entertainment Corp. (a).................. 50,000 931,250
Intimate Brands, Inc. ............................. 34,000 1,636,250
Lexmark International Group, Inc., Class A (a)..... 12,700 1,419,225
Lowe's Cos., Inc. ................................. 42,800 2,589,400
Office Depot, Inc. (a)............................. 40,000 1,472,500
Pacific Sunwear of California, Inc. (a)............ 66,000 2,293,500
Polycom, Inc. (a).................................. 45,000 843,750
Safeway, Inc. (a).................................. 58,000 2,976,125
TJX Cos., Inc. .................................... 125,000 4,250,000
Tommy Hilfiger Corp. (a)........................... 26,000 1,790,750
Tricon Global Restaurants, Inc. (a)................ 40,000 2,810,000
Wal-Mart Stores, Inc. ............................. 38,000 3,503,125
------------
39,774,900
------------
CONSUMER DURABLES 2.9%
Harley Davidson, Inc. ............................. 24,000 1,380,000
Hasbro, Inc. ...................................... 51,000 1,475,813
Shaw Industries, Inc. ............................. 62,000 1,147,000
------------
4,002,813
------------
CONSUMER NON-DURABLES 1.0%
Adolph Coors Co.................................... 27,000 1,458,000
------------
CONSUMER SERVICES 6.0%
Autobytel.com, Inc. (a)............................ 8,100 339,188
Brinker International, Inc. (a).................... 39,300 1,014,431
Chancellor Media Corp., Class A (a)................ 15,000 706,875
iVillage, Inc. (a)................................. 3,100 311,550
MGM Grand, Inc. (a)................................ 39,000 1,311,375
United Road Services, Inc. (a)..................... 74,000 383,875
Univision Communications, Inc., Class A (a)........ 40,000 2,000,000
Young & Rubicam, Inc. (a).......................... 47,000 1,915,250
Ziff Davis, Inc. (a)............................... 10,900 392,400
------------
8,374,944
------------
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 273
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
--------------------------------------------------------------------------------
<S> <C> <C>
FINANCE 5.7%
Affiliated Managers Group, Inc. (a)................ 8,800 $ 228,800
Ambac Financial Group, Inc. ....................... 17,900 966,600
Charles Schwab Corp. .............................. 16,000 1,538,000
Fifth Third Bancorp................................ 6,700 441,781
Firstar Corp. ..................................... 18,000 1,611,000
Nationwide Financial Services, Inc., Class A....... 3,800 159,600
Providian Financial Corp. ......................... 15,000 1,650,000
Zions Bancorp. (a)................................. 21,000 1,396,500
------------
7,992,281
------------
HEALTHCARE 12.6%
Allergan, Inc. .................................... 8,800 773,300
Alpharma, Inc., Class A............................ 35,000 1,373,750
Amgen, Inc. (a).................................... 40,000 2,995,000
Biogen, Inc. (a)................................... 13,000 1,486,062
Bristol-Myers Squibb Co. .......................... 22,000 1,414,875
Guidant Corp. ..................................... 40,000 2,420,000
Lincare Holdings, Inc. (a)......................... 74,000 2,081,250
Mylan Laboratories, Inc. .......................... 38,000 1,042,625
Schering-Plough Corp. ............................. 33,000 1,825,313
Watson Pharmaceuticals, Inc. (a)................... 26,000 1,147,250
Wellpoint Health Networks, Inc., Class A (a)....... 14,000 1,061,375
------------
17,620,800
------------
PRODUCER MANUFACTURING 2.9%
Corning, Inc. ..................................... 24,000 1,440,000
Republic Services, Inc., Class A (a)............... 73,900 1,196,256
Waste Management, Inc. ............................ 32,900 1,459,938
------------
4,096,194
------------
TECHNOLOGY 33.5%
Acclaim Entertainment, Inc. (a).................... 60,000 536,250
Altera Corp. (a)................................... 25,000 1,487,500
America Online, Inc. (a)........................... 72,000 10,512,000
Avt Corp. (a)...................................... 72,000 1,719,000
BMC Software, Inc. (a)............................. 27,000 1,000,687
Citrix Systems, Inc. (a)........................... 48,000 1,830,000
Compuware Corp. (a)................................ 66,000 1,575,750
CSG Systems International, Inc. (a)................ 30,000 1,183,125
Electronics for Imaging, Inc. (a).................. 55,000 2,145,000
EMC Corp. (a)...................................... 61,000 7,792,750
Jabil Circuit, Inc. (a)............................ 62,000 2,511,000
Microsoft Corp. (a)................................ 27,200 2,437,800
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 274
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
--------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Neon Systems, Inc. (a)............................. 7,300 $ 401,500
Network Solutions, Inc., Class A................... 7,000 740,250
Nokia Corp.--ADR (Finland)......................... 13,000 2,024,750
pcOrder.com, Inc., Class A (a)..................... 3,200 181,200
Rational Software Corp. (a)........................ 50,000 1,340,625
Sanmina Corp. (a).................................. 28,000 1,785,000
Solectron Corp. (a)................................ 32,000 1,554,000
Teradyne, Inc. (a)................................. 13,000 709,312
Waters Corp. (a)................................... 23,000 2,416,437
Xilinx, Inc. (a)................................... 26,000 1,054,625
------------
46,938,561
------------
UTILITIES 4.7%
Century Telephone Enterprises, Inc. ............... 21,000 1,475,250
Cincinnati Bell, Inc. ............................. 71,000 1,593,063
Level 3 Communications, Inc. (a)................... 2,700 196,594
Transwitch Corp. (a)............................... 74,000 3,348,500
------------
6,613,407
------------
TOTAL LONG-TERM INVESTMENTS 97.6%
(Cost $91,542,154).......................................... 136,871,900
REPURCHASE AGREEMENT 2.4%
SBC Warburg, Corp. ($3,400,000 par collateralized by U.S.
Government obligations in a pooled cash account dated
03/31/99, to be sold on 04/01/99 at $3,400,463) (Cost
$3,400,000)................................................... 3,400,000
------------
TOTAL INVESTMENTS 100.0%
(Cost $94,942,154).......................................... 140,271,900
OTHER ASSETS IN EXCESS OF LIABILITIES 0.0%..................... 66,022
------------
NET ASSETS 100.0%.............................................. $140,337,922
============
</TABLE>

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

See Notes to Financial Statements

F-4
<PAGE> 275

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $94,942,154)........................ $140,271,900
Cash........................................................ 3,844
Receivables:
Investments Sold.......................................... 5,008,980
Dividends................................................. 40,156
Fund Shares Sold.......................................... 15,292
Unamortized Organizational Costs............................ 14,102
Other....................................................... 344,825
------------
Total Assets.......................................... 145,699,099
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,472,798
Fund Shares Repurchased................................... 495,754
Distributor and Affiliates................................ 180,799
Investment Advisory Fee................................... 87,211
Accrued Expenses............................................ 68,870
Trustees' Deferred Compensation and Retirement Plans........ 55,745
------------
Total Liabilities..................................... 5,361,177
------------
NET ASSETS.................................................. $140,337,922
============
NET ASSETS CONSIST OF:
Capital..................................................... $ 99,307,949
Net Unrealized Appreciation................................. 45,329,746
Accumulated Net Realized Loss............................... (4,245,157)
Accumulated Net Investment Loss............................. (54,616)
------------
NET ASSETS.................................................. $140,337,922
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $60,128,868 and 2,580,837 shares of
beneficial interest issued and outstanding)............. $ 23.30
Maximum sales charge (5.75%* of offering price)........... 1.42
------------
Maximum offering price to public.......................... $ 24.72
============
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $72,808,647 and 3,183,691 shares of beneficial
interest issued and outstanding)........................ $ 22.87
============
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $7,400,407 and 323,632 shares of beneficial
interest issued and outstanding)........................ $ 22.87
============
</TABLE>

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

See Notes to Financial Statements

F-5
<PAGE> 276

STATEMENT OF OPERATIONS

For the Nine Months Ended March 31, 1999
and the Year Ended June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1999 June 30, 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>

INVESTMENT INCOME:
Dividends................................... $ 241,203 $ 466,773
Interest.................................... 203,423 421,677
----------- -----------
Total Income............................ 444,626 888,450
----------- -----------
EXPENSES:
Investment Advisory Fee..................... 741,338 1,014,540
Distribution (12b-1) and Service Fees
(Attributed to Class A, B, and C of
$105,309, $511,218 and $55,646,
respectively, for the nine months ended
3/31/99 and $148,958, $669,433 and
$87,301, respectively, for the year ended
6/30/98).................................. 672,173 905,692
Shareholder Services........................ 407,920 574,734
Legal....................................... 45,597 14,323
Trustees' Fees and Expenses................. 12,294 24,916
Custody..................................... 11,803 2,177
Amortization of Organizational Costs........ 6,003 7,997
Other....................................... 193,861 168,777
----------- -----------
Total Expenses.......................... 2,090,989 2,713,156
Less Fees Waived........................ 42,465 386,039
----------- -----------
Net Expenses............................ 2,048,524 2,327,117
----------- -----------
NET INVESTMENT LOSS......................... $(1,603,898) $(1,438,667)
=========== ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................... $(3,953,208) $12,625,540
Futures................................... -0- 278,325
----------- -----------
Net Realized Gain/Loss...................... (3,953,208) 12,903,865
----------- -----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................... 38,993,144 7,542,991
End of the Period......................... 45,329,746 38,993,144
----------- -----------
Net Unrealized Appreciation During the
Period.................................... 6,336,602 31,450,153
----------- -----------
NET REALIZED AND UNREALIZED GAIN............ $ 2,383,394 $44,354,018
=========== ===========
NET INCREASE IN NET ASSETS FROM
OPERATIONS................................ $ 779,496 $42,915,351
=========== ===========
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 277

STATEMENT OF CHANGES IN NET ASSETS

For the Nine Months Ended March 31, 1999
and the Years Ended June 30, 1998 and 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
March 31, 1999 June 30, 1998 June 30, 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss.................. $ (1,603,898) $ (1,438,667) $ (86,224)
Net Realized Gain/Loss............... (3,953,208) 12,903,865 (1,757,194)
Net Unrealized Appreciation During
the Period......................... 6,336,602 31,450,153 7,484,772
------------ ------------ ------------
Change in Net Assets from
Operations......................... 779,496 42,915,351 5,641,354
------------ ------------ ------------
Distributions from Net Realized
Gain/Loss.......................... (3,378,184) (6,327,980) (23,514)
Distributions in Excess of Net
Realized Gain/Loss................. (291,949) -0- (1,799)
------------ ------------ ------------
Distributions from and in Excess of
Net Realized Gain*............... (3,670,133) (6,327,980) (25,313)
Return of Capital Distribution*...... -0- -0- (21,887)
------------ ------------ ------------
Total Distributions................ (3,670,133) (6,327,980) (47,200)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES.............. (2,890,637) 36,587,371 5,594,154
------------ ------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............ 12,933,199 28,476,433 122,206,757
Net Asset Value of Shares Issued
Through Dividend Reinvestment...... 3,395,527 5,825,754 2,031
Cost of Shares Repurchased........... (26,950,184) (33,462,669) (11,696,360)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS....................... (10,621,458) 839,518 110,512,428
------------ ------------ ------------
TOTAL INCREASE/DECREASE IN NET
ASSETS............................. (13,512,095) 37,426,889 116,106,582
NET ASSETS:
Beginning of the Period.............. 153,850,017 116,423,128 316,546
------------ ------------ ------------
End of the Period (Including
accumulated net investment loss of
$54,616, $47,131, and $23,118
respectively)...................... $140,337,922 $153,850,017 $116,423,128
============ ============ ============
*Distributions by Class
Distributions from and in Excess of
Net Realized Gain:
Class A Shares..................... $ (1,555,668) $ (2,743,327) $ (24,246)
Class B Shares..................... (1,907,640) (3,159,670) (537)
Class C Shares..................... (206,825) (424,983) (530)
------------ ------------ ------------
$ (3,670,133) $ (6,327,980) $ (25,313)
============ ============ ============
Return of Capital Distribution:
Class A Shares..................... $ -0- $ -0- $ (20,964)
Class B Shares..................... -0- -0- (465)
Class C Shares..................... -0- -0- (458)
------------ ------------ ------------
$ -0- $ -0- $ (21,887)
============ ============ ============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 278

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
December 27, 1995
Nine Months (Commencement of
Ended Year Ended Year Ended Investment Operations)
Class A Shares March 31, 1999(a) June 30, 1998 June 30, 1997(a) to June 30, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $ 23.463 $ 17.878 $ 13.696 $ 10.000
----------- ----------- ----------- -----------
Net Investment Income/Loss... (.185) (.136) .031 (.044)
Net Realized and Unrealized
Gain....................... .604 6.711 4.810 3.740
----------- ----------- ----------- -----------
Total from Investment
Operations................... .419 6.575 4.841 3.696
----------- ----------- ----------- -----------
Less:
Distributions from and in
Excess of Net Realized
Gain....................... .584 .990 .353 -0-
Return of Capital
Distribution............... -0- -0- .306 -0-
----------- ----------- ----------- -----------
Total Distributions........... .584 .990 .659 -0-
----------- ----------- ----------- -----------
Net Asset Value, End of the
Period....................... $ 23.298 $ 23.463 $ 17.878 $ 13.696
=========== =========== =========== ===========
Total Return* (b)............. 2.18%** 38.52% 36.00% 37.00%**
Net Assets at End of the
Period (In millions)......... $60.1 $64.9 $53.1 $.1
Ratio of Expenses to Average
Net Assets*.................. 1.64% 1.30% 1.32% 1.46%
Ratio of Net Investment Income
to Average Net Assets*....... (1.19%) (.64%) .19% (.79%)
Portfolio Turnover............ 82%** 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................... 1.68% 1.58% 2.31% 15.69%
Ratio of Net Investment Income
to Average Net Assets........ (1.23%) (.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

F-8
<PAGE> 279
FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
December 27, 1995
Nine Months (Commencement of
Ended Year Ended Year Ended Investment Operations)
Class B Shares March 31, 1999(a) June 30, 1998 June 30, 1997(a) to June 30, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $ 23.173 $ 17.796 $ 13.695 $ 10.000
----------- ----------- ----------- -----------
Net Investment Loss.......... (.299) (.270) (.093) (.045)
Net Realized and Unrealized
Gain....................... .579 6.637 4.853 3.740
----------- ----------- ----------- -----------
Total from Investment
Operations................... .280 6.367 4.760 3.695
----------- ----------- ----------- -----------
Less:
Distributions from and in
Excess of Net Realized
Gain....................... .584 .990 .353 -0-
Return of Capital
Distribution............... -0- -0- .306 -0-
----------- ----------- ----------- -----------
Total Distributions........... .584 .990 .659 -0-
----------- ----------- ----------- -----------
Net Asset Value, End of the
Period....................... $ 22.869 $ 23.173 $ 17.796 $ 13.695
=========== =========== =========== ===========
Total Return* (b)............. 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the
Period (In millions)......... $72.8 $79.7 $55.0 $.1
Ratio of Expenses to Average
Net Assets*.................. 2.40% 2.05% 2.07% 1.46%
Ratio of Net Investment Income
to Average Net Assets*....... (1.95%) (1.40%) (.56%) (.74%)
Portfolio Turnover............ 82%** 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................... 2.44% 2.34% 3.04% 15.70%
Ratio of Net Investment Income
to Average Net Assets........ (1.99%) (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

F-9
<PAGE> 280
FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
Nine Months December 27, 1995
Ended Year Ended Year Ended (Commencement of
Class C Shares March 31, 1999(a) June 30, 1998 June 30, 1997(a) Investment Operations)
- ------------------------------------------------------------------------------------- to June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period.............. $23.173 $17.793 $13.695 $10.000
------- ------- ------- -------
Net Investment Loss........ (.300) (.311) (.096) (.045)
Net Realized and Unrealized
Gain..................... .578 6.681 4.853 3.740
------- ------- ------- -------
Total from Investment
Operations................. .278 6.370 4.757 3.695
------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Realized
Gain..................... .584 .990 .353 -0-
Return of Capital
Distribution............. -0- -0- .306 -0-
------- ------- ------- -------
Total Distributions......... .584 .990 .659 -0-
------- ------- ------- -------
Net Asset Value, End of
the Period................. $22.867 $23.173 $17.793 $13.695
======= ======= ======= =======
Total Return* (b)........... 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the
Period (In millions)....... $7.4 $9.2 $8.3 $.1
Ratio of Expenses to Average
Net Assets*................ 2.41% 2.05% 2.07% 1.46%
Ratio of Net Investment
Income to Average Net
Assets*.................... (1.96%) (1.39%) (.57%) (.74%)
Portfolio Turnover.......... 82%** 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................. 2.45% 2.34% 3.04% 15.70%
Ratio of Net Investment
Income to Average Net
Assets..................... (2.00%) (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

F-10
<PAGE> 281

NOTES TO FINANCIAL STATEMENTS

March 31, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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. In July, 1998, the Fund's Board of
Trustees approved a change in the Fund's fiscal year end from June 30 to March
31. As a result, this financial report reflects the nine-month period commencing
on July 1, 1998, and ending on March 31, 1999.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the mean of the bid and asked prices. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the Board
of Trustees. Short-term securities with remaining maturities of 60 days or less
are valued at amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments 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

F-11
<PAGE> 282
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 and
interest income is recorded on an accrual basis. 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.
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.
The Fund intends to utilize provisions of the Federal income tax laws which
allows it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At March 31, 1999, the Fund had an accumulated capital loss carryforward
for tax purposes of $3,970,049 which will expire an March 31, 2007.
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 March 31, 1999, for federal income tax purposes the cost of long- and
short-term investments is $95,216,360, the aggregate gross unrealized
appreciation is $47,556,355 and the aggregate gross unrealized depreciation is
$2,500,815, resulting in net unrealized appreciation on long- and short-term
investments of $45,055,540.
F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income and net realized gains, if any.
Distributions from net

F-12
<PAGE> 283
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
for the nine months ended March 31, 1999 and for the year ended June 30, 1998
have been identified and appropriately reclassified. For the nine months ended
March 31, 1999, a permanent difference related to a net operating loss totaling
$1,596,413 has been reclassified from accumulated net investment loss to
capital. For the year ended June 30, 1998, a permanent difference related to net
operating loss which may be used as an offset against short-term gains for tax
purposes totalling $1,414,654 has been reclassified from accumulated net
investment loss to accumulated net realized gain.

<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>

For the nine months ended March 31, 1999 and the year ended June 30, 1998,
the Adviser voluntarily waived approximately $42,000 and $386,000, respectively,
of its investment advisory fees. Van Kampen 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. This agreement was voluntarily
continued through July 31, 1998 and was discontinued on August 1, 1998.
For the nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund recognized expenses of approximately $4,900 and $3,000, respectively,
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 nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund recognized expenses of approximately $62,100 and $50,100, respectively,
representing Van Kampen's cost of providing accounting and legal services to the
Fund.

F-13
<PAGE> 284
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the nine months ended
March 31, 1999 and the year ended June 30, 1998, the Fund recognized expenses of
approximately $305,800 and $412,300, respectively. 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.
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 March 31, 1999, Van Kampen owned 7,000 shares of Class A and 6,500 shares
each of Classes B and C, respectively.

F-14
<PAGE> 285
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

At March 31, 1999, capital aggregated $41,591,140, $52,906,982, and
$4,809,827 for Classes A, B, and C, respectively. For the nine months ended
March 31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 337,597 $ 7,019,197
Class B.................................. 269,887 5,504,113
Class C.................................. 19,753 409,889
---------- ------------
Total Sales................................ 627,237 $ 12,933,199
========== ============
Dividend Reinvestment:
Class A.................................. 71,540 $ 1,449,407
Class B.................................. 89,988 1,793,457
Class C.................................. 7,660 152,663
---------- ------------
Total Dividend Reinvestment................ 169,188 $ 3,395,527
========== ============
Repurchases:
Class A.................................. (593,731) $(12,335,516)
Class B.................................. (616,839) (12,488,158)
Class C.................................. (102,252) (2,126,510)
---------- ------------
Total Repurchases.......................... (1,312,822) $(26,950,184)
========== ============
</TABLE>

F-15
<PAGE> 286
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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>

F-16
<PAGE> 287
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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>

F-17
<PAGE> 288
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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>

For the nine months ended March 31, 1999 and 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 $15,400 and $38,700, respectively and
CDSC on the redeemed shares of Classes B and C of approximately $178,400 and
$191,300, respectively. Sales charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS
For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $104,662,006
and $123,377,532, respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds from sales of investment 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.

F-18
<PAGE> 289
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

The Fund may invest in futures contracts, a type of derivative. A futures
contract is an agreement involving the delivery of a particular asset on a
specified future date at an agreed upon price. The Fund generally invests in
stock index futures. These contracts are generally used as a substitute for
purchasing and selling specific securities. Upon entering into futures
contracts, the Fund maintains, in a segregated account with its custodian, cash
or liquid securities with a value equal to its obligation under the futures
contracts. During the period the futures contract is open, payments are received
from or made to the broker based upon changes in the value of the contract (the
variation margin).
The Fund did not enter into any futures transactions for the nine months
ended March 31, 1999.
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 nine months ended March 31, 1999 and the year ended June 30, 1998, are
payments retained by Van Kampen of approximately $409,700 and $568,400,
respectively.

F-19
<PAGE> 290

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
MID CAP VALUE FUND

Van Kampen Mid Cap Value Fund (the "Fund") is a mutual fund with an
investment objective to seek long-term growth of capital. The Fund's management
seeks to achieve the investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of
medium-capitalization companies that the Fund's investment adviser believes are
selling below their intrinsic value and offer the opportunity for significant
growth of capital.

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-3
Strategic Transactions...................................... B-7
Investment Restrictions..................................... B-12
Trustees and Officers....................................... B-14
Investment Advisory Agreement............................... B-23
Other Agreements............................................ B-23
Distribution and Service.................................... B-24
Transfer Agent.............................................. B-27
Portfolio Transactions and Brokerage Allocation............. B-27
Shareholder Services........................................ B-29
Redemption of Shares........................................ B-31
Contingent Deferred Sales Charge-Class A.................... B-31
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-31
Taxation.................................................... B-33
Fund Performance............................................ B-37
Other Information........................................... B-39
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-10
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 291

GENERAL INFORMATION

The Fund was originally organized as a series of the Trust under the name
Van Kampen American Capital Value Fund on May 10, 1995. On July 14, 1998, the
Fund changed its name to Van Kampen Value Fund. On October 23, 1998 the Fund
adopted its current name.

B-2
<PAGE> 292

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

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Investments Inc. ........................ 110,271.46 A 99.96%
Attn: Dominick Cogliandro 8,111.23 B 100.00%
One Chase Manhattan Plaza 8,110.88 C 100.00%
37(th) Floor
New York, NY 10005-1401
</TABLE>

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

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

INVESTMENT OBJECTIVE AND POLICIES

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. The Fund may invest an
amount up to 20% of its total assets in securities subject to repurchase
agreements. A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a security and the seller
agrees to repurchase the obligation at a future time and set price, thereby
determining the yield during the holding period. Repurchase agreements involve
certain risks in the event of default by the other party. The Fund may enter
into repurchase agreements with banks or broker-dealers deemed to be
creditworthy by the Adviser under guidelines approved by the Trustees. The Fund
will not invest in repurchase agreements maturing in more than seven days if any
such investment, together with any other illiquid securities held by the Fund,
would exceed the Fund's limitation on illiquid securities described below. In
the event of the bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible lack of access to income on the underlying security during
this period; and (c) expenses of enforcing its rights.

B-3
<PAGE> 293

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund
also may borrow money in an amount up to 5% of the Fund's total assets for
temporary purposes. The Fund has no current intention to borrow money other than
for temporary purposes.

B-4
<PAGE> 294

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

The Fund may purchase and sell portfolio securities on a "when-issued" and
"delayed delivery" basis. No income accrues to the Fund on securities in
connection with such purchase transactions are subject to market fluctuation the
value of the securities at delivery may be more or less than their purchase
price, and yields generally available on comparable securities when delivery
occurs may be higher or lower than yields on the securities obtained pursuant to
such transactions. Because the Fund relies on the buyer or seller, as the case
may be, to consummate the transaction, failure by the other party to complete
the transaction may result in the Fund missing the opportunity of obtaining a
price or yield considered to be advantageous. When the Fund is the buyer in such
a transaction, however, it will maintain, in a segregated account with its
custodian, cash or liquid securities having an aggregate value equal to the
amount of such purchase commitments until payment is made. The Fund will made
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.

LENDING OF SECURITIES

PORTFOLIO TURNOVER

B-5
<PAGE> 295

ILLIQUID SECURITIES

TYPES OF CONVERTIBLE SECURITIES

The Fund's investments in convertible securities may include securities
with enhanced convertible features or "equity-linked" features. These securities
come in many forms and may include features, among others, such as the
following: (i) may be issued by the issuer of the underlying equity security on
its own securities or securities it holds of another company or be issued by a
third party (typically a brokerage firm or other financial entity) on a security
of another company, (ii) may convert into equity securities, such as common
stock, or may be redeemed for cash or some combination of cash and the linked
security at a value based upon the value of the underlying equity security,
(iii) may have various conversion features prior to maturity at the option of
the holder or the issuer or both, (iv) may limit the appreciation value with
caps or collars of the value of underlying equity security and (v) may have
fixed, variable or no interest payments during the life of the security which
reflect the actual or a structured return relative to the underlying dividends
of the linked equity security. Generally these securities are designed to give
investors enhanced yield opportunities to the equity securities of an issuer,
but these securities may involve a limited appreciation potential, downside
exposure, or a finite time in which to capture the yield advantage. For example,
certain securities may provide a higher current dividend income than the
dividend income on the underlying security while capping participation in the
capital appreciation of such security. Other securities may involve arrangements
with no interest or dividend payments made until maturity of the security or an
enhanced principal amount received at maturity based on the yield and value of
the underlying equity security during the security's term or at maturity.
Besides enhanced yield opportunities, another advantage of using such securities
is that they may be used for portfolio management or hedging purposes to reduce
the risk of investing in a more volatile underlying equity security. There may
be additional types of convertible securities with features not specifically
referred to herein in which the Fund may invest consistent with its investment
objective and policies.

Investments in enhanced convertible or equity-linked securities may subject
the Fund to additional risks not ordinarily associated with investments in
traditional convertible securities. Particularly when such

B-6
<PAGE> 296

securities are issued by a third party on an underlying linked security of
another company, the Fund is subject to risks if the underlying security
underperforms or the issuer defaults on the payment of the dividend or the
underlying security at maturity. Additionally, the trading market for certain
securities may be less liquid than for other convertible securities making it
difficult for the Fund to dispose of a particular security in a timely manner,
and reduced liquidity in the secondary market for any such securities may make
it more difficult to obtain market quotations for valuing the Fund's portfolio.

STRATEGIC TRANSACTIONS

In the course of pursuing these investment strategies, the Fund may
purchase and sell derivative securities such as exchange-listed and
over-the-counter put and call options on securities, financial futures, equity,
fixed-income and interest rate indices and other financial instruments, 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 or options on currency or currency futures
(collectively, all the above are called "Strategic Transactions"). Among other
things, Strategic Transactions may be used to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
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 or
to establish a position in the derivatives markets as a temporary substitute for
purchasing or selling particular securities.

B-7
<PAGE> 297

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.

B-8
<PAGE> 298

including such terms as method of settlement, term, exercise price, premium,
guarantees and security, are set by negotiation of the parties.

B-9
<PAGE> 299

part of the Fund. If the Fund exercises an option on a futures contract it will
be obligated to post initial margin (and potential subsequent variation margin)
for the resulting futures position just as it would for any position. Futures
contracts and options thereon are generally settled by entering into an
offsetting transaction but there can be no assurance that the position can be
offset prior to settlement at an advantageous price nor that delivery will
occur.

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. 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.

INVESTMENT RESTRICTIONS

B-12
<PAGE> 302

the Fund's outstanding voting securities. The percentage limitations contained
in the restrictions and policies set forth herein apply at the time of purchase
of securities. These restrictions provide that the Fund shall not:

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. 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. Invest 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.

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.

B-13
<PAGE> 303

TRUSTEES AND OFFICERS

TRUSTEES

B-14
<PAGE> 304

B-15
<PAGE> 305

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

B-16
<PAGE> 306

OFFICERS

B-17
<PAGE> 307

B-18
<PAGE> 308

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

COMPENSATION TABLE

- ------------------------------------
(1) Trustees not eligible for compensation are not included in the Compensation
Table.

B-20
<PAGE> 310

As of July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

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

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

B-21
<PAGE> 311

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ----------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund.............. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0
Great American Companies Fund....... 3/31 801 0 801 401 801 601 401 801 0
Growth Fund......................... 3/31 951 0 951 476 951 751 476 951 0
Mid Cap Value Fund.................. 3/31 801 0 801 401 801 601 401 801 0
Prospector Fund..................... 3/31 802 0 802 401 802 602 401 802 0
Small Cap Value Fund................ 3/31 0 0 0 0 0 0 0 0 0
Utility Fund........................ 3/31 974 0 974 487 974 774 487 974 0
------ -- ------ ------ ------ ------ ------ ------ --
Equity Trust Total................ $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0

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

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

B-22
<PAGE> 312

INVESTMENT ADVISORY AGREEMENT

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.75% on the first $500 million of
average daily net assets; 0.70% on the next $500 million of average daily net
assets; and 0.65% on the average daily net assets over $1 billion.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, the Adviser received approximately $0, $0 and $0,
respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Advisory Corp. received approximately $0, $0 and $0,
respectively, in accounting services fees from the Fund.

B-23
<PAGE> 313

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Van Kampen Investments received approximately $0, $0 and
$0, respectively, in legal services fees from the Fund.

DISTRIBUTION AND SERVICE

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999.......................... $0 $0
Fiscal year ended June 30, 1998............................. $0 $0
Fiscal year ended June 30, 1997............................. $0 $0
</TABLE>

B-24
<PAGE> 314

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

CLASS A SHARES SALES CHARGE TABLE

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

B-25
<PAGE> 315

expenses with respect to Class B Shares and Class C Shares, respectively,
representing 0.00% and 0.00% of the Fund's net assets attributable to Class B
Shares and Class C Shares, respectively. If the Plans were terminated or not
continued, the Fund would not be contractually obligated to pay the Distributor
for any expenses not previously reimbursed by the Fund or recovered through
contingent deferred sales charges.

For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $0 or 0.00% of the Class A Shares'
average daily net assets. Such expenses were paid to reimburse the Distributor
for payments made to financial intermediaries for servicing Fund shareholders
and for administering the Class A Share Plans. For the fiscal period ended March
31, 1999, the Fund's aggregate expenses paid under the Plans for Class B Shares
were $0 or 0.00% of the Class B Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments: $0 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class B Shares of the Fund and $0 for fees paid to financial
intermediaries for servicing Class B shareholders and administering the Class B
Share Plans. For the fiscal period ended March 31, 1999, the Fund's aggregate
expenses paid under the Plans for Class C Shares were $0 or 0.00% of the Class C
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for the following payments: $0 for commissions and transaction fees
paid to financial intermediaries in respect of sales of Class C Shares of the
Fund and $0 for fees paid to financial intermediaries for servicing Class C
shareholders and administering the Class C Share Plans.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating
approximately $0, $0 and $0, respectively for these services. The transfer
agency prices are determined through negotiations with the Fund's Board of
Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-27
<PAGE> 317

the research efforts of the Adviser to the Fund and still must be analyzed and
reviewed by its staff, the receipt of research information is not expected to
reduce its expenses materially. The investment advisory fee is not reduced as a
result of the Adviser's receipt of such research services. Services provided may
include (a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; (b) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody). Research services furnished by firms through
which the Fund effects its securities transactions may be used by the Adviser in
servicing all of its advisory accounts; not all of such services may be used by
the Adviser in connection with the Fund. The Adviser also may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Fund, the Adviser or the Distributor and with brokerage firms
participating in the distribution of the Fund's shares if it reasonably believes
that the quality of execution and the commission are comparable to that
available from other qualified firms. Similarly, to the extent permitted by law
and subject to the same considerations on quality of execution and comparable
commission rates, the Adviser may direct an executing broker to pay a portion or
all of any commissions, concessions or discounts to a firm supplying research or
other services or to a firm participating in the distribution of the Fund's
shares.

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated
Brokers
-----------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999.......................... $2,601 $0 $0
Fiscal year ended June 30, 1998............................. $3,466 $0 $0
Fiscal year ended June 30, 1997............................. $1,300 $6 $0
Fiscal 1999 Percentages:
Commissions with affiliate to total commissions........... 0% 0%
Value of brokerage transactions with affiliate to total
transactions........................................... 0% 0%
</TABLE>

B-28
<PAGE> 318

During the fiscal period ended March 31, 1999, the Fund paid $2,182
brokerage commissions on transactions totaling $1,275,827 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

RETIREMENT PLANS

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

B-29
<PAGE> 319

Once enrolled in the ACH plan, a shareholder may terminate participation at any
time by writing Investor Services.

DIVIDEND DIVERSIFICATION

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGE PRIVILEGE

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

B-30
<PAGE> 320

REINSTATEMENT PRIVILEGE

REDEMPTION OF SHARES

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE
("CDSC-CLASS B AND C")

REDEMPTION UPON DEATH OR DISABILITY

B-31
<PAGE> 321

specifically adopt the balance of the Code's definition which pertains to
furnishing the Secretary of Treasury with such proof as he or she may require,
the Distributor will require satisfactory proof of death or disability before it
determines to waive the CDSC-Class B and C.

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

B-32
<PAGE> 322

REINVESTMENT OF REDEMPTION PROCEEDS

REDEMPTION BY ADVISER

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

TAXATION

FEDERAL INCOME TAXATION

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.

DISTRIBUTIONS

B-34
<PAGE> 324

SALE OF SHARES

CAPITAL GAINS RATES

NON-U.S. SHAREHOLDERS

B-35
<PAGE> 325

administration is subject to the primary supervision of a United States court
and which has one or more United States fiduciaries who have the authority to
control all substantial decisions of the trust (a "Non-U.S. Shareholder")
generally will be subject to withholding of United States federal income tax at
a 30% rate (or lower applicable treaty rate) on dividends from the Fund (other
than capital gain dividends) that are not "effectively connected" with a United
States trade or business carried on by such shareholder. Accordingly, investment
in the Fund is likely to be appropriate for a Non-U.S. Shareholder only if such
person can utilize a foreign tax credit or corresponding tax benefit in respect
of such United States withholding tax.

BACKUP WITHHOLDING

GENERAL

FUND PERFORMANCE

B-37
<PAGE> 327

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 the 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 other than with a professional representative. The Fund may
also be marketed on the internet.

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was -9.43% and (ii) the approximately three-year, three-month
period since December 27, 1995, the commencement of investment operations for
Class A Shares of the Fund, through March 31, 1999 was 15.62%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 60.53%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 70.32%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was -8.44% and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class B Shares of the Fund, through March 31, 1999 was 17.21%.

B-38
<PAGE> 328

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 70.32%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was -4.81%, and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class C Shares of the Fund, through March 31, 1999 was 17.74%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 70.31%.

OTHER INFORMATION

CUSTODY OF ASSETS

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-39
<PAGE> 329
REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of
Van Kampen Mid Cap Value Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Mid Cap Value Fund (the "Fund"), including the portfolio of investments,
as of March 31, 1999, and the related statement of operations for the nine-month
period ended March 31, 1999 and the year ended June 30, 1998, the statement of
changes in net assets for the nine-month period ended March 31, 1999, and for
each of the years in the two-year period ended June 30, 1998, 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.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Mid Cap Value Fund as of March 31, 1999, the results of its operations
for the nine-month period ended March 31, 1999 and the year ended June 30, 1998,
the changes in its net assets for the nine-month period ended March 31, 1999 and
for each of the years in the two-year period ended June 30, 1998, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

KPMG LLP

Chicago, Illinois
May 10, 1999

F-1
<PAGE> 330
VAN KAMPEN MID CAP VALUE FUND

PORTFOLIO OF INVESTMENTS
MARCH 31, 1999

Description Shares Market Value

Common Stocks 90.7%
Consumer Distribution 4.3%
Federated Department Stores, Inc. (a) 790 $ 31,699
Saks, Inc. (a) 1,500 39,000
------------
70,699
------------
Consumer Non-Durables 3.4%
Philip Morris Cos., Inc. 670 23,575
Whitman Corp. 1,850 31,797
------------
55,372
------------
Consumer Services 1.9%
Bell & Howell Co. (a) 1,090 31,951
------------
Energy 7.2%
Apache Corp. 1,000 26,063
Dynegy Inc. 3,000 42,187
Nabors Industries, Inc. (a) 500 9,094
Seagull Energy Corp. (a) 5,900 40,194
------------
117,538
------------
Finance 14.7%
Arden Realty, Inc. 1,200 26,700
Bank of Tokyo - Mitsubishi, Ltd. - ADR (Japan) 4,100 57,656
Chase Manhattan Corp. 480 39,030
Merrill Lynch & Co., Inc. 100 8,844
MONY Group Inc. 1,500 37,312
Washington Mutual, Inc. 1,000 40,875
XL Capital Ltd. - Class A 500 30,375
------------
240,792
------------
Healthcare 19.4%
Aetna, Inc. 450 37,350
Beckman Coulter, Inc. 800 35,200
Dura Pharmaceuticals, Inc. (a) 2,700 38,138
Oxford Health Plans, Inc. (a) 2,800 43,750
Pharmacia & Upjohn, Inc. 500 31,188
Schein Pharmaceutical, Inc. (a) 2,000 26,000
Teva Pharmaceutical Industries Ltd.
- ADR (Israel) 1,000 47,437
United HealthCare Corp. 1,100 57,887
------------
316,950
------------

See Notes to Financial Statements

F-2
<PAGE> 331
VAN KAMPEN MID CAP VALUE FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1999

Description Shares Market Value

Producer Manufacturing 7.9%
International Game Technology 1,800 $ 26,212
Koninklijke Philips Electronics N.V. -
N.Y. Registered Shares (Netherlands) 200 16,488
Minnesota Mining & Manufacturing Co. 600 42,450
Waste Management, Inc. 990 43,931
------------
129,081
------------
Raw Materials/Processing Industries 4.9%
Boise Cascade Corp. 1,300 41,925
Raychem Corp. 1,700 38,356
------------
80,281
------------
Technology 12.2%
Adaptec, Inc. (a) 800 18,250
Adobe Systems, Inc. 900 51,075
Alcatel SA - ADR (France) 200 4,563
First Data Corp. 1,000 42,750
QUALCOMM, Inc. (a) 200 24,875
Quantum Corp. (a) 800 14,400
SunGard Data Systems, Inc. (a) 1,100 44,000
------------
199,913
------------
Utilities 14.8%
GPU, Inc. 800 29,850
Illinova Corp. 1,000 21,188
NCR Corp. (a) 1,200 60,000
Niagara Mohawk Holdings Inc. (a) 5,200 69,875
Northeast Utilities (a) 2,400 33,300
Texas Utilities Co. 700 29,181
------------
243,394
------------

Total Investments 90.7% 1,485,971
(Cost $1,352,906)

Other Assets in Excess of Liabilities 9.3% 152,192
------------
Net Assets 100.0% $ 1,638,163
------------
(a) Non-income producing security as this stock currently does not
declare dividends.

ADR - American Depository Receipt.

See Notes to Financial Statements

F-3
<PAGE> 332
<TABLE>
<CAPTION>
VAN KAMPEN MID CAP VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
<S> <C>
ASSETS:

Total Investments (Cost $1,352,906) $ 1,485,971
Cash 151,260
Receivables:
Investments Sold 30,791
Expense Reimbursement From Adviser 15,964
Dividends 2,435
Fund Shares Sold 50
Unamortized Organizational Costs 14,102
Other 1,441
------------
Total Assets 1,702,014
------------
LIABILITIES:

Trustees' Deferred Compensation and Retirement Plans 37,208
Payable to Distributor and Affiliates 11,334
Audit Fees 8,310
Custody 2,815
Other Accrued Expenses 4,184
------------

Total Liabilities 63,851
------------

NET ASSETS $ 1,638,163
============

NET ASSETS CONSIST OF:
Capital $ 1,499,291
Net Unrealized Appreciation 133,065
Accumulated Net Realized Gain 32,837
Accumulated Net Investment Loss (27,030)
------------

NET ASSETS $ 1,638,163
============

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$1,428,063 and 110,306 shares of beneficial interest issued and outstanding) $ 12.95
Maximum sales charge (5.75%* of offering price) 0.79
------------

Maximum offering price to public $ 13.74
============

Class B Shares:
Net asset value and offering price per share (Based on net assets of $105,041
and 8,111 shares of beneficial interest issued and outstanding) $ 12.95
============

Class C Shares:
Net asset value and offering price per share (Based on net assets of $105,059
and 8,111 shares of beneficial interest issued and outstanding) $ 12.95
============

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

</TABLE>
See Notes to Financial Statements

F-4
<PAGE> 333

VAN KAMPEN MID CAP VALUE FUND

STATEMENT OF OPERATIONS
For the Nine Months Ended March 31, 1999
and the Year Ended June 30, 1998

<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1999 June 30, 1998
INVESTMENT INCOME:
<S> <C> <C>
Dividends $ 12,288 $ 15,205
--------- ---------

EXPENSES:
Accounting 33,927 29,582
Shareholder Reports 20,476 20,885
Trustees' Fees and Expenses 13,034 7,383
Custody 11,282 4,623
Shareholder Services 11,265 16,558
Audit 9,506 11,991
Investment Advisory Fee 8,855 12,163
Amortization of Organizational Costs 6,003 7,997
Legal 3,891 5,184
Other 6,019 9,548
--------- ---------
Total Expenses 124,258 125,914
Less: Fees Waived and Expenses Reimbursed ($8,855 and $97,204 respectively,
for the nine months ended March 31,
1999 and $12,163 and $90,382,
respectively, for the year ended
June 30, 1998)
106,059 102,545
Credits Earned on Cash Balances 2,850 2,286
--------- ---------
Net Expenses 15,349 21,083
--------- ---------

NET INVESTMENT LOSS $ (3,061) $ (5,878)
========= =========

REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain $ 34,570 $ 240,590
--------- ---------

Unrealized Appreciation/Depreciation:
Beginning of the Period 168,091 206,246
End of the Period 133,065 168,091
--------- ---------
Net Unrealized Depreciation During the Period (35,026) (38,155)
--------- ---------

NET REALIZED AND UNREALIZED GAIN/LOSS $ (456) $ 202,435
========= =========

NET INCREASE/DECREASE IN NET ASSETS FROM OPERATIONS $ (3,517) $ 196,557
========= =========
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 334
VAN KAMPEN MID CAP VALUE FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Nine Months Ended March 31, 1999
and the Years Ended June 30, 1998 and 1997

<TABLE>
<CAPTION>
Nine Months
Ended Year Ended Year Ended
March 31, 1999 June 30, 1998 June 30, 1997
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss $ (3,061) $ (5,878) $ (1,438)
Net Realized Gain 34,570 240,590 64,043
Net Unrealized Appreciation/Depreciation During the Period (35,026) (38,155) 185,690
----------- ----------- -----------

Change in Net Assets from Operations (3,517) 196,557 248,295
----------- ----------- -----------

Distributions in Excess of Net Investment Income:
Class A Shares (2,858) (9,412) (174)
Class B Shares (210) (666) (111)
Class C Shares (210) (666) (111)
----------- ----------- -----------
(3,278) (10,744) (396)
----------- ----------- -----------

Distributions from and in Excess of Net Realized Gain:
Class A Shares (73,579) (192,785) (6,330)
Class B Shares (5,411) (13,647) (4,004)
Class C Shares (5,411) (13,647) (4,004)
----------- ----------- -----------
(84,401) (220,079) (14,338)
----------- ----------- -----------

Total Distributions (87,679) (230,823) (14,734)
----------- ----------- -----------

NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES (91,196) (34,266) 233,561
----------- ----------- -----------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold 350 1,196 1,000,000
Net Asset Value of Shares Issued Through Dividend Reinvestment 87,679 230,823 2,074
Cost of Capital Stock Repurchased -0- (57,633) -0-
----------- ----------- -----------

NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 88,029 174,386 1,002,074
----------- ----------- -----------

TOTAL INCREASE/DECREASE IN NET ASSETS (3,167) 140,120 1,235,635

NET ASSETS:
Beginning of the Period 1,641,330 1,501,210 265,575
----------- ----------- -----------

End of the Period (Including accumulated net investment
loss of $27,030, $20,691 and $4,069 respectively) $ 1,638,163 $ 1,641,330 $ 1,501,210
=========== =========== ===========
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 335
VAN KAMPEN MID CAP VALUE FUND

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

<TABLE>
<CAPTION>
December 27,
1995
(Commencement
Nine Months of Investment
Ended Year Ended Year Ended Operations)
March 31, 1999 June 30, 1998 June 30, 1997 to June 30,
CLASS A SHARES 1996

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 13.719 $ 14.321 $ 11.409 $ 10.000
-------------- -------------- -------------- ------------

Net Investment Income/Loss (0.013) (0.032) (0.014) 0.018
Net Realized and Unrealized Gain/Loss (0.027) 1.633 3.559 1.391
-------------- -------------- -------------- ------------

Total from Investment Operations (0.040) 1.601 3.545 1.409
-------------- -------------- -------------- ------------

Less:
Distributions in Excess of Net Investment Income 0.027 0.103 0.017 -0-
Distributions from Net Realized Gain 0.706 2.100 0.616 -0-
-------------- -------------- -------------- ------------
Total Distributions 0.733 2.203 0.633 -0-
-------------- -------------- -------------- ------------

Net Asset Value, End of the Period $ 12.946 $ 13.719 $ 14.321 $ 11.409
============== ============== ============== ============

Total Return * (a) (0.19)%** 13.06% 32.39% 14.00%**

Net Assets at End of the Period (In thousands) $ 1,428.1 $ 1,430.7 $ 1,315.0 $ 117.2

Ratio of Expenses to Average Net Assets* (b) 1.54% 1.44% 1.48% 1.38%

Ratio of Net Investment Income/Loss to Average Net Assets* (0.26)% (0.36)% (0.31)% 0.38%

Portfolio Turnover 70%** 109% 85% 41%**

*If certain expenses 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 (b) 10.52% 7.76% 17.19% 17.57%

Ratio of Net Investment Income/Loss to Average Net Assets (9.24)% (6.69)% (16.01)% (15.81)%
</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 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 .24%, .14%, .18% and .08% for the
periods ended on March 31, 1999, June 30, 1998, June 30, 1997 and June 30,
1996 respectively.

See Notes to Financial Statements

F-7
<PAGE> 336
VAN KAMPEN MID CAP VALUE FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Nine Months Investment
Ended Year Ended Year Ended Operations)
March 31, June 30, June 30, to June 30,
CLASS B SHARES 1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 13.724 $ 14.327 $ 11.410 $ 10.000
------------ ------------ ----------- -----------

Net Investment Income/Loss (0.014) (0.027) (0.017) 0.024
Net Realized and Unrealized Gain/Loss (0.027) 1.626 3.567 1.386
------------ ------------ ----------- -----------

Total from Investment Operations (0.041) 1.599 3.550 1.410
------------ ------------ ----------- -----------

Less:
Distributions in Excess of Net Investment Income 0.027 0.102 0.017 -0-
Distributions from Net Realized Gain 0.706 2.100 0.616 -0-
------------ ------------ ----------- -----------
Total Distributions 0.733 2.202 0.633 -0-
------------ ------------ ----------- -----------

Net Asset Value, End of the Period $ 12.950 $ 13.724 $ 14.327 $ 11.410
============ ============ =========== ===========

Total Return * (a) (0.19)%** 12.98% 32.48% 14.00%**

Net Assets at End of the Period (In thousands) $ 105.0 $ 105.3 $ 93.1 $ 74.2

Ratio of Expenses to Average Net Assets* (b) 1.54% 1.44% 1.48% 1.38%

Ratio of Net Investment Income/Loss to Average Net Assets* (0.26)% (0.36)% (0.14)% 0.44%

Portfolio Turnover 70%** 109% 85% 41%**

*If certain expenses 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 (b) 10.52% 7.76% 17.19% 17.57%

Ratio of Net Investment Income/Loss to Average Net Assets (9.24)% (6.69)% (15.79)% (15.75)%
</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 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 .24%, .14%, .18% and .08% for the
periods ended on March 31, 1999, June 30, 1998, June 30, 1997 and June 30,
1996 respectively.

See Notes to Financial Statements

F-8
<PAGE> 337
VAN KAMPEN MID CAP VALUE FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.

<TABLE>
<CAPTION>
December 27, 1995
(Commencement
Nine Months of Investment
Ended Year Ended Year Ended Operations)
March 31, June 30, June 30, to June 30,
CLASS C SHARES 1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 13.726 $ 14.327 $ 11.410 $ 10.000
------------ ------------ ----------- -----------

Net Investment Income/Loss (0.014) (0.026) (0.017) 0.024
Net Realized and Unrealized Gain/Loss (0.026) 1.627 3.567 1.386
------------ ------------ ----------- -----------
Total from Investment Operations (0.040) 1.601 3.550 1.410
------------ ------------ ----------- -----------

Net Asset Value, End of the Period $ 12.953 $ 13.726 $ 14.327 $ 11.410
============ ============ =========== ===========

Total Return * (a) (0.26)%** 13.06% 32.48% 14.00%**

Net Assets at End of the Period (In thousands) $ 105.1 $ 105.3 $ 93.1 $ 74.2

Ratio of Expenses to Average Net Assets* (b) 1.54% 1.44% 1.48% 1.38%

Ratio of Net Investment Income/Loss to Average Net Assets* (0.26)% (0.36)% (0.14)% 0.44%

Portfolio Turnover 70%** 109% 85% 41%**

*If certain expenses 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 (b) 10.52% 7.76% 17.19% 17.57%

Ratio of Net Investment Income/Loss to Average Net Assets (9.24)% (6.68)% (15.79)% (15.75)%
</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 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 .24%, .14%, .18% and .08% for the
periods ended on March 31, 1999, June 30, 1998, June 30, 1997 and June 30,
1996 respectively.

See Notes to Financial Statements

F-9
<PAGE> 338
VAN KAMPEN MID CAP VALUE FUND

Notes to Financial Statements
March 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Mid Cap Value Fund (the "Fund") is organized as a series of Van
Kampen Equity Trust (the "Trust"), a Delaware business trust, and is registered
as a diversified open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
long-term growth of capital by investing primarily in a diversified portfolio of
common stocks and other equity securities of medium and larger capitalization
companies. The Fund commenced investment operations on December 27, 1995, with
three classes of common shares, Class A, Class B and Class C. In July 1998, the
Fund's Board of Trustees approved a change in the Fund's fiscal year end from
June 30 to March 31. As a result, this financial report reflects the nine-month
period commencing on July 1, 1998, and ending on March 31, 1999.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

A. SECURITY VALUATION - Investments in securities listed on a securities
exchange are valued at their sales price as of the close of such securities
exchange. Investments in securities not listed on a securities exchange are
valued based on the mean of the bid and asked prices 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 date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Investment Advisory Corp. Inc. (the "Adviser")
or its affiliates, the daily aggregate of which is invested in repurchase
agreements. Repurchase agreements are fully collateralized by the underlying
debt security. The Fund will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of the custodian
bank. The seller is required to maintain the value of the underlying security at
not less than the repurchase proceeds due the fund.

C. INCOME AND EXPENSES - Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. 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 will 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.

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

G. EXPENSE REDUCTIONS - During the nine months ended March 31, 1999 and the year
ended June 30, 1998, respectively, the Fund's custody fee was reduced by $2,850
and $2,286, respectively, as a result of credits earned on overnight cash
balances.

F-10
<PAGE> 339
VAN KAMPEN MID CAP VALUE FUND

Notes to Financial Statements (Continued)
March 31, 1999

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:

Average Net Assets % Per Annum
- --------------------------- ----------------
First $500 million .75%
Next $500 million .70%
Over $1 billion .65%

For the nine months ended March 31, 1999 and the year ended June 30,
1998 the Adviser voluntarily capped the expenses of the Fund at 1.30% of average
net assets, prior to any credits earned on overnight cash balances. As such, the
Adviser waived $8,855 and $12,163, respectively, of its investment advisory fees
and assumed $97,204 and $90,382, respectively, of the Fund's other expenses.
This waiver is voluntary in nature and can be discontinued at the Adviser's
discretion.
For the nine months ended March 31, 1999 and the year ended June 30,
1998, respectively, the Fund incurred expenses of approximately $3,900 and
$5,200, respectively, 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. All of this cost has been assumed by Van Kampen.
For the nine months ended March 31, 1999 and the year ended June 30,
1998, respectively, the Fund incurred expenses of approximately $33,900 and
$29,600, respectively, representing Van Kampen's cost of providing accounting
services to the Fund. All of this cost has been assumed by Van Kampen.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the
Adviser, serves as the shareholder servicing agent of the Fund. For the nine
months ended March 31, 1999 and the year ended June 30, 1998, respectively, the
Fund recognized expenses of approximately $10,800 and $15,000, respectively. All
of this cost has been assumed by Van Kampen. Transfer agency fees are determined
through negotiations with the Fund's Board of Trustees and are based on
competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and
directors of Van Kampen. The Fund does not compensate its officers or trustees
who are officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

At March 31, 1999, Van Kampen owned 110,271 shares of Class A, 8,111
shares of Class B, and 8,111 shares of Class C.

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 March 31, 1999, capital aggregated $1,328,351, $86,018 and $84,922
for Classes A, B and C, respectively. For the nine months ended March 31, 1999,
transactions were as follows:

Shares Value
--------- -----------
Sales:
Class A 26 $ 350
--------- -----------
Total Sales 26 $ 350
========= ===========
Dividend Reinvestment:
Class A 5,995 $ 76,436
Class B 441 5,621
Class C 441 5,622
--------- -----------
Total Dividend Reinvestment 6,877 $ 87,679
========= ===========

At June 30, 1998, capital aggregated $1,251,565, $80,397 and $79,300
for Classes A, B and C, respectively. For the twelve months ended June 30, 1998,
transactions were as follows:

Shares Value
--------- -----------
Sales:
Class A 7 $ 100
Class B 0 1,096
--------- -----------
Total Sales 7 $ 1,196
========= ===========

Dividend Reinvestment:
Class A 16,533 $202,198
Class B 1,170 14,313
Class C 1,170 14,312
--------- -----------
Total Dividend Reinvestment 18,873 $230,823
========= ===========
Shares Repurchased:
Class A (4,076) $(57,633)
========= ===========

F-11
<PAGE> 340
VAN KAMPEN MID CAP VALUE FUND

Notes to Financial Statements (Continued)
March 31, 1999

At June 30, 1997, capital aggregated $1,106,900, $64,988 and $64,988
for Classes A, B, and C respectively. For the year ended June 30, 1997,
transactions were as follows:

Shares Value
--------- -----------
Sales:
Class A 81,367 $1,000,000
========= ===========
Dividend Reinvestment:
Class A 177 $2,074
========= ===========

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

Contingent Deferred
Sales Charge
Value Year of Redemption Class B Shares Class 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

4. INVESTMENT TRANSACTIONS

For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments were $1,048,821
and $1,141,341 respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds of sales of investments, excluding short-term investments
were $1,697,057 and $1,565,249 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.
The Fund's net assets are subject to annual fees under the Plans of up
to .25% for Class A shares and 1.00% each for Class B and Class C shares. No
fees related to the Plans have been accrued by the Fund, as the Fund is
currently owned solely by affiliated persons.

F-12
<PAGE> 341

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
GREAT AMERICAN COMPANIES FUND

Van Kampen Great American Companies Fund (the "Fund") is a mutual fund with
an investment objective to seek long-term growth of capital. The Fund's
management seeks to achieve the investment objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of U.S.
companies that, in the Fund's investment adviser's view, have achieved or will
achieve leading and sustainable market positions within their U.S. industrial
sectors.

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-4
Strategic Transactions...................................... B-8
Investment Restrictions..................................... B-16
Trustees and Officers....................................... B-18
Investment Advisory Agreement............................... B-29
Other Agreements............................................ B-30
Distribution and Service.................................... B-31
Transfer Agent.............................................. B-35
Portfolio Transactions and Brokerage Allocation............. B-35
Shareholder Services........................................ B-37
Redemption of Shares........................................ B-40
Contingent Deferred Sales Charge-Class A.................... B-40
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-41
Taxation.................................................... B-43
Fund Performance............................................ B-48
Other Information........................................... B-51
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-11
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 342

GENERAL INFORMATION

The Fund was originally organized as a series of the Trust under the name
Van Kampen American Capital Great American Companies Fund on September 7, 1995.
On July 14, 1998, the Fund adopted its current name.

B-2
<PAGE> 343

expenses and has exclusive voting rights with respect to its distribution fee.
Shares of the Trust entitle their holders to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series and separate votes are taken by each class of a series on matters
affecting an individual class of such series. For example, a change in
investment policy for a series would be voted upon by shareholders of only the
series involved and a change in the distribution fee for a class of a series
would be voted upon by shareholders of only the class of such series involved.
Except as otherwise described in the Prospectus or herein, shares do not have
cumulative voting rights, preemptive rights or any conversion, subscription or
exchange rights.

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- -------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Investments Inc.................. 113,162.49 A 100.00%
Attn: Dominick Cogliandro 8,305.17 B 100.00%
One Chase Manhattan Plaza 8,305.17 C 100.00%
37th Floor
New York, NY 10005-1401
</TABLE>

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

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

B-3
<PAGE> 344

INVESTMENT OBJECTIVE AND POLICIES

RISKS OF INVESTING IN SECURITIES OF FOREIGN ISSUERS

The Fund may invest up to 5% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign currency exchange rates, political and
economic developments (including war or other instability, expropriation of
assets, nationalization and confiscatory taxation), the imposition of foreign
exchange limitations (including currency blockage), withholding taxes on income
or capital transactions or other restrictions, higher transaction costs
(including higher brokerage, custodial and settlement costs and currency
translation costs) and difficulty in enforcing contractual obligations or taking
judicial action. In addition, there often is less publicly available information
about many foreign issuers, and issuers of foreign securities are subject to
different, often less comprehensive, auditing, accounting, financial reporting
and disclosure requirements than domestic issuers. Such securities may be less
liquid than the securities of domestic issuers. Such securities may also be
subject to greater fluctuations in price than securities of domestic issuers.
There is generally less government regulation of stock exchanges, brokers and
listed companies abroad than in the U. S., and, with respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation, or
diplomatic developments which could affect investment in those countries.
Because there is usually less supervision and governmental regulation of
exchanges, brokers and dealers than there is in the U.S., the Fund may
experience settlement difficulties or delays not usually encountered in the U.S.
The risks of foreign investments should be considered carefully by an investor
in the Fund.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. A repurchase agreement
is a short-term investment in which the purchaser (i.e., the Fund) acquires
ownership of a security and the seller agrees to repurchase the obligation at a
future time and set price, thereby determining the yield during the holding
period. It is the current policy of the Fund not to invest at the time of
purchase more than 20% of its total assets in securities subject to repurchase
agreements. Repurchase agreements involve certain risks in the event of default
by the other party. The Fund may enter into repurchase agreements with banks or
broker-dealers deemed to be creditworthy by the Adviser under guidelines
approved by the Trustees. The Fund will not invest in repurchase agreements
maturing in more than seven days if any such investment, together with any other
illiquid securities held by the Fund, would exceed the Fund's limitation on
illiquid securities described below. In the event of the bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses including: (a)
possible decline in the value of the underlying security during the period while
the

B-4
<PAGE> 345

Fund seeks to enforce its rights thereto; (b) possible lack of access to income
on the underlying security during this period; and (c) expenses of enforcing its
rights.

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund
also may borrow money in an amount up to 5% of the Fund's total assets for
temporary purposes. The Fund has no current intention to borrow money other than
for temporary purposes.

B-5
<PAGE> 346

LENDING OF SECURITIES

B-6
<PAGE> 347

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

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.

PORTFOLIO TURNOVER

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of

B-7
<PAGE> 348

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

STRATEGIC TRANSACTIONS

B-8
<PAGE> 349

B-9
<PAGE> 350

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.

B-10
<PAGE> 351

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 generally are 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. The sale of a futures contract
creates a firm obligation by the Fund, as seller, to deliver to the buyer the
specific type of financial instrument called for in the contract at a specific
future time for a specified price (or, with respect to index futures and
Eurodollar instruments, the net cash amount). Options on futures contracts are
similar to options on securities except that an

B-11
<PAGE> 352

option on a futures contract gives the purchaser the right in return for the
premium paid to assume a position in a futures contract and obligates the seller
to deliver such option.

B-12
<PAGE> 353

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

B-13
<PAGE> 354

B-14
<PAGE> 355

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. 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.

B-15
<PAGE> 356

INVESTMENT RESTRICTIONS

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. 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 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.

B-16
<PAGE> 357

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.

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.

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.

B-17
<PAGE> 358

TRUSTEES AND OFFICERS

TRUSTEES

B-18
<PAGE> 359

B-19
<PAGE> 360

B-20
<PAGE> 361

<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,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other open-end and closed-end funds advised
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.

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

B-21
<PAGE> 362

OFFICERS

B-22
<PAGE> 363

B-23
<PAGE> 364

B-24
<PAGE> 365

B-25
<PAGE> 366

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

COMPENSATION TABLE

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table.

B-26
<PAGE> 367

Trust are shown in Table C. The deferred compensation plan is described above
the Compensation Table.

As of, July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

B-27
<PAGE> 368

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

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

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0 $ 321
Great American Companies
Fund.................. 3/31 801 0 801 401 801 601 401 801 0 200
Growth Fund............. 3/31 951 0 951 476 951 751 476 951 0 250
Mid Cap Value Fund...... 3/31 801 0 801 401 801 601 401 801 0 200
Prospector Fund......... 3/31 802 0 802 401 802 602 401 802 0 200
Small Cap Value Fund.... 3/31 0 0 0 0 0 0 0 0 0 0
Utility Fund............ 3/31 974 0 974 487 974 774 487 974 0 259
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0 $1,430
</TABLE>

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

B-28
<PAGE> 369

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund...... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund........................ 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund.................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund............... 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund....................... 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>

INVESTMENT ADVISORY AGREEMENT

B-29
<PAGE> 370

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.70% on the first $500 million of
average daily net assets; 0.65% on the next $500 million of average daily net
assets; and 0.60% on the average daily net assets over $1 billion.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, the Adviser received approximately $0, $0 and $0,
respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the respective number of classes of securities issued
per fund and the remaining 75% of such costs based proportionally on their
respective net assets per fund.

B-30
<PAGE> 371

DISTRIBUTION AND SERVICE

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999..................... $0 $0
Fiscal year ended June 30, 1998........................ $0 $0
Fiscal year ended June 30, 1997........................ $0 $0
</TABLE>

B-31
<PAGE> 372

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

CLASS A SHARES SALES CHARGE TABLE

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

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

B-32
<PAGE> 373

B-33
<PAGE> 374

B-34
<PAGE> 375

Plans. For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class C Shares were $0 or 0% of the Class C Shares'
average daily net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $0 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class C Shares of the Fund and
$0 for fees paid to financial intermediaries for servicing Class C shareholders
and administering the Class C Share Plans.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating
approximately $0, $0 and $0, respectively for these services. The transfer
agency prices are determined through negotiations with the Fund's Board of
Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-35
<PAGE> 376

transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund. The Adviser also may place portfolio transactions, to the extent
permitted by law, with brokerage firms affiliated with the Fund, the Adviser or
the Distributor and with brokerage firms participating in the distribution of
the Fund's shares if it reasonably believes that the quality of execution and
the commission are comparable to that available from other qualified firms.
Similarly, to the extent permitted by law and subject to the same considerations
on quality of execution and comparable commission rates, the Adviser may direct
an executing broker to pay a portion or all of any commissions, concessions or
discounts to a firm supplying research or other services or to a firm
participating in the distribution of the Fund's shares.

B-36
<PAGE> 377

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated
Brokers
-----------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999................. $ 2,402 $ 0 $0
Fiscal year ended June 30, 1998.................... $ 3,164 $ 0 $0
Fiscal year ended June 30, 1997.................... $ 1,117 $116 $0
Fiscal 1999 Percentages:
Commissions with affiliate to total
commissions................................... 0% 0%
Value of brokerage transactions with affiliate to
total
transactions.................................. 0% 0%
</TABLE>

During the fiscal period ended March 31, 1999, the Fund paid $1,105 in
brokerage commissions on transactions totaling $1,127,727 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

B-37
<PAGE> 378

RETIREMENT PLANS

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

DIVIDEND DIVERSIFICATION

B-38
<PAGE> 379

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGE PRIVILEGE

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

REINSTATEMENT PRIVILEGE

B-39
<PAGE> 380

REDEMPTION OF SHARES

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

B-40
<PAGE> 381

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC-CLASS B
AND C")

REDEMPTION UPON DEATH OR DISABILITY

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

B-41
<PAGE> 382

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

REINVESTMENT OF REDEMPTION PROCEEDS

REDEMPTION BY ADVISER

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

B-42
<PAGE> 383

TAXATION

FEDERAL INCOME TAXATION

B-43
<PAGE> 384

elections in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.

B-44
<PAGE> 385

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

DISTRIBUTIONS

B-45
<PAGE> 386

eliminated, all or a portion of the dividends declared by the Fund may be
treated for federal income tax purposes as a return of capital or, in some
circumstances, as capital gain. Generally, a shareholder's tax basis in Fund
shares will be reduced to the extent that an amount distributed to such
shareholder is treated as a return of capital.

SALE OF SHARES

CAPITAL GAINS RATES

NON-U.S. SHAREHOLDERS

B-46
<PAGE> 387

nonetheless be subject to backup withholding on capital gain dividends and gross
proceeds paid to them upon the sale of their shares. See "Backup Withholding"
below.

BACKUP WITHHOLDING

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

B-47
<PAGE> 388

consequences of purchasing, holding and disposing of shares, as well as the
effects of state, local and foreign tax law and any proposed tax law changes.

FUND PERFORMANCE

From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund.

B-48
<PAGE> 389

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

B-49
<PAGE> 390

(2) illustrate in graph or chart form, or otherwise, the benefits of dollar cost
averaging by comparing investments made pursuant to a systematic investment plan
to investments made in a rising market; (3) illustrate allocations among
different types of mutual funds for investors at different stages of their
lives; and (4) in reports or other communications to shareholders or in
advertising material, illustrate the benefits of compounding at various assumed
rates of return.

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was 16.79% and (ii) the approximately three-year, three-month
period since December 27, 1995, the commencement of investment operations for
Class A Shares of the Fund, through March 31, 1999 was 27.59%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 121.33%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 134.83%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 18.98% and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class B Shares of the Fund, through March 31, 1999 was 29.53%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 134.97%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 22.90%, and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class C Shares of the Fund, through March 31, 1999 was 29.96%.

B-50
<PAGE> 391

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 134.97%.

OTHER INFORMATION

CUSTODY OF ASSETS

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-51
<PAGE> 392

Report of Independent Accountants

The Board of Trustees and Shareholders of
Van Kampen Great American Companies Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Great American Companies Fund (the "Fund"), including the portfolio
of investments, as of March 31, 1999, and the related statement of
operations for the nine-month period ended March 31, 1999 and the year
ended June 30, 1998, the statement of changes in net assets for the
nine-month period ended March 31, 1999 and for each of the years in the
two-year period ended June 30, 1998, 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 March 31, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Van Kampen Great American Companies Fund as of March 31, 1999, the
results of its operations for the nine-month period ended March 31, 1999
and the year ended June 30, 1998, the changes in its net assets for the
nine-month period ended March 31, 1999 and for each of the years in the
two-year period ended June 30, 1998, and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles.

KPMG LLP

Chicago, Illinois
May 10, 1999

F-1
<PAGE> 393

Van Kampen Great American Companies Fund

Portfolio of Investments
March 31, 1999

Description Shares Market Value

Common Stocks 96.9%
Consumer Distribution 12.6%
Dayton Hudson Corp. 400 $ 26,650
Home Depot, Inc. 500 31,125
Kroger Co. (a) 400 23,950
Lowe's Cos., Inc. 800 48,400
Safeway, Inc. (a) 500 25,655
TJX Cos., Inc. 1,000 34,000
Tricon Global Restaurants, Inc. (a) 600 42,150
Wal-Mart Stores, Inc. 500 46,094
--------
278,024
--------

Consumer Durables 1.5%
Ford Motor Co. 600 34,050
--------

Consumer Non-Durables 2.8%
Anheuser Busch Cos., Inc. 500 38,094
Clorox Co. 200 23,438
--------
61,532
--------

Consumer Services 13.4%
Brinker International, Inc. (a) 600 15,488
CBS Corp. 900 36,844
Chancellor Media Corp., Class A (a) 200 9,425
Comcast Corp., Class A 300 18,881
Cox Communications, Inc., Class A (a) 600 45,375
Fox Entertainment Group, Inc., Class A (a) 1,000 27,125
Omnicom Group, Inc. 700 55,956
Time Warner, Inc. 800 56,850
Univision Communications, Inc. (a) 600 30,000
--------
295,944
--------

Energy 1.9%
Enron Corp. 600 38,550
Halliburton Co. 100 3,850
--------
42,400
--------

See Notes to Financial Statements

F-2
<PAGE> 394

Van Kampen Great American Companies Fund

Portfolio of Investments (Continued)
March 31, 1999

Description Shares Market Value

Finance 12.5%
American General Corp. 300 $ 21,150
American International Group, Inc. 200 24,125
Chase Manhattan Corp. 300 24,394
Citigroup, Inc. 350 22,356
Equitable Cos., Inc. 400 28,000
Fifth Third Bancorp 100 6,594
Firstar Corp. 300 26,850
J.P. Morgan & Co., Inc. 200 24,675
Marsh & McLennan Cos., Inc. 300 22,256
Mellon Bank Corp. 100 7,038
Merrill Lynch & Co., Inc. 200 17,688
PNC Bank Corp. 400 22,225
Providian Financial Corp. 200 22,000
State Street Corp. 100 8,219
--------
277,570
--------

Healthcare 16.3%
Abbott Laboratories, Inc. 600 28,088
American Home Products Corp. 500 32,625
Amgen, Inc. (a) 800 59,900
Baxter International, Inc. 250 16,500
Bristol-Myers Squibb Co. 600 38,588
Cardinal Health, Inc. 300 19,800
Eli Lilly & Co. 400 33,950
Guidant Corp. 400 24,200
Johnson & Johnson 200 18,738
Pfizer, Inc. 200 27,750
Schering Plough Corp. 600 33,188
Warner Lambert Co. 400 26,475
--------
359,802
--------

Producer Manufacturing 3.9%
Republic Services, Inc., Class A (a) 700 11,331
Tyco International, Ltd. 350 25,113
United Technologies Corp. 200 27,088
Waste Management, Inc. 500 22,188
--------
85,720
--------

See Notes to Financial Statements

F-3
<PAGE> 395

Van Kampen Great American Companies Fund

Portfolio of Investments (Continued)
March 31, 1999

Description Shares Market Value

Raw Materials/Processing Industries 1.6%
Georgia Pacific Group 300 $ 22,275
Temple Inland, Inc. 200 12,550
----------
34,825
----------

Technology 24.9%
America Online, Inc. (a) 1,220 178,120
Applied Materials, Inc. (a) 300 18,506
Ascend Communications, Inc. (a) 300 25,106
BMC Software, Inc. (a) 400 14,825
Cisco Systems, Inc. (a) 450 49,303
Citrix Systems, Inc. (a) 600 22,875
Compuware Corp. (a) 800 19,100
EMC Corp. (a) 500 63,875
Intel Corp. 350 41,606
International Business Machines Corp. 150 26,588
Microsoft Corp. (a) 600 53,775
Oracle Corp. (a) 650 17,144
Texas Instruments, Inc. 200 19,850
----------
550,673
----------

Transportation 1.0%
Kansas City Southern Industries, Inc. 400 22,800
----------

Utilities 4.5%
ALLTEL Corp. 500 31,188
AT & T Corp. 200 15,963
MCI Worldcom, Inc. (a) 300 26,569
SBC Communications, Inc. 550 25,919
----------
99,639
----------

Total Investments 96.9%
(Cost $1,454,274) 2,142,979
Other Assets in Excess of Liabilities 3.1% 68,621
----------
Net Assets 100.0% $2,211,600
==========

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

See Notes to Financial Statements

F-4
<PAGE> 396

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999

ASSETS:

Total Investments (Cost $1,454,274) $2,142,979
Cash 96,366
Receivables:
Investments Sold 56,864
Expense Reimbursement from Adviser 16,194
Dividends 1,132
Unamortized Organizational Costs 14,102
Other 1,129
-----------
Total Assets 2,328,766
-----------
LIABILITIES:

Payable for Investments Purchased 49,113
Trustees' Deferred Compensation and Retirement Plans 37,585
Accrued Expenses 17,469
Distributor and Affiliates 12,999
-----------
Total Liabilities 117,166
-----------
NET ASSETS $2,211,600
===========

NET ASSETS CONSIST OF:
Capital $1,590,553
Net Unrealized Appreciation 688,705
Accumulated Net Investment Loss (32,090)
Accumulated Net Realized Loss (35,568)
-----------
NET ASSETS $2,211,600
===========

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $1,928,494 and 113,163 shares of beneficial interest
issued and outstanding)
$17.04
Maximum sales charge (5.75%* of offering price) 1.04
===========
Maximum offering price to public $18.08
===========
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $141,546 and 8,305 shares of beneficial interest
issued and outstanding)
$17.04
===========
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $141,560 and 8,305 shares of beneficial interest
issued and outstanding)
$17.05
===========
* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

F-5
<PAGE> 397

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

STATEMENT OF OPERATIONS
For the Nine Months Ended March 31, 1999, and
the Year Ended June 30, 1998

Nine Months Ended Year Ended
March 31, 1999 June 30, 1998
--------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 9,409 $ 16,979
--------------- ------------

EXPENSES:

Accounting 33,776 28,709
Shareholder Reports 20,176 25,938
Trustees' Fees and Expenses 13,289 9,477
Shareholder Services 11,702 15,259
Custody 10,443 7,307
Investment Advisory Fee 9,771 11,450
Audit 9,506 11,992
Amortization of Organizational Costs 6,003 7,997
Legal 3,963 9,020
Other 5,477 10,194
--------------- ------------

Total Expenses 124,106 137,343
Less: Fees Waived and Expenses
Reimbursed ($9,771 and $95,161, 104,932 112,756
respectively, for the nine months
ended 3/31/99 and $11,450 and
$101,306, respectively, for the
year ended 6/30/98)
Credits Earned on Cash Balances 1,721 4,169
--------------- ------------

Net Expenses 17,453 20,418
--------------- ------------

NET INVESTMENT LOSS $ (8,044) $ (3,439)
=============== ============
REALIZED AND UNREALIZED GAIN/LOSS:

Net Realized Gain/Loss $ (34,592) $ 320,602
--------------- ------------

Unrealized Appreciation:
Beginning of the Period 301,129 198,127

End of the Period 688,705 301,129
--------------- ------------

Net Unrealized Appreciation During the Period 387,576 103,002
--------------- ------------

NET REALIZED AND UNREALIZED GAIN $ 352,984 $ 423,604
=============== ============

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 344,940 $ 420,165
=============== ============
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 398

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Nine Months Ended March 31, 1999, and
the Years Ended June 30, 1998 and 1997

<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
March 31, 1999 June 30, 1998 June 30, 1997
--------------------- ------------------ ---------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:

Operations:
Net Investment Loss $ (8,044) $ (3,439) $ (369)
Net Realized Gain/Loss (34,592) 320,602 56,138
Net Unrealized Appreciation During the Period 387,576 103,002 176,652
-------------- --------------- --------------
Change in Net Assets from Operations 344,940 420,165 232,421
-------------- --------------- --------------
Distributions from and in Excess of Net Investment Income:

Class A Shares (2,823) (12,532) (133)
Class B Shares (207) (920) (123)
Class C Shares (207) (920) (123)
-------------- --------------- --------------
(3,237) (14,372) (379)
-------------- --------------- --------------
Distributions from Net Realized Gain:

Class A Shares (171,322) (154,061) (6,296)
Class B Shares (12,574) (11,306) (5,847)
Class C Shares (12,574) (11,306) (5,847)
-------------- --------------- --------------
(196,470) (176,673) (17,990)
-------------- --------------- --------------
Total Distributions (199,707) (191,045) (18,369)
-------------- --------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES 145,233 229,120 214,052
-------------- --------------- --------------
FROM CAPITAL TRANSACTIONS:

Proceeds from Shares Sold 0 0 1,005,024
Net Asset Value of Shares Issued Through
Dividend Reinvestment 199,707 191,045 0
Cost of Shares Repurchased 0 (5,023) 0
-------------- --------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 199,707 186,022 1,005,024
-------------- --------------- --------------
TOTAL INCREASE IN NET ASSETS 344,940 415,142 1,219,076

NET ASSETS:
Beginning of the Period 1,866,660 1,451,518 232,442
-------------- --------------- --------------
End of the Period (Including accumulated Net Investment
Loss of $32,091, $20,810 and $2,999, respectively) $ 2,211,600 $ 1,866,660 $ 1,451,518
============== =============== ==============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 399

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

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

December 27, 1995
(Commencement
Year Ended June 30, of Investment
Nine Months Ended ---------------------- Operations) to
Class A Shares March 31, 1999 1998 1997 June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 16.128 $ 14.235 $ 11.622 $ 10.000
------------ ---------- ----------- ------------
Net Investment Income/Loss (0.040) (0.009) (0.003) 0.019
Net Realized and Unrealized Gain 2.680 3.784 3.535 1.603
------------ ---------- ----------- ------------
Total from Investment Operations 2.640 3.775 3.532 1.622

Less:
Distributions from and in Excess
of Net Investment Income 0.028 0.142 0.019 ---
Distributions from Net Realized Gain 1.698 1.740 0.900 ---
------------ ---------- ----------- ------------
Total Distributions 1.726 1.882 0.919 ---
------------ ---------- ----------- ------------
Net Asset Value, End of the Period $ 17.042 $ 16.128 $ 14.235 $ 11.622
============ ========== =========== ============

Total Return * (a) 18.45%** 29.08% 32.29% 16.10%**

Net Assets at End of the Period (In thousands) $ 1,928.5 $ 1,627.7 $ 1,260.8 $ 81.4

Ratio of Expenses to Average Net Assets* (b) 1.37% 1.51% 1.59% 1.37%

Ratio of Net Investment Income/
Loss to Average Net Assets* (0.58%) (0.21%) (0.08%) 0.33%

Portfolio Turnover 74%** 150% 100% 48%**

*If certain expenses 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 (b) 8.89% 8.41% 17.82% 18.46%

Ratio of Net Investment Income/
Loss to Average Net Assets (8.09%) (7.11%) (16.31%) (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 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 .12% for the nine months ended
March 31, 1999 and .26%, .34% and .13% for the years ended, June 30, 1998,
1997 and 1996, respectively.

See Notes to Financial Statements

F-8
<PAGE> 400

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.

December 27, 1995
(Commencement
Year Ended June 30, of Investment
Nine Months Ended ---------------------- Operations) to
Class B Shares March 31, 1999 1998 1997 June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of the Period $ 16.129 $ 14.237 $ 11.622 $ 10.000
-------- -------- -------- --------
Net Investment Income/Loss (0.036) (0.004) (0.007) 0.019
Net Realized and Unrealized Gain 2.676 3.778 3.541 1.603
-------- -------- -------- --------
Total from Investment Operations 2.640 3.774 3.534 1.622
-------- -------- -------- --------
Less:
Distributions from and in
Excess of Net Investment Income 0.028 0.142 0.019 ---
Distributions from Net Realized Gain 1.698 1.740 0.900 ---
-------- -------- -------- --------
Total Distributions 1.726 1.882 0.919 ---
-------- -------- -------- --------
Net Asset Value, End of the Period $ 17.043 $ 16.129 $ 14.237 $ 11.622
======== ======== ======== ========

Total Return * (a) 18.52%** 29.08% 32.29% 16.10%**

Net Assets at End of the Period (In thousands) $ 141.5 $ 119.5 $ 92.5 $ 75.5

Ratio of Expenses to Average Net Assets* (b) 1.37% 1.51% 1.59% 1.37%

Ratio of Net Investment Income/
Loss to Average Net Assets* (0.58%) (0.21%) (0.05%) 0.33%

Portfolio Turnover 74%** 150% 100% 48%**

*If certain expenses 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 (b) 8.89% 8.41% 17.82% 18.46%

Ratio of Net Investment Income/
Loss to Average Net Assets (8.09%) (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 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 .12% for the nine months ended
March 31, 1999 and .26%, .34% and .13% for the years ended, June 30, 1998,
1997 and 1996, respectively.

See Notes to Financial Statements

F-9
<PAGE> 401

VAN KAMPEN GREAT AMERICAN COMPANIES FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.

December 27, 1995
(Commencement
Year Ended June 30, of Investment
Nine Months Ended ---------------------- Operations) to
Class C Shares March 31, 1999 1998 1997 June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Net Asset Value, Beginning of the Period $ 16.131 $ 14.237 $ 11.622 $ 10.000
--------- --------- --------- ---------
Net Investment Income/Loss (0.036) (0.008) (0.007) 0.019
Net Realized and Unrealized Gain 2.676 3.784 3.541 1.603
--------- --------- --------- ---------
Total from Investment Operations 2.640 3.776 3.534 1.622
--------- --------- --------- ---------
Less:
Distributions from and in
Excess of Net Investment Income 0.028 0.142 0.019 ---
Distributions from Net Realized Gain 1.698 1.740 0.900 ---
--------- --------- --------- ---------
Total Distributions 1.726 1.882 0.919 ---
--------- --------- --------- ---------
Net Asset Value, End of the Period $ 17.045 $ 16.131 $ 14.237 $ 11.622
========= ========= ========= =========

Total Return * (a) 18.52%** 29.08% 32.29% 16.10%**

Net Assets at End of the Period (In thousands) $ 141.6 $ 119.5 $ 98.2 $ 75.5

Ratio of Expenses to Average Net Assets* (b) 1.37% 1.51% 1.59% 1.37%

Ratio of Net Investment Income/
Loss to Average Net Assets* (0.58%) (0.21%) (0.05%) 0.33%

Portfolio Turnover 74%** 150% 100% 48%**

*If certain expenses 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 (b) 8.89% 8.41% 17.82% 18.46%

Ratio of Net Investment Income
Loss to Average Net Assets (8.09%) (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 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 .12% for the nine months ended
March 31, 1999 and .26%, .34% and .13% for the years ended, June 30, 1998,
1997 and 1996, respectively.

See Notes to Financial Statements

F-10
<PAGE> 402

VAN KAMPEN
GREAT AMERICAN COMPANIES FUND
Notes to Financial Statements
March 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Great American Companies Fund (the "Fund") is organized as a series
of the Van Kampen Equity Trust (the "Trust"), a Delaware business trust, and is
registered as a diversified open-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek long-term growth of capital by investing principally in common stocks
and other equity securities. The Fund commenced investment operations on
December 27, 1995, with three classes of common shares, Class A, Class B and
Class C shares. In July 1998, the Fund's Board of Trustees approved a change in
the Fund's fiscal year end from June 30 to March 31. As a result, this financial
report reflects the nine month period commencing on July 1, 1998, and ending on
March 31, 1999.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

A. SECURITY VALUATION - Investments in securities listed on a securities
exchange are valued at their sale price as of the close of such securities
exchange. Investments in securities not listed on a securities exchange are
valued based on the mean of the bid and asked prices 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 date
basis. Realized gains and losses are determined on an identified cost basis.
The fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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.

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 $40,000. These costs were originally
scheduled to be amortized on a straight-line basis over the 60 month period
ending December 27, 2000. Pursuant to AICPA Statement of Position 98-5, any
unamortized organizational costs will be expensed on the first business day of
the 1999 fiscal year.

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.
The Fund intends to utilize provisions of the federal income tax laws
which allow it to carry a realized capital loss forward for eight years
following the year of loss and offset such losses against any future realized
capital gains. At March 31, 1999, the Fund had an accumulated capital loss
carryforward for tax purposes of $34,593 which will expire on March 31, 2007.
Net realized gains or losses may differ for financial reporting and tax purposes
primarily as a result of wash sales.
At March 31, 1999, for federal income tax purposes the cost of long-
and short-term investments is $1,455,250, the aggregate gross unrealized
appreciation is $711,808 and the aggregate gross unrealized depreciation is
$24,079, resulting in net unrealized appreciation on long- and short-term
investments of $687,729.

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 purpose may include
short-term capital gains which are included in ordinary income for tax purposes.

F-11
<PAGE> 403

VAN KAMPEN
GREAT AMERICAN COMPANIES FUND
Notes to Financial Statements (Continued)
March 31, 1999

G. EXPENSE REDUCTIONS - During the nine months ended
March 31, 1999 and the year ended June 30, 1998, the Fund's custody fee was
reduced by $1,721 and $4,169, respectively as a result of credits earned on
overnight cash balances.

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

Average Net Assets % Per Annum
First $500 million .70 of 1%
Next $500 million .65 of 1%
Over $1 billion .60 of 1%

For the nine months ended March 31, 1999, and the year ended June 30,
1998, the Adviser voluntarily capped the expenses of the Fund at 1.25% of
average net assets, prior to any credits earned on overnight cash balances. As
such, the Adviser waived $9,771 and $11,450, respectively, of its investment
advisory fees and assumed $95,161 and $101,306, respectively, of the Fund's
other expenses. This waiver is voluntary in nature and can be discontinued at
the Adviser's discretion.
For the nine months ended March 31, 1999, and the year ended June 30,
1998, the Fund recognized expenses of approximately $200 and $500, respectively,
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. All of this cost has been assumed by Van Kampen.
For the nine months ended March 31, 1999, and the year ended June 30,
1998, the Fund incurred expenses of approximately $37,500 and $37,300,
respectively, representing Van Kampen's cost of providing accounting and legal
services to the Fund. All of this cost has been assumed by Van Kampen.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves
as the shareholder servicing agent for the Fund. For the nine months ended March
31, 1999, and the year ended June 30, 1998, the Fund recognized expenses of
approximately $10,800 and $15,000, respectively. All of this cost has been
assumed by Van Kampen. Transfer agency fees are determined through negotiations
with the Fund's Board of Trustees and are based on competitive market
benchmarks.
Certain officers and trustees of the Fund are also officers and
directors of Van Kampen. The Fund does not compensate its officers or trustees
who are officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
At March 31, 1999, Van Kampen owned all shares 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 March 31, 1999, capital aggregated $1,410,601, $89,976 and $89,976
for Classes A, B and C, respectively. For the nine months ended March 31, 1999,
transactions were as follows:

Shares Value
- -------------------------------------- ------------ ----------------
Dividend Reinvestment:
Class A 12,238 $174,145
Class B 898 12,781
Class C 898 12,781
------------ ----------------
Total Dividend Reinvestment 14,034 $199,707
------------ ----------------

At June 30, 1998, capital aggregated $1,236,456, $77,195 and $77,195
for Classes A, B and C, respectively. For the year ended June 30, 1998,
transactions were as follows:

Shares Value
- -------------------------------------- ------------ ----------------
Dividend Reinvestment:
Class A 12,359 $166,593
Class B 907 12,226
Class C 907 12,226
------------ ----------------
Total Dividend Reinvestment 14,173 $191,045
------------ ----------------

Cost of Shares Repurchased:
Class C (398) $ (5,023)
------------ ----------------

At June 30, 1997, capital aggregated $1,069,863, $64,969 and $69,992
for Classes A, B and C, respectively. For the year ended June 30, 1997,
transactions were as follows:

Shares Value
- -------------------------------------- ------------ ----------------
Dividend Reinvestment:
Class A 81,566 $1,000,000
Class B 0 0
Class C 398 5,024
------------ ----------------
Total Dividend Reinvestment 81,964 $1,005,024
------------ ----------------

F-12
<PAGE> 404

VAN KAMPEN
GREAT AMERICAN COMPANIES FUND
Notes to Financial Statements (Continued)
March 31, 1999

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

Contingent Deferred
Sales Charge

Class B Class C
Year of Redemption Shares Shares
- ---------------------- ------------ -----------
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

4. INVESTMENT TRANSACTIONS
For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $1,374,373 and
$1,371,514, respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds from sales of investments, excluding short-term
investments were $2,298,298 and $2,282,313, 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.
The Fund's net assets are subject to 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. No fees related to the Plans have been accrued by the Fund as the Fund
is currently owned solely by affiliated persons.

F-13
<PAGE> 405

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
PROSPECTOR FUND

Van Kampen Prospector Fund (the "Fund") is a mutual fund with an investment
objective to seek capital growth and income. The Fund's management seeks to
achieve the investment objective by investing primarily in a diversified
portfolio of equity securities, including dividend-paying common and preferred
stocks and income securities convertible into common or preferred stocks.

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

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-4
Strategic Transactions...................................... B-8
Investment Restrictions..................................... B-15
Trustees and Officers....................................... B-17
Investment Advisory Agreement............................... B-29
Other Agreements............................................ B-30
Distribution and Service.................................... B-30
Transfer Agent.............................................. B-34
Portfolio Transactions and Brokerage Allocation............. B-34
Shareholder Services........................................ B-36
Redemption of Shares........................................ B-39
Contingent Deferred Sales Charge-Class A.................... B-39
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-39
Taxation.................................................... B-41
Fund Performance............................................ B-46
Other Information........................................... B-50
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-11
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 406

GENERAL INFORMATION

The Fund was originally organized as a series of the Trust under the name
Van Kampen American Capital Prospector Fund on September 7, 1995. On July 14,
1998, the Fund adopted its current name.

B-2
<PAGE> 407

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Investments Inc.................... 127,412.85 A 100.00%
Attn: Dominick Cogliandro 9,128.03 B 100.00%
One Chase Manhattan Plaza 9,128.03 C 100.00%
37th Floor
New York, NY 10005-1401
</TABLE>

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

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

B-3
<PAGE> 408

INVESTMENT OBJECTIVE AND POLICIES

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. A repurchase agreement
is a short-term investment in which the purchaser (i.e., the Fund) acquires
ownership of a security and the seller agrees to repurchase the obligation at a
future time and set price, thereby determining the yield during the holding
period. It is the current policy of the Fund not to invest at the time of
purchase more than 20% of its total assets in securities subject to repurchase
agreements. Repurchase agreements involve certain risks in the event of default
by the other party. The Fund may enter into repurchase agreements with banks or
broker-dealers deemed to be creditworthy by the Adviser under guidelines
approved by the Trustees. The Fund will not invest in repurchase agreements
maturing in more than seven days if any such investment, together with any other
illiquid securities held by the Fund, would exceed the Fund's limitation on
illiquid securities described below. In the event of the bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible lack of access to
income on the underlying security during this period; and (c) expenses of
enforcing its rights.

B-4
<PAGE> 409

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund may
also borrow money in an amount up to 5% of the Fund's total assets for temporary
purposes. The Fund has no current intention to borrow money other than for
temporary purposes.

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

B-5
<PAGE> 410

may be more or less than their purchase price, and yields generally available on
comparable securities when delivery occurs may be higher or lower than yields on
the securities obtained pursuant to such transactions. Because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction,
failure by the other party to complete the transaction may result in the Fund
missing the opportunity of obtaining a price or yield considered to be
advantageous. When the Fund is the buyer in such a transaction, however, it will
maintain, in a segregated account with its custodian, cash or portfolio
securities having an aggregate value equal to the amount of such purchase
commitments until payment is made. The Fund will make commitments to purchase
securities on such basis only with the intention of actually acquiring these
securities, but the Fund may sell such securities prior to the settlement date
if such sale is considered to be advisable. To the extent the Fund engages in
"when-issued" and "delayed delivery" transactions, it will do so for the purpose
of acquiring securities for the Fund's portfolio consistent with the Fund's
investment objectives and policies and not for the purpose of investment
leverage.

SHORT SALES

LENDING OF SECURITIES

B-6
<PAGE> 411

PORTFOLIO TURNOVER

ILLIQUID SECURITIES

B-7
<PAGE> 412

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.

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, use various investment strategies as
described below to earn income, facilitate portfolio management and mitigate
risks. Such strategies are generally accepted under modern portfolio management
and are regularly used 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.

B-8
<PAGE> 413

might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of these futures contracts 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.

B-9
<PAGE> 414

B-10
<PAGE> 415

B-11
<PAGE> 416

thereon would exceed 5% of the Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. The segregation requirements with respect to futures contracts and
options thereon are described below.

B-12
<PAGE> 417

currently convertible into such currency other than with respect to
cross-hedging or proxy hedging as described below.

B-13
<PAGE> 418

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.

B-14
<PAGE> 419

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, 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.

INVESTMENT RESTRICTIONS

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. 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 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.

B-15
<PAGE> 420

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
techniques.

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. Invest in securities of other investment companies, except as part of a
merger, consolidation 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
right under agreements relating to portfolio securities.

B-16
<PAGE> 421

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.

TRUSTEES AND OFFICERS

TRUSTEES

B-17
<PAGE> 422

B-18
<PAGE> 423

B-19
<PAGE> 424

<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,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other open-end and closed-end funds advised
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.

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

B-20
<PAGE> 425

OFFICERS

B-21
<PAGE> 426

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of the Advisers, Van
Vice President and Secretary Kampen Advisors Inc., Van Kampen Management Inc.,
the Distributor, American Capital Contractual
Services, Inc., Van Kampen Exchange Corp., Van
Kampen Recordkeeping Services Inc., Investor
Services, Van Kampen Insurance Agency of Illinois
Inc. and Van Kampen System Inc. Vice President
and Secretary of each of the funds in the Fund
Complex and certain other investment companies
advised by the Advisers or their affiliates.
Prior to January 1999, counsel to New York Life
Insurance Company ("New York Life"), and prior to
March 1997, Vice President and Associate General
Counsel of New York Life. Prior to December 1993,
Assistant General Counsel of The Dreyfus
Corporation. Prior to August 1991, Senior
Associate, Willkie Farr & Gallagher. Prior to
January 1989, Mr. Smith was a Staff Attorney at
the Securities and Exchange Commission, Division
of Investment Management, Office of Chief
Counsel.

B-22
<PAGE> 427

B-23
<PAGE> 428

B-24
<PAGE> 429

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

COMPENSATION TABLE

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table.

B-25
<PAGE> 430

Trust are shown in Table C. The deferred compensation plan is described above
the Compensation Table.

As of July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

B-26
<PAGE> 431

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

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

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0 $ 321
Great American Companies
Fund.................. 3/31 801 0 801 401 801 601 401 801 0 200
Growth Fund............. 3/31 951 0 951 476 951 751 476 951 0 250
Mid Cap Value Fund...... 3/31 801 0 801 401 801 601 401 801 0 200
Prospector Fund......... 3/31 802 0 802 401 802 602 401 802 0 200
Small Cap Value Fund.... 3/31 0 0 0 0 0 0 0 0 0 0
Utility Fund............ 3/31 974 0 974 487 974 774 487 974 0 259
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0 $1,430
</TABLE>

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

B-27
<PAGE> 432

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund...... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund........................ 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund.................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund............... 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund....................... 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>

B-28
<PAGE> 433

INVESTMENT ADVISORY AGREEMENT

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.70% on the first $500 million of
average daily net assets; 0.65% on the next $500 million of average daily net
assets and 0.60% on the average daily net assets over $1 billion.

During the fiscal period ended March 31, 1999 and the fiscal years ended
1998 and 1997, the Adviser received approximately $0, $0, and $0, respectively,
in advisory fees from the Fund.

B-29
<PAGE> 434

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the respective number of classes of securities issued
per fund and the remaining 75% of such costs based proportionally on their
respective net assets per fund.

DISTRIBUTION AND SERVICE

B-30
<PAGE> 435

are not parties to the Distribution and Service Agreement or interested persons
of any party, by votes cast in person at a meeting called for such purpose. The
Distribution and Service Agreement provides that it will terminate if assigned,
and that it may be terminated without penalty by either party on 90 days'
written notice. Total underwriting commissions on the sale of shares of the Fund
for the last three fiscal periods are shown in the chart below.

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999..................... $0 $0
Fiscal year ended June 30, 1998........................ $0 $0
Fiscal year ended June 30, 1997........................ $0 $0
</TABLE>

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

CLASS A SHARES SALES CHARGE TABLE

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

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

B-31
<PAGE> 436

respect to Class C Shares, the authorized dealers generally are paid the ongoing
commission and transaction fees of up to 0.75% of the average daily net assets
of the Fund's Class C Shares annually commencing in the second year after
purchase.

B-32
<PAGE> 437

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."

B-33
<PAGE> 438

expenses among such funds in an equitable manner. The Distributor will not use
the proceeds from the contingent deferred sales charge applicable to a
particular class of shares to defray distribution-related expenses attributable
to any other class of shares.

For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $0 or 0% of the Class A Shares'
average daily net assets. Such expenses were paid to reimburse the Distributor
for payments made to financial intermediaries for servicing Fund shareholders
and for administering the Class A Share Plans. For the fiscal period ended March
31, 1999, the Fund's aggregate expenses paid under the Plans for Class B Shares
were $0 or 0% of the Class B Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments: $0 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class B Shares of the Fund and $0 for fees paid to financial
intermediaries for servicing Class B shareholders and administering the Class B
Share Plans. For the fiscal period ended March 31, 1999, the Fund's aggregate
expenses paid under the Plans for Class C Shares were $0 or 0% of the Class C
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for the following payments: $0 for commissions and transaction fees
paid to financial intermediaries in respect of sales of Class C Shares of the
Fund and $0 for fees paid to financial intermediaries for servicing Class C
shareholders and administering the Class C Share Plans.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating $0, $0
and $0, respectively for these services. The transfer agency prices are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-34
<PAGE> 439

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

B-35
<PAGE> 440

Trustees will consider from time to time whether the advisory fee for the Fund
will be reduced by all or a portion of the brokerage commission given to
affiliated brokers.

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated Brokers
-------------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999.......................... $6,990 $0 $0
Fiscal year ended June 30, 1997............................. $ 0 $0 $0
Fiscal year ended June 30, 1996............................. $ 0 $0 $0
Fiscal 1999 Percentages:
Commissions with affiliate to total commissions........... 0% 0%
Value of brokerage transactions with affiliate to total
transactions............................................ 0% 0%
</TABLE>

During the fiscal period ended March 31, 1999, the Fund paid $3,688 in
brokerage commissions on transactions totaling $2,072,456 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

B-36
<PAGE> 441

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

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

DIVIDEND DIVERSIFICATION

B-37
<PAGE> 442

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGE PRIVILEGE

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

REINSTATEMENT PRIVILEGE

B-38
<PAGE> 443

REDEMPTION OF SHARES

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC-CLASS B
AND C")

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge.

B-39
<PAGE> 444

The CDSC-Class B and C is waived on redemptions of Class B Shares and Class C
Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the plan, a dollar
amount of a

B-40
<PAGE> 445

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

REINVESTMENT OF REDEMPTION PROCEEDS

REDEMPTION BY ADVISER

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

TAXATION

FEDERAL INCOME TAXATION

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

B-41
<PAGE> 446

B-42
<PAGE> 447

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

B-43
<PAGE> 448

B-44
<PAGE> 449

SALE OF SHARES

CAPITAL GAINS RATES

NON-U.S. SHAREHOLDERS

B-45
<PAGE> 450

are corporations may also be subject to an additional "branch profits tax" with
respect to income from the Fund that is effectively connected with a United
States trade or business.

BACKUP WITHHOLDING

GENERAL

FUND PERFORMANCE

B-46
<PAGE> 451

B-47
<PAGE> 452

engaged in by the Fund. Distribution rates will be computed separately for each
class of the Fund's shares.

The Fund's Annual Report and Semiannual Report contain additional
performance information. A copy of the Annual Report or Semiannual Report may be
obtained without

B-48
<PAGE> 453

charge by calling or writing the Fund at the telephone number and address
printed on the back cover of the Prospectus.

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was 1.90%, and (ii) the approximately three-year, three-month
period since December 27, 1995, the commencement of investment operations for
Class A shares of the Fund, through March 31, 1999 was 23.40%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 98.48%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 110.59%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 3.83%, and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class B Shares of the Fund, through March 31, 1999 was 25.20%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 110.59%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 7.28% and (ii) the approximately three-year,
three-month period since December 27, 1995, the commencement of investment
operations for Class C Shares of the Fund, through March 31, 1999 was 25.66%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 110.59%.

B-49
<PAGE> 454

OTHER INFORMATION

CUSTODY OF ASSETS

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-50
<PAGE> 455
Report of Independent Accountants

The Board of Trustees and Shareholders of
Van Kampen Prospector Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Prospector Fund (the "Fund"), including the portfolio of
investments, as of March 31, 1999, and the related statement of operations
for the nine-month period ended March 31, 1999 and the year ended June 30,
1998, the statement of changes in net assets for the nine-month period
ended March 31, 1999 and for each of the years in the two-year period ended
June 30, 1998, 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 March 31, 1999, by correspondence with the custodian
and brokers and by the application of alternative auditing procedures where
broker replies were not received. 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 Prospector Fund as of March 31, 1999, the results of its
operations for the nine-month period ended March 31, 1999 and the year
ended June 30, 1998, the changes in its net assets for the nine-month
period ended March 31, 1999 and for each of the years in the two-year
period ended June 30, 1998, and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting
principles.

KPMG LLP
Chicago, Illinois
May 10, 1999

F-1
<PAGE> 456
Van Kampen Prospector Fund

Portfolio of Investments
March 31, 1999

Description Shares Market Value

Common Stocks 98.2%
Consumer Distribution 5.6%
Consolidated Stores Corp. (a) 800 $ 24,250
Federated Department Stores, Inc. (a) 900 36,112
Payless ShoeSource, Inc. (a) 500 23,250
Saks, Inc. (a) 1,130 29,380
--------
112,992
--------

Consumer Non-Durables 3.7%
Dial Corp. 860 29,563
Philip Morris Cos., Inc. 1,290 45,392
--------
74,955
--------

Consumer Services 0.7%
Mirage Resorts, Inc. (a) 700 14,875
--------

Energy 12.4%
Apache Corp. 1,300 33,881
BP Amoco PLC - ADR (United Kingdom) 285 28,767
Chevron Corp. 390 34,491
Diamond Offshore Drilling, Inc. 900 28,463
Enron Oil & Gas Co. 600 9,975
ENSCO International, Inc. 2,200 29,288
Rowan Cos., Inc. (a) 2,600 32,987
Ultramar Diamond Shamrock Corp. 900 19,463
Unocal Corp. 900 33,131
--------
250,446
--------

Finance 12.9%
AMBAC Financial Group, Inc. 930 50,220
Aon Corp. 400 25,300
Bear Stearns Cos., Inc. 430 19,216
CMAC Investment Corp. 460 17,940
LandAmerica Financial Group, Inc. 570 16,530
Providian Financial Corp. 600 66,000
Torchmark Corp. 600 18,975
United Asset Management Corp. 400 9,050
Washington Mutual, Inc. 520 21,255
Wells Fargo Co. 500 17,531
--------
262,017
--------

See Notes to Financial Statements

F-2
<PAGE> 457
Van Kampen Prospector Fund

Portfolio of Investments (Continued)
March 31, 1999

Description Shares Market
Value
Healthcare 11.1%
American Home Products Corp. 630 $ 41,108
HEALTHSOUTH Corp. (a) 1,200 12,450
Rhone-Poulenc, SA, Class A - ADR (France) 1,240 54,560
Tenet Healthcare Corp. (a) 3,700 70,069
United HealthCare Corp. 900 47,362
--------
225,549
--------

Producer Manufacturing 10.3%
American Power Conversion Corp. (a) 750 20,250
Cognex Corp. (a) 4,115 97,474
U. S. Filter Corp. (a) 360 11,025
Waste Management, Inc. 1,807 80,186
--------
208,935
--------

Raw Materials/Processing Industries 15.2%
Barrick Gold Corp. 700 11,944
Bethlehem Steel Corp. (a) 6,000 49,500
Boise Cascade Corp. 755 24,349
Champion International Corp. 600 24,637
Freeport-McMoRan Copper & Gold, Inc., Class B 1,740 18,923
Homestake Mining Co. 1,240 10,695
Imperial Chemical Industries PLC - ADR (United Kingdom) 500 17,906
Louisiana - Pacific Corp. 1,060 19,742
Placer Dome, Inc. 1,700 19,019
Smurfit-Stone Container Corp. (a) 1,881 36,327
Temple - Inland, Inc. 300 18,825
Union Camp Corp. 300 20,137
USX - U.S. Steel, Inc. 1,500 35,250
--------
307,254
--------

See Notes to Financial Statements

F-3
<PAGE> 458
Van Kampen Prospector Fund

Portfolio of Investments (Continued)
March 31, 1999

Description Shares Market Value

Technology 6.8%
BMC Software, Inc. (a) 600 $ 22,237
Comverse Technology, Inc. (a) 300 25,500
ECI Telecom Ltd. 600 21,000
Quantum Corp. (a) 670 12,060
SunGard Data Systems, Inc. (a) 1,430 57,200
--------
137,997
--------

Utilities 19.5%
Baltimore Gas & Electric Co. 800 20,300
BEC Energy 1,500 55,124
Central & South West Corp. 800 18,750
DTE Energy Co. 1,000 38,437
FirstEnergy Corp. 500 13,969
IDACORP, Inc. 700 20,563
Illinova Corp. 700 14,831
New Century Energies, Inc. 600 20,438
Northern States Power Co. 700 16,231
OGE Energy Corp. 1,400 31,587
P G & E Corp. 600 18,638
Pinnacle West Capital Corp. 500 18,188
Public Service Co. of New Mexico 1,030 17,510
Reliant Energy, Inc. 1,200 31,275
Texas Utilities Co. 870 36,268
Unicom Corp. 600 21,937
--------
394,046
--------

Total Investments 98.2%
(Cost $1,785,788) 1,989,066

Other Assets in Excess of Liabilities 1.8% 36,693
--------

Net Assets 100.0% $2,025,759
==========

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

See Notes to Financial Statements.

F-4
<PAGE> 459
VAN KAMPEN PROSPECTOR FUND

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999

<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Total Investments (Cost $1,785,788) $ 1,989,066
Cash 77,850
Receivables:
Investments Sold 19,405
Expense Reimbursement from Adviser 14,199
Dividends 3,521
Unamortized Organizational Costs 14,059
Other 1,136
-----------

Total Assets 2,119,236
-----------

LIABILITIES:

Deferred Compensation and Retirement Plans 37,598
Investments Purchased 27,436
Payable to Distributor and Affliates 10,278
Audit 8,310
Reports to Shareholders 2,565
Accrued Expenses 7,290
-----------

Total Liabilities 93,477
-----------

NET ASSETS $ 2,025,759
===========

NET ASSETS CONSIST OF:
Capital $ 1,774,971
Net Unrealized Appreciation 203,278
Accumulated Net Realized Gain 77,944
Accumulated Distributions in Excess of Net Investment Income (30,434)
-----------

NET ASSETS $ 2,025,759
===========

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$1,771,883 and 127,413 shares $ 13.91
of beneficial interest issued and outstanding)
Maximum sales charge (5.75%* of offering price) 0.85
-----------

Maximum offering price to public $ 14.76
===========

Class B Shares:
Net asset value and offering price per share (Based on net assets of $126,938
and 9,128 shares of beneficial interest issued and outstanding) $ 13.91
===========

Class C Shares:
Net asset value and offering price per share (Based on net assets of $126,938
and 9,128 shares of beneficial interest issued and outstanding) $ 13.91
===========
* On sales of $50,000 or more, the sales charge will be reduced.
</TABLE>

See Notes to Financial Statements

F-5

<PAGE> 460
VAN KAMPEN PROSPECTOR FUND

STATEMENT OF OPERATIONS
For the Nine Months Ended March 31, 1999 and the
Year Ended June 30, 1998

<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1999 June 30, 1998

<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 27,886 $ 33,513
--------- ---------
EXPENSES:
Accounting 32,581 28,861
Shareholder Reports 17,976 22,389
Trustees' Fees and Expenses 13,630 8,483
Custody 13,240 2,145
Shareholder Services 11,204 15,036
Investment Advisory Fee 10,020 11,782
Audit 9,506 11,992
Amortization of Organizational Costs 6,003 7,997
Legal 3,141 5,934
Other 5,584 10,084
--------- ---------

Total Expenses 122,885 124,703
Less: Fees Waived and Expenses Reimbursed
($10,020 and $92,631, respectively, for the nine months ended 03/31/99 and
$11,782 and $91,388, respectively, for the year ended 6/30/98) 102,651 103,170
Credits earned on Overnight Cash Balances 2,317 474
--------- ---------
Net Expenses 17,917 21,059
--------- ---------

NET INVESTMENT INCOME $ 9,969 $ 12,454
========= =========

REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain $ 180,405 $ 373,394
--------- ---------

Unrealized Appreciation/Depreciation:
Beginning of the Period 218,931 158,790
End of the Period 203,278 218,931
--------- ---------
Net Unrealized Appreciation/Depreciation During the Period (15,653) 60,141
--------- ---------

NET REALIZED AND UNREALIZED GAIN $ 164,752 $ 433,535
========= =========

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 174,721 $ 445,989
========= =========
</TABLE>

See Notes to Financial Statements

F-6

<PAGE> 461
VAN KAMPEN PROSPECTOR FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Nine Months Ended March 31, 1999 and the
Years Ended June 30, 1998 and 1997

<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
March 31, 1999 June 30, 1998 June 30, 1997
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income $ 9,969 $ 12,454 $ 5,574
Net Realized Gain 180,405 373,394 50,199
Net Unrealized Appreciation/Depreciation During the Period (15,653) 60,141 140,918
----------- ----------- -----------

Change in Net Assets from Operations 174,721 445,989 196,691
----------- ----------- -----------

Distributions from Net Investment Income (9,969) (13,056) (6,087)
Distributions in Excess of Net Investment Income (14,367) (16,067) -0-
----------- ----------- -----------
Distributions from and in Excess of Net Investment Income * (24,336) (29,123) (6,087)
Distributions from Net Realized Gain * (383,744) (133,630) (15,600)
----------- ----------- -----------
Total Distributions (408,080) (162,753) (21,687)
----------- ----------- -----------

NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES (233,359) 283,236 175,004
----------- ----------- -----------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold -0- -0- 1,000,000
Net Asset Value of Shares Issued Through Dividend Reinvestment 408,080 162,753 4,341
----------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 408,080 162,753 1,004,341
----------- ----------- -----------

TOTAL INCREASE IN NET ASSETS 174,721 445,989 1,179,345

NET ASSETS:
Beginning of the Period 1,851,038 1,405,049 225,704
----------- ----------- -----------

End of the Period (Including accumulated undistributed net investment
income of $(30,434), $(16,067) and $602, respectively) $ 2,025,759 $ 1,851,038 $ 1,405,049
=========== =========== ===========

<CAPTION>
Nine Months Ended Year Ended Year Ended
*Distributions by Class March 31, 1999 June 30, 1998 June 30, 1997

<S> <C> <C> <C>
Distributions from and in excess of Net Investment Income:
Class A Shares $ (21,286) $ (25,473) $ (4,041)
Class B Shares (1,525) (1,825) (1,023)
Class C Shares (1,525) (1,825) (1,023)
----------- ----------- -----------
$ (24,336) $ (29,123) $ (6,087)
=========== =========== ===========

Distributions from Net Realized Gain:
Class A Shares $ (335,652) $ (116,882) $ (5,460)
Class B Shares (24,046) (8,374) (5,070)
Class C Shares (24,046) (8,374) (5,070)
----------- ----------- -----------
$ (383,744) $ (133,630) $ (15,600)
=========== =========== ===========
</TABLE>

See Notes to Financial Statements

F-7

<PAGE> 462
VAN KAMPEN PROSPECTOR FUND

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

<TABLE>
<CAPTION>
December 27, 1995
(Commencement
of Investment
Nine Months Ended Year Ended June 30, Operations) to
Class A Shares March 31, 1999 1998 1997 (a) June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 15.974 $ 13.473 $ 11.285 $ 10.000
-------------- ------------- ------------ ----------
Net Investment Income 0.140 0.131 0.115 0.072
Net Realized and Unrealized Gain/Loss 1.315 3.924 2.996 1.239
-------------- ------------- ------------ ----------

Total from Investment Operations 1.455 4.055 3.111 1.311
-------------- ------------- ------------ ----------

Less:
Distributions from and in Excess of Net Investment Income 0.210 0.275 0.143 0.026
Distributions from Net Realized Gain 3.312 1.279 0.780 0.000
-------------- ------------- ------------ ----------

Total Distributions 3.522 1.554 0.923 0.026
-------------- ------------- ------------ ----------

Net Asset Value, End of the Period $ 13.907 $ 15.974 $ 13.473 $ 11.285
============== ============= ============ ==========

Total Return * (b) 9.49%** 31.65% 29.11% 13.10%**

Net Assets at End of the Period (In thousands) $ 1,771.9 $ 1,619.1 $ 1,229.0 $ 78.9

Ratio of Expenses to Average Net Assets* (c) 1.41% 1.28% 1.55% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.70% 0.74% 1.19% 1.34%

Portfolio Turnover 103%** 132% 104% 69%**

*If certain expenses 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 (c) 8.57% 7.40% 18.41% 20.75%

Ratio of Net Investment Income to Average Net Assets (6.47%) (5.38%) (15.97%) (18.07%)
</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.

(c) The Ratio 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 .16% for the nine months ended
March 31, 1999 and .03%, .30% and .04% for the years ended June 30, 1998
and 1997, and for the period ending June 30, 1996, respectively.

See Notes to Financial Statements

F-8

<PAGE> 463
VAN KAMPEN PROSPECTOR FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.

<TABLE>
<CAPTION>
December 27, 1995
(Commencement
of Investment
Nine Months Ended Year Ended June 30, Operations) to
Class B Shares March 31, 1999 1998 1997 (a) June 30, 1996
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 15.973 $ 13.473 $ 11.285 $ 10.000
------------ ----------- ---------- -----------
Net Investment Income 0.140 0.131 0.113 0.072
Net Realized and Unrealized Gain/Loss 1.315 3.923 3.020 1.239
------------ ----------- ---------- -----------
Total from Investment Operations 1.455 4.054 3.133 1.311
------------ ----------- ---------- -----------
Less:
Distributions from and in Excess of
Net Investment Income 0.210 0.275 0.165 0.026
Distributions from Net Realized Gain 3.312 1.279 0.780 0.000
------------ ----------- ---------- -----------
Total Distributions 3.522 1.554 0.945 0.026
------------ ----------- ---------- -----------
Net Asset Value, End of the Period $ 13.906 $ 15.973 $ 13.473 $ 11.285
============ =========== ========== ===========

Total Return * (b) 9.49%** 31.65% 29.11% 13.19%**

Net Assets at End of the Period (In thousands) $ 126.9 $ 116.0 $ 88.0 $ 73.4

Ratio of Expenses to Average Net Assets* (c) 1.41% 1.28% 1.55% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.69% 0.74% 0.86% 1.34%

Portfolio Turnover 103%** 132% 104% 69%**

*If certain expenses 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 (c) 8.57% 7.40% 18.41% 20.75%

Ratio of Net Investment Income to Average Net Assets (6.47%) (5.38%) (16.30%) (18.07%)
</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

F-9

<PAGE> 464
VAN KAMPEN PROSPECTOR FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.

<TABLE>
<CAPTION>
December 27, 1995
(Commencement
of Investment
Nine Months Ended Year Ended June 30, Operations) to
Class C Shares March 31, 1999 1998 1997 (a) June 30, 1996

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 15.973 $ 13.473 $ 11.285 $ 10.000
------------ ----------- ----------- ----------
Net Investment Income 0.140 0.131 0.113 0.072
Net Realized and Unrealized Gain/Loss 1.315 3.923 3.020 1.239
------------ ----------- ----------- ----------
Total from Investment Operations 1.455 4.054 3.133 1.311
------------ ----------- ----------- ----------
Less:
Distributions from and in Excess of Net Investment Income 0.210 0.275 0.165 0.026
Distributions from Net Realized Gain 3.312 1.279 0.780 0.000
------------ ----------- ----------- ----------
Total Distributions 3.522 1.554 0.945 0.026
------------ ----------- ----------- ----------
Net Asset Value, End of the Period $ 13.906 $ 15.973 $ 13.473 $ 11.285
============ =========== =========== ==========

Total Return * (b) 9.49%** 31.65% 29.11% 13.19%**

Net Assets at End of the Period (In thousands) $ 126.9 $ 116.0 $ 88.0 $ 73.4

Ratio of Expenses to Average Net Assets* (c) 1.41% 1.28% 1.55% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.69% 0.74% 0.86% 1.34%

Portfolio Turnover 103%** 132% 104% 69%**

*If certain expenses 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 (c) 8.57% 7.40% 18.41% 20.75%

Ratio of Net Investment Income to Average Net Assets (6.47%) (5.38%) (16.30%) (18.07%)
</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
F-10

<PAGE> 465
VAN KAMPEN PROSPECTOR FUND
Notes to Financial Statements
March 31, 1999

1. Significant Accounting Policies
Van Kampen Prospector Fund (the "Fund") is organized as a series of the Van
Kampen Equity Trust, a Delaware business trust (the "Trust") and is registered
as a diversified open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
capital growth and income through investing principally in income producing
equity securities and other equity securities. The Fund commenced investment
operations on December 27, 1995, with three classes of common shares, Class A,
Class B and Class C shares. In July, 1998, the Fund's Board of Trustees approved
a change in the Fund's fiscal year end from June 30 to March 31.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. Security Valuation - Investments in securities listed on a securities
exchange are valued at their sale price as of the close of such securities
exchange. Investments in securities not listed on a securities exchange are
valued based on the mean of the bid and asked prices 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 date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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.
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 $40,000. These costs were originally
scheduled to be amortized on a straight-line basis over the 60 month period
ending December 26, 2000. Pursuant to AICPA Statement of Position 98-5, any
unamortized organizational costs will be expensed on the first business day of
the 1999 fiscal year.

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 and gains,
if any, to its shareholders. Therefore, no provision for federal income taxes is
required. Net realized gains or losses may differ for financial reporting and
tax purposes primarily as a result of wash sales.
At March 31, 1999, for federal income tax purposes, cost of long-term
investments is $1,804,199; the aggregate gross unrealized appreciation is
$307,991, and the aggregate gross unrealized depreciation is $123,124, resulting
in net unrealized appreciation on long-term investments of $184,867.

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, which are included in ordinary income for
tax purposes.
Due to inherent differences in the recognition of expenses under generally
accepted accounting principles and federal income tax purposes, the amount of
distributed net investment income may differ for a particular period. These
differences are temporary in nature, but may result in book basis distribution
in excess of net investment income for certain periods.

G. Expense Reductions - During the nine months ended
March 31, 1999 and the year ended June 30, 1998, the Fund's custody fee was
reduced by $2,317 and $474, respectively as a result of credits earned on
overnight cash balances.

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

Average Net Assets % Per Annum
First $500 million .70%
Next $500 million .65%
Over $1 billion .60%

For the nine months ended March 31, 1999 and the year ended June 30, 1998
the Adviser voluntarily capped the expenses of the Fund at 1.25% of average net
assets, prior to any credits earned on overnight cash balances. As such, the
Adviser waived $10,020 and $11,782, respectively, of its investment advisory
fees and assumed $92,631 and $91,388, respectively, of the Fund's other
expenses. This waiver is voluntary in nature and can be discontinued at the
Adviser's discretion.
For the nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund recognized expenses of approximately $100 and $300, respectively,
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. All of this cost has been assumed by Van

F-11
<PAGE> 466

VAN KAMPEN PROSPECTOR FUND
Notes to Financial Statements
March 31, 1999

Kampen.
For the nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund incurred expenses of approximately $35,600 and $35,400, respectively,
representing Van Kampen's cost of providing accounting and legal services to the
Fund. All of this cost has been assumed by Van Kampen.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the nine months
ended March 31, 1999 and the year ended June 30, 1998, the Fund recognized
expenses of approximately $10,800 and $15,000, respectively. The transfer agency
fees are determined through negotiations with the Fund's Board of Trustees and
are based on competitive market benchmarks. All of this cost has been assumed by
Van Kampen.
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 March 31, 1999, Van Kampen owned all shares 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 March 31, 1999 capital aggregated $1,572,545, $101,213 and $101,213 for
classes A, B, and C, respectively. For the nine months ended March 31, 1999,
transactions were as follows:

Shares Value
-------- --------
Dividend Reinvestment:
Class A 26,054 $356,936
Class B 1,866 25,572
Class C 1,866 25,572
-------- --------
Total Dividend Reinvestments 29,786 $408,080
======== ========

At June 30, 1998 capital aggregated $1,215,609, $75,641 and $75,641 for
classes A, B, and C, respectively. For the year ended June 30, 1998,
transactions were as follows:

Shares Value
-------- --------
Dividend Reinvestment:
Class A 10,142 $142,357
Class B 727 10,198
Class C 727 10,198
-------- --------
Total Dividend Reinvestments 11,596 $162,753
======== ========

At June 30, 1997 capital aggregated $1,073,252, $65,443 and $65,443 for
classes A, B, and C, respectively. For the year ended June 30, 1997,
transactions were as follows:

Shares Value
---------- ----------
Sales:
Class A 83,963 $1,000,000
Class B -0- -0-
Class C -0- -0-
---------- ----------
Total Sales 83,963 $1,000,000
========== ==========

Shares Value
---------- ----------
Dividend Reinvestment:
Class A 254 $ 3,429
Class B 35 456
Class C 35 456
---------- ----------
Total Dividend Reinvestments 324 $ 4,341
========== ==========

Class B and Class C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B and Class C shares
will automatically convert to Class A shares after the seventh and tenth years,
respectively, following purchase. The CDSC 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.

Contingent Deferred
Sales Charge
Class B Class C
Year of Redemption Shares Shares
- ------------------------------ ------------- ------------
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

4. Investment Transactions
For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $1,905,291 and
$1,896,997, respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds from sales of investments, excluding short-term
investments, were $2,180,788 and $2,223,842, 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.
The Fund's net assets are subject to 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.
No fees related to the Plans have been accrued by the Fund as the Fund is
currently owned solely by affiliated persons.

F-12
<PAGE> 467

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
AGGRESSIVE GROWTH FUND

Van Kampen Aggressive Growth Fund (the "Fund") is a mutual fund with an
investment objective to seek capital growth. The Fund's management seeks to
achieve the investment objective by investing primarily in common stocks and
other equity securities of small- and medium-sized growth companies.

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

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-4
Strategic Transactions...................................... B-8
Investment Restrictions..................................... B-16
Trustees and Officers....................................... B-18
Investment Advisory Agreement............................... B-29
Other Agreements............................................ B-30
Distribution and Service.................................... B-31
Transfer Agent.............................................. B-35
Portfolio Transactions and Brokerage Allocation............. B-35
Shareholder Services........................................ B-37
Redemption of Shares........................................ B-40
Contingent Deferred Sales Charge-Class A.................... B-40
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-40
Taxation.................................................... B-42
Fund Performance............................................ B-47
Other Information........................................... B-51
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-13
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JULY 29, 1999.

<PAGE> 468

GENERAL INFORMATION

The Fund was originally organized as a series of the Trust under the name
Van Kampen American Capital Aggressive Growth Fund on April 26, 1996. On July
14, 1998, the Fund adopted its current name.

The Fund currently offers three classes of shares, designated Class A
Shares, Class B Shares and Class C Shares. Other classes may be established from
time to time in

B-2
<PAGE> 469

B-3
<PAGE> 470

<TABLE>
<CAPTION>
Amount of
Ownership at Class Percentage
Name and Address of Holder July 8, 1999 of Shares Ownership
-------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen Trust Company................... 2,549,337.96 A 14.52%
2800 Post Oak Blvd. 3,452,396.16 B 22.21%
Houston, TX 77056 121,084.44 C 6.19%
Northern Trust Co TR....................... 3,017,598.72 A 17.18%
FBO Morgan Stanley
Deferred Profit Sharing Plan
PO Box 92956
Chicago, IL 60675-2956
Merrill Lynch Pierce Fenner & Smith Inc.... 2,210,770.98 A 12.59%
For the Sole Benefit of its Customers 170,731.47 C 8.73%
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
</TABLE>

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

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

INVESTMENT OBJECTIVE AND POLICIES

REPURCHASE AGREEMENTS

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

B-4
<PAGE> 471

of the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible lack of access to income on the underlying security
during this period; and (c) expenses of enforcing its rights.

BORROWING AND REVERSE REPURCHASE AGREEMENTS

The Fund may borrow money for investment purposes. The Fund may borrow
money from banks and engage in reverse repurchase agreements in an amount up to
33 1/3% of the Fund's total assets (including the amount borrowed). The Fund may
also borrow money in an amount up to 5% of the Fund's total assets for temporary
purposes. The Fund has no current intention to borrow money other than for
temporary purposes.

B-5
<PAGE> 472

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.

LENDING OF SECURITIES

B-6
<PAGE> 473

"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS

SHORT SALES

PORTFOLIO TURNOVER

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of

B-7
<PAGE> 474

STRATEGIC TRANSACTIONS

B-8
<PAGE> 475

B-9
<PAGE> 476

B-10
<PAGE> 477

B-11
<PAGE> 478

option on a futures contract gives the purchaser the right in return for the
premium paid to assume a position in a futures contract and obligates the seller
to deliver such option.

B-12
<PAGE> 479

B-13
<PAGE> 480

B-14
<PAGE> 481

B-15
<PAGE> 482

INVESTMENT RESTRICTIONS

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. 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 limitation 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.

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% of its total assets 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.

B-16
<PAGE> 483

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.

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.

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.

B-17
<PAGE> 484

TRUSTEES AND OFFICERS

TRUSTEES

B-18
<PAGE> 485

B-19
<PAGE> 486

B-20
<PAGE> 487

<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,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other open-end and closed-end funds advised
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.

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

B-21
<PAGE> 488

OFFICERS

B-22
<PAGE> 489

B-23
<PAGE> 490

B-24
<PAGE> 491

B-25
<PAGE> 492

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

COMPENSATION TABLE

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table.

B-26
<PAGE> 493

Trust are shown in Table C. The deferred compensation plan is described
above the Compensation Table.

As of July 8, 1999, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.

B-27
<PAGE> 494

TABLE A

1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES

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

** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.

TABLE B

1999 AGGREGATE COMPENSATION DEFERRED FROM

THE TRUST AND EACH SERIES

<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0 $ 321
Great American Companies
Fund.................. 3/31 801 0 801 401 801 601 401 801 0 200
Growth Fund............. 3/31 951 0 951 476 951 751 476 951 0 250
Mid Cap Value Fund...... 3/31 801 0 801 401 801 601 401 801 0 200
Prospector Fund......... 3/31 802 0 802 401 802 602 401 802 0 200
Small Cap Value Fund.... 3/31 0 0 0 0 0 0 0 0 0 0
Utility Fund............ 3/31 974 0 974 487 974 774 487 974 0 259
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0 $1,430
</TABLE>

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

B-28
<PAGE> 495

TABLE C

1999 CUMULATIVE COMPENSATION DEFERRED

(PLUS INTEREST) FROM THE TRUST AND EACH SERIES

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

TABLE D

YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST

<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund...... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund........................ 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund.................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund............... 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund....................... 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>

INVESTMENT ADVISORY AGREEMENT

B-29
<PAGE> 496

Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.75% on the first $500 million of
average daily net assets; 0.70% on the next $500 million of average daily net
assets; and 0.65% on the average daily net assets over $1 billion.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, the Adviser received approximately $1,777,900,
$1,414,500 and $617,600, respectively, in advisory fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the respective number of classes of securities issued
per fund and the remaining 75% of such costs based proportionally on their
respective net assets per fund.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Advisory Corp. received approximately $86,600, $76,100
and $40,200, respectively, in accounting services fees from the Fund.

B-30
<PAGE> 497

preparation and oversight of the fund's regulatory reports, and other
information provided to shareholders, as well as responding to day-to-day legal
issues on behalf of the funds. Payment by the Fund for such services is made on
a cost basis for the salary and salary related benefits, including but not
limited to bonuses, group insurance 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
Investments. 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.

During the fiscal period ended March 31, 1999 and the fiscal years ended
June 30, 1998 and 1997, Van Kampen Investments received approximately $5,500,
$10,000 and $0, respectively, in legal services fees from the Fund.

DISTRIBUTION AND SERVICE

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal period ended March 31, 1999..................... $1,005,397 $137,952
Fiscal year ended June 30, 1998........................ $ 876,086 $140,600
Fiscal year ended June 30, 1997........................ $1,691,671 $284,900
</TABLE>

B-31
<PAGE> 498

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

CLASS A SHARES SALES CHARGE TABLE

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

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

B-32
<PAGE> 499

B-33
<PAGE> 500

For the fiscal period ended March 31, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $222,670 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Fund
shareholders and for administering the Class A Share Plans. For the fiscal
period ended March 31, 1999, the Fund's aggregate expenses paid under the Plans
for Class B Shares were $559,011 or 1.00% of the Class B Shares' average daily
net assets. Such expenses were paid to reimburse the Distributor for the
following payments: $275,076 for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B Shares of the Fund and
$283,935 for fees paid to financial intermediaries for servicing Class B
shareholders and administering the Class B

B-34
<PAGE> 501

Share Plans. For the fiscal period ended March 31, 1999, the Fund's aggregate
expenses paid under the Plans for Class C Shares were $128,099 or 1.00% of the
Class C Shares' average daily net assets. Such expenses were paid to reimburse
the Distributor for the following payments: $49,048 for commissions and
transaction fees paid to financial intermediaries in respect of sales of Class C
Shares of the Fund and $79,051 for fees paid to financial intermediaries for
servicing Class C shareholders and administering the Class C Share Plans.

The Distributor has entered into agreements with the following firms: (i)
Morgan Stanley Dean Witter, (ii) Merrill Lynch, Pierce, Fenner & Smith Inc.,
(iii) Prudential, (iv) Norwest Bank Minnesota, N.A., (v) Sanwa Bank, (vi)
Huntington Bank, (vii) Fidelity Investments Institutional Operations Company,
Inc., (viii) Fidelity Investments Investment Advisor Group, and (ix) Hewitt
Associates, LLC. Shares of the Fund will be offered pursuant to such firm's
retirement plan alliance program(s). Trustees and other fiduciaries of
retirement plans seeking to invest in multiple fund families through
broker-dealer retirement plan alliance program should contact the firms
mentioned above for further information concerning the program(s) including, but
not limited to, minimum size and operational requirements.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and divided disbursing
agent is Van Kampen Investor Services Inc., PO Box 418256, Kansas City, MO
64141-9256. During the fiscal period ended March 31, 1999 and the fiscal years
ended June 30, 1998 and 1997, Investor Services received fees aggregating
$827,300, $865,100 and $395,800, respectively for these services. Prior to 1998,
these services were provided at cost plus a profit. Beginning in 1998, the
transfer agency prices are determined through negotiations with the Fund's Board
of Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

B-35
<PAGE> 502

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

B-36
<PAGE> 503

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

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated
Brokers
-----------------
All Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Fiscal period ended March 31, 1999................. $ 349,381 $ -0- $ -0-
Fiscal year ended June 30, 1998.................... $ 519,606 $ -0- $ -0-
Fiscal year ended June 30, 1997.................... $ 85,572 $2,520 $ -0-
Fiscal 1999 Percentages:
Commissions with affiliate to total
commissions................................... 0% 0%
Value of brokerage transactions with affiliate to
total
transactions.................................. 0% 0%
</TABLE>

During the fiscal period ended March 31, 1999, the Fund paid $201,943 in
brokerage commissions on transactions totaling $133,216,481 to brokers selected
primarily on the basis of research services provided to the Adviser.

SHAREHOLDER SERVICES

INVESTMENT ACCOUNT

SHARE CERTIFICATES

B-37
<PAGE> 504

RETIREMENT PLANS

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

DIVIDEND DIVERSIFICATION

B-38
<PAGE> 505

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGE PRIVILEGE

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

REINSTATEMENT PRIVILEGE

B-39
<PAGE> 506

REDEMPTION OF SHARES

CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC-CLASS B
AND C")

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge.

B-40
<PAGE> 507

The CDSC-Class B and C is waived on redemptions of Class B Shares and Class C
Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

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

REDEMPTION PURSUANT TO A FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the plan, a dollar
amount of a

B-41
<PAGE> 508

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

REINVESTMENT OF REDEMPTION PROCEEDS

REDEMPTION BY ADVISER

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

TAXATION

FEDERAL INCOME TAXATION

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

B-42
<PAGE> 509

B-43
<PAGE> 510

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

B-44
<PAGE> 511

B-45
<PAGE> 512

SALE OF SHARES

CAPITAL GAINS RATES

NON-U.S. SHAREHOLDERS

B-46
<PAGE> 513

are corporations may also be subject to an additional "branch profits tax" with
respect to income from the Fund that is effectively connected with a United
States trade or business.

BACKUP WITHHOLDING

GENERAL

FUND PERFORMANCE

From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one year,

B-47
<PAGE> 514

five year and ten year periods. Other total return quotations, aggregate or
average, over other time periods may also be included.

B-48
<PAGE> 515

B-49
<PAGE> 516

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
March 31, 1999 was 31.80% and (ii) the approximately two-year, ten-month period
since May 29, 1996, the commencement of investment operations for Class A Shares
of the Fund, through March 31, 1999 was 23.67%.

The Class A shares cumulative non-standardized total return, including
payments of the maximum sales charge, with respect to the Class A Shares from
its inception to March 31, 1999 was 82.75%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to March 31, 1999 was 93.99%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 33.76% and (ii) the approximately two-year,
ten-month period since May 29, 1996, the commencement of investment operations
for Class B Shares of the Fund, through March 31, 1999 was 24.63%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
its inception to March 31, 1999 was 89.82%.

CLASS C SHARES

The average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended March 31, 1999 was 37.84%, and (ii) the approximately two-year,
ten-month period since May 29, 1996, the commencement of investment operations
for Class C Shares of the Fund, through March 31, 1999 was 25.36%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
its inception to March 31, 1999 was 89.93%.

These results are based on historical earnings and asset value fluctuations
and are not intended to indicate future performance. Such information should be
considered in light of

B-50
<PAGE> 517

the Fund's investment objective and policies as well as the risks incurred in
the Fund's investment practices.

OTHER INFORMATION

CUSTODY OF ASSETS

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.

LEGAL COUNSEL

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

B-51
<PAGE> 518

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of
Van Kampen Aggressive Growth Fund:

We have audited the accompanying statement of assets and liabilities Van Kampen
Aggressive Growth Fund (the "Fund"), including the portfolio of investments, as
of March 31, 1999, and the related statement of operations for the nine-month
period ended March 31, 1999 and the year ended June 30, 1998, the statement of
changes in net assets for the nine-month period ended March 31, 1999 and for
each of the years in the two-year period ended June 30, 1998, 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.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Aggressive Growth Fund as of March 31, 1999, the results of its
operations for the nine-month period ended March 31, 1999 and the year ended
June 30, 1998, the changes in its net assets for the nine-month period ended
March 31, 1999 and for each of the years in the two-year period ended June 30,
1998, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.

KPMG LLP
Chicago, Illinois
May 3, 1999

F-1
<PAGE> 519

PORTFOLIO OF INVESTMENTS

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 89.9%
CONSUMER DISTRIBUTION 10.7%
99 Cents Only Stores (a).............................. 50,000 $ 2,121,875
Abacus Direct Corp. (a)............................... 30,000 2,460,000
Abercrombie & Fitch Co. (a)........................... 95,000 8,740,000
American Eagle Outfitters, Inc. (a)................... 30,000 2,150,625
Ames Department Stores, Inc. (a)...................... 70,000 2,598,750
AnnTaylor Stores Corp. (a)............................ 145,000 6,407,188
Best Buy Co., Inc. (a)................................ 140,000 7,280,000
Chico's Fas, Inc. (a)................................. 85,000 1,827,500
Circuit City Stores-Circuit City Group................ 50,000 3,831,250
Claire's Stores, Inc.................................. 75,000 2,259,375
Hollywood Entertainment Corp. (a)..................... 100,000 1,862,500
Jacor Communications, Inc., Class A (a)............... 30,000 2,280,000
K-Swiss, Inc., Class A................................ 30,000 757,500
O'Reilly Automotive, Inc. (a)......................... 55,000 2,461,250
Pacific Sunwear of California (a)..................... 40,000 1,390,000
Staples, Inc. (a)..................................... 120,000 3,945,000
Tricon Global Restaurants, Inc. (a)................... 15,652 1,099,553
------------
53,472,366
------------
CONSUMER DURABLES 1.5%
Copart, Inc. (a)...................................... 100,000 2,075,000
CSK Auto Corp. (a).................................... 50,000 1,496,875
MIPS Technologies, Inc. (a)........................... 35,000 2,135,000
Sonic Automotive, Inc. (a)............................ 100,000 1,550,000
------------
7,256,875
------------
CONSUMER NON-DURABLES 3.6%
bebe stores, inc. (a)................................. 75,000 3,075,000
Ben & Jerry's Homemade, Inc., Class A (a)............. 75,000 2,100,000
Cutter & Buck, Inc. (a)............................... 50,000 1,600,000
Fossil, Inc. (a)...................................... 120,000 3,577,500
Linens 'N Things, Inc. (a)............................ 65,000 2,949,375
Quiksilver Resources, Inc. (a)........................ 110,000 4,647,500
------------
17,949,375
------------
CONSUMER SERVICES 12.0%
Adelphia Communications Corp., Class A (a)............ 35,000 2,205,000
autobytel.com, inc. (a)............................... 26,900 1,126,437
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 520
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER SERVICES (CONTINUED)
CMP Media, Inc. (a)................................... 55,000 $ 1,691,250
Covad Communications Group, Inc. (a).................. 40,000 2,630,000
Earthlink Network, Inc. (a)........................... 30,000 1,800,000
Entercom Communications Corp. (a)..................... 15,700 555,388
Express Scripts, Inc., Class A (a).................... 57,000 4,898,437
Foodmaker, Inc. (a)................................... 125,000 3,187,500
FPIC Insurance Group, Inc. (a)........................ 40,000 1,660,000
Go2Net, Inc. (a)...................................... 35,000 4,641,875
International Network Services (a).................... 60,000 4,196,250
International Speedway Corp., Class A................. 25,000 1,318,750
iVillage, Inc. (a).................................... 10,100 1,015,050
Metromedia Fiber Network, Inc. (a).................... 140,000 7,253,750
Metzler Group, Inc. (a)............................... 75,000 2,353,125
NCO Group, Inc. (a)................................... 35,000 1,295,000
Outdoor Systems, Inc. (a)............................. 78,750 2,362,500
Pegasus Systems, Inc. (a)............................. 85,000 3,389,375
Quanta Services, Inc. (a)............................. 100,000 2,543,750
RoweCom, Inc. (a)..................................... 30,000 1,308,750
Speedway Motorsports, Inc. (a)........................ 75,000 3,093,750
TMP Worldwide, Inc. (a)............................... 50,000 3,240,625
Vignette Corp. (a).................................... 15,500 1,166,375
Ziff-Davis, Inc. (a).................................. 36,800 1,324,800
------------
60,257,737
------------
FINANCE 3.1%
Capital One Financial Corp............................ 15,000 2,265,000
Knight/Trimark Group, Inc., Class A (a)............... 25,000 1,675,000
Providian Financial Corp.............................. 73,700 8,107,000
TeleBanc Financial Corp. (a).......................... 25,000 1,993,750
US Trust Corp......................................... 20,000 1,483,750
------------
15,524,500
------------
HEALTHCARE 11.4%
Advance Paradigm, Inc. (a)............................ 45,000 2,843,438
Alpharma, Inc......................................... 165,100 6,480,175
Andrx Corp. (a)....................................... 40,000 3,645,000
Biogen, Inc. (a)...................................... 45,000 5,144,062
Biomatrix, Inc. (a)................................... 30,000 2,340,000
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 521
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Hooper Holmes, Inc.................................... 70,000 $ 1,093,750
IDEC Pharmaceuticals Corp. (a)........................ 25,000 1,284,375
Laser Vision Centers, Inc. (a)........................ 125,000 4,765,625
Medicis Pharmaceutical Corp., Class A (a)............. 25,000 750,000
MedImmune, Inc. (a)................................... 50,000 2,959,375
Molecular Devices Corp. (a)........................... 65,000 1,755,000
Osteotech, Inc. (a)................................... 52,500 1,804,688
Priority Healthcare Corp. (a)......................... 125,000 5,656,250
TLC The Laser Center, Inc. (a)........................ 50,000 1,609,375
VISX, Inc. (a)........................................ 85,000 9,142,812
Xomed Surgical Products, Inc. (a)..................... 150,000 5,887,500
------------
57,161,425
------------
PRODUCER MANUFACTURING 1.9%
Cree Research, Inc. (a)............................... 50,000 2,346,875
Dycom Industries, Inc. (a)............................ 135,000 5,872,500
Insituform Technologies, Inc. (a)..................... 84,000 1,470,000
------------
9,689,375
------------
RAW MATERIALS/PROCESSING INDUSTRIES 1.7%
Elcor Corp............................................ 135,000 4,750,313
Optical Coating Laboratory, Inc....................... 50,000 2,400,000
Stillwater Mining Co. (a)............................. 50,000 1,318,750
------------
8,469,063
------------
TECHNOLOGY 39.2%
Advantage Learning Systems, Inc. (a).................. 80,000 2,485,000
America Online, Inc. (a).............................. 80,000 11,680,000
Applied Micro Circuits Corp. (a)...................... 50,000 2,137,500
AVT Corp. (a)......................................... 153,200 3,657,650
Aware, Inc. (a)....................................... 55,000 2,585,000
BroadVision, Inc. (a)................................. 50,000 2,987,500
Business Objects SA (a)............................... 60,000 1,781,250
Carrier Access Corp. (a).............................. 115,000 8,890,937
Concord Communications, Inc. (a)...................... 85,000 4,845,000
CSG Systems International, Inc. (a)................... 140,000 5,521,250
EMC Corp. (a)......................................... 80,000 10,220,000
Exodus Communications, Inc. (a)....................... 15,000 2,017,500
FactSet Research Systems, Inc......................... 42,500 1,838,125
</TABLE>

See Notes to Financial Statements

F-4
<PAGE> 522
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Gemstar International Group Ltd. (a).................. 52,300 $ 3,935,575
Geotel Communications Corp. (a)....................... 180,000 8,257,500
Gilat Satellite Networks Ltd. (a)..................... 95,000 5,700,000
Harmonic, Inc. (a).................................... 45,000 1,243,125
ISS Group, Inc. (a)................................... 50,000 3,975,000
Macromedia, Inc. (a).................................. 175,000 7,929,687
Mercury Interactive Corp. (a)......................... 130,000 4,631,250
Micromuse, Inc. (a)................................... 85,000 3,910,000
Mindspring Enterprises, Inc. (a)...................... 75,000 6,454,688
NEON Systems, Inc. (a)................................ 22,700 1,248,500
Network Appliance, Inc. (a)........................... 100,000 5,062,500
Network Solutions, Inc., Class A (a).................. 40,000 4,230,000
New Era of Networks, Inc. (a)......................... 100,000 6,775,000
pcOrder.com, Inc. (a)................................. 10,000 566,250
Peregrine Systems, Inc. (a)........................... 180,000 6,052,500
Power Integrations, Inc. (a).......................... 100,000 3,175,000
Qlogic Corp. (a)...................................... 45,000 3,020,625
Rational Software Corp. (a)........................... 90,000 2,413,125
SanDisk Corp. (a)..................................... 70,000 1,855,000
Sapient Corp. (a)..................................... 25,000 1,784,375
SDL, Inc. (a)......................................... 100,000 9,075,000
SEI Investments Co.................................... 29,700 2,747,250
TSI International Software Ltd. (a)................... 35,000 1,708,438
Tweeter Home Entertainment Group, Inc. (a)............ 75,000 2,418,750
Uniphase Corp. (a).................................... 35,000 4,029,375
USWeb Corp. (a)....................................... 100,000 4,125,000
VeriSign, Inc. (a).................................... 20,000 3,080,000
VERITAS Software Corp. (a)............................ 75,000 6,056,250
Verity, Inc. (a)...................................... 125,000 4,187,500
Visual Networks, Inc. (a)............................. 30,000 1,121,250
Vitesse Semiconductor Corp. (a)....................... 40,000 2,025,000
Waters Corp. (a)...................................... 65,000 6,829,062
WebTrends Corp. (a)................................... 26,000 1,264,250
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 523
PORTFOLIO OF INVESTMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Xircom, Inc. (a)...................................... 75,000 $ 1,884,375
Yahoo!, Inc. (a)...................................... 20,000 3,367,500
------------
196,785,412
------------
TRANSPORTATION 0.6%
Comair Holdings, Inc.................................. 60,000 1,417,500
Skywest, Inc.......................................... 50,000 1,443,750
------------
2,861,250
------------
UTILITIES 4.2%
RF Micro Devices, Inc. (a)............................ 144,400 13,817,275
Transwitch Corp. (a).................................. 165,000 7,466,250
------------
21,283,525
------------
TOTAL LONG-TERM INVESTMENTS 89.9%
(Cost $282,529,440)........................................ 450,710,903
REPURCHASE AGREEMENT 6.3%
Warburg Dillon Read ($31,740,000 par collaterized by U.S.
Government obligations in a pooled cash account, dated
03/31/99, to be sold on 04/01/99 at $31,744,320)
(Cost $31,740,000)........................................... 31,740,000
------------
TOTAL INVESTMENTS 96.2%
(Cost $314,269,440)........................................ 482,450,903
OTHER ASSETS IN EXCESS OF LIABILITIES 3.8%.................... 19,263,051
------------
NET ASSETS 100.0%............................................. $501,713,954
============
</TABLE>

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

See Notes to Financial Statements

F-6
<PAGE> 524

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $314,269,440)....................... $482,450,903
Cash........................................................ 2,396
Receivables:
Fund Shares Sold.......................................... 26,532,970
Investments Sold.......................................... 5,659,170
Dividends................................................. 2,200
Unamortized Organizational Costs............................ 45,512
Other....................................................... 69,913
------------
Total Assets............................................ 514,763,064
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 10,846,412
Fund Shares Repurchased................................... 1,172,130
Distributor and Affiliates................................ 518,522
Investment Advisory Fee................................... 281,407
Accrued Expenses............................................ 164,175
Trustees' Deferred Compensation and Retirement Plans........ 66,464
------------
Total Liabilities....................................... 13,049,110
------------
NET ASSETS.................................................. $501,713,954
============
NET ASSETS CONSIST OF:
Capital..................................................... $316,091,885
Net Unrealized Appreciation................................. 168,181,463
Accumulated Net Realized Gain............................... 17,506,863
Accumulated Net Investment Loss............................. (66,257)
------------
NET ASSETS.................................................. $501,713,954
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $242,556,451 and 14,154,257 shares of
beneficial interest issued and outstanding)............. $ 17.14
Maximum sales charge (5.75%* of offering price)......... 1.05
------------
Maximum offering price to public........................ $ 18.19
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $231,786,114 and 13,840,712 shares of
beneficial interest issued and outstanding)............. $ 16.75
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $27,371,389 and 1,632,921 shares of
beneficial interest issued and outstanding)............. $ 16.76
============
</TABLE>

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

See Notes to Financial Statements

F-7
<PAGE> 525

STATEMENT OF OPERATIONS

For the Nine Months Ended March 31, 1999 and the
Year Ended June 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1999 June 30, 1998
- -----------------------------------------------------------------------------------
<S> <C> <C>

INVESTMENT INCOME:
Interest......................................... $ 680,329 $ 595,465
Dividends........................................ 137,307 248,561
------------ -----------
Total Income................................. 817,636 844,026
------------ -----------
EXPENSES:
Investment Advisory Fee.......................... 1,777,939 1,820,687
Distribution (12b-1) and Service Fees (Attributed
to Classes A, B and C of $261,587, $1,191,530
and $135,838, respectively, for the nine months
ended 3/31/99 and $264,715, $1,233,496 and
$135,103, respectively, for the year ended
6/30/98)....................................... 1,588,955 1,633,314
Shareholder Services............................. 1,088,758 1,106,755
Custody.......................................... 18,931 1,659
Amortization of Organizational Costs............. 15,763 20,998
Legal............................................ 15,362 15,344
Trustees' Fees and Expenses...................... 13,540 23,085
Other............................................ 213,216 326,581
------------ -----------
Total Expenses............................... 4,732,464 4,948,423
Less Fees Waived............................. -0- 406,180
------------ -----------
Net Expenses................................. 4,732,464 4,542,243
------------ -----------
NET INVESTMENT LOSS.............................. $ (3,914,828) $(3,698,217)
============ ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments.................................... $ 17,483,578 $46,196,606
Futures........................................ 123,947 -0-
------------ -----------
Net Realized Gain................................ 17,607,525 46,196,606
------------ -----------
Unrealized Appreciation/Depreciation:
Beginning of the Period........................ 70,053,002 39,121,376
End of the Period.............................. 168,181,463 70,053,002
------------ -----------
Net Unrealized Appreciation During the Period.... 98,128,461 30,931,626
------------ -----------
NET REALIZED AND UNREALIZED GAIN................. $115,735,986 $77,128,232
============ ===========
NET INCREASE IN NET ASSETS FROM OPERATIONS....... $111,821,158 $73,430,015
============ ===========
</TABLE>

See Notes to Financial Statements

F-8
<PAGE> 526

STATEMENT OF CHANGES IN NET ASSETS

For the Nine Months Ended March 31, 1999 and the
Years Ended June 30, 1998 and 1997
- --------------------------------------------------------------------------------

See Notes to Financial Statements

F-9
<PAGE> 527

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Nine Months Ended Year Ended Year Ended Operations) to
Class A Shares March 31, 1999(b) June 30, 1998 June 30, 1997 June 30, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $13.676 $9.948 $9.118 $9.430
------- ------ ------ ------
Net Investment Loss............... (.125) (.135) (.065) (.002)
Net Realized and Unrealized
Gain/Loss....................... 4.445 3.863 .895 (.310)
------- ------ ------ ------
Total from Investment Operations.... 4.320 3.728 .830 (.312)
Less Distributions from Net Realized
Gain.............................. .859 -0- -0- -0-
------- ------ ------ ------
Net Asset Value, End of the
Period............................ $17.137 $13.676 $9.948 $9.118
======= ====== ====== ======
Total Return (a).................... 33.72%** 37.49% 9.10% (3.29%)**
Net Assets at End of the Period (In
millions)......................... $ 242.6 $117.5 $ 84.0 $ 30.3
Ratio of Expenses to Average Net
Assets*........................... 1.56% 1.44% 1.30% 1.29%
Ratio of Net Investment Loss to
Average Net Assets*............... (1.22%) (1.09%) (.81%) (.50%)
Portfolio Turnover.................. 126%** 185% 186% 4%**
* If certain expenses had not been
waived by Van Kampen, Total Return
would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................ N/A 1.61% 1.61% 2.05%
Ratio of Net Investment Loss to
Average Net Assets................ N/A (1.26%) (1.12%) (1.25%)
</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) Based on average shares outstanding.

N/A=Not Applicable

See Notes to Financial Statements

F-10
<PAGE> 528
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Nine Months Ended Year Ended Year Ended Operations) to
Class B Shares March 31, 1999(b) June 30, 1998 June 30, 1997 June 30, 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $13.461 $9.867 $9.112 $9.430
------- ------ ------ ------
Net Investment Loss................ (.197) (.204) (.105) (.006)
Net Realized and Unrealized
Gain/Loss........................ 4.342 3.798 .860 (.312)
------- ------ ------ ------
Total from Investment Operations..... 4.145 3.594 .755 (.318)
Less Distributions from Net Realized
Gain............................... .859 -0- -0- -0-
------- ------ ------ ------
Net Asset Value, End of the Period... $16.747 $13.461 $9.867 $9.112
======= ====== ====== ======
Total Return (a)..................... 32.99%** 36.37% 8.34% (3.39%)**
Net Assets at End of the Period (In
millions).......................... $ 231.8 $148.4 $ 94.2 $ 25.5
Ratio of Expenses to Average Net
Assets*............................ 2.33% 2.20% 2.05% 2.06%
Ratio of Net Investment Loss to
Average Net Assets*................ (1.99%) (1.85%) (1.55%) (1.28%)
Portfolio Turnover................... 126%** 185% 186% 4%**
* If certain expenses had not been
waived by Van Kampen, Total Return
would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................. N/A 2.37% 2.35% 2.81%
Ratio of Net Investment Loss to
Average Net Assets................. N/A (2.02%) (1.86%) (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.

(b) Based on average shares outstanding.

N/A=Not Applicable

See Notes to Financial Statements

F-11
<PAGE> 529
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Nine Months Ended Year Ended Year Ended Operations) to
Class C Shares March 31, 1999(b) June 30, 1998 June 30, 1997 June 30, 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $13.470 $ 9.869 $9.113 $9.430
------- ------- ------ ------
Net Investment Loss.............. (.197) (.203) (.103) (.006)
Net Realized and Unrealized
Gain/Loss...................... 4.348 3.804 .859 (.311)
------- ------- ------ ------
Total from Investment Operations... 4.151 3.601 .756 (.317)
Less Distributions from Net
Realized Gain.................... .859 -0- -0- -0-
------- ------- ------ ------
Net Asset Value, End of the
Period........................... $16.762 $13.470 $9.869 $9.113
======= ======= ====== ======
Total Return (a)................... 32.96%** 36.47% 8.34% (3.39%)**
Net Assets at End of the Period (In
millions)........................ $ 27.4 $ 16.4 $ 10.8 $ 3.9
Ratio of Expenses to Average Net
Assets*.......................... 2.33% 2.20% 2.05% 2.05%
Ratio of Net Investment Loss to
Average Net Assets*.............. (1.98%) (1.85%) (1.54%) (1.28%)
Portfolio Turnover................. 126%** 185% 186% 4%**
* If certain expenses had not been
waived by Van Kampen, Total
Return would have been lower and
the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets........................... N/A 2.36% 2.35% 2.81%
Ratio of Net Investment Loss to
Average Net Assets............... N/A (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.

(b) Based on average shares outstanding.

N/A=Not Applicable

See Notes to Financial Statements

F-12
<PAGE> 530

NOTES TO FINANCIAL STATEMENTS

March 31, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Aggressive Growth Fund (the "Fund") is organized as a separate
diversified series of Van Kampen Equity Trust (the "Trust"), a Delaware business
trust, which is registered as an 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. The Fund commenced investment
operations on May 29, 1996 with three classes of common shares, Class A, Class B
and Class C. In July, 1998, the Fund's Board of Trustees approved a change in
the Fund's fiscal year end from June 30 to March 31.
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.

B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Investment Advisory Corp. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are collateralized by the underlying debt security. The
Fund will make payment for such securities only upon physical delivery or
evidence of book

F-13
<PAGE> 531
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 and
interest income is recorded on an accrual basis. 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 will 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 $105,000. These costs are being amortized
on a straight line basis over the 60 month period ending May 28, 2001. 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.
Accumulated net realized gain/loss differs for financial and tax reporting
purposes as a result of the deferral for tax purposes of losses resulting from
wash sales.
At March 31, 1999, for federal income tax purposes, cost of long- and
short-term investments is $314,540,786; the aggregate gross unrealized
appreciation is $173,177,065 and the aggregate gross unrealized depreciation is
$5,266,948 resulting in net unrealized appreciation on long- and short-term
investments of $167,910,117.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income and net realized gains, if any. Due to
inherent differences in the recognition of income, expenses and realized
gains/losses under generally accepted accounting principles and federal income
tax purposes, permanent differences between book and tax basis reporting for the
nine months ended March 31, 1999 and for the year ended June 30, 1998 have been
identified and appropriately reclassified. For the nine months ended March 31,
1999, a permanent difference related

F-14
<PAGE> 532
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

to a net operating loss totaling $3,900,143 has been reclassified from
accumulated net investment loss to capital. For the year ended June 30, 1998, a
permanent difference related to net operating loss which may be used as an
offset against short-term gains for tax purposes totaling $124,267 has been
reclassified from accumulated net realized gains to accumulated net investment
loss. The $3,557,256 of remaining tax basis net operating loss was reclassified
from accumulated net investment loss to capital.

For the year ended June 30, 1998, the Adviser voluntarily waived
approximately $406,200 of its investment advisory fees. Van Kampen agreed to
waive fees or reimburse certain expenses 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. This agreement was voluntarily
continued through December 31, 1997 and was discontinued on January 1, 1998.
For the nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund recognized expenses of approximately $9,900 and $4,600, respectively,
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 nine months ended March 31, 1999 and the year ended June 30, 1998,
the Fund recognized expenses of approximately $92,100 and $86,100, respectively,
representing Van Kampen's cost of providing accounting and legal services to the
Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the nine months ended March
31, 1999 and the year ended June 30, 1998, the Fund recognized expenses of
approximately $827,300 and $865,100, respectively. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks.

F-15
<PAGE> 533
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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 March 31, 1999, Van Kampen owned 100 shares each of Classes A, B and C.

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 March 31, 1999, capital aggregated $157,542,638, $141,372,990 and
$17,176,257 for Classes A, B, and C, respectively. For the nine months ended
March 31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................... 16,304,723 $ 225,416,282
Class B................................... 4,260,040 58,630,954
Class C................................... 654,046 8,988,462
----------- -------------
Total Sales................................. 21,218,809 $ 293,035,698
=========== =============
Dividend Reinvestment:
Class A................................... 617,711 $ 7,881,994
Class B................................... 748,531 9,356,636
Class C................................... 78,313 979,698
----------- -------------
Total Dividend Reinvestment................. 1,444,555 $ 18,218,328
=========== =============
Repurchases:
Class A................................... (11,356,554) $(151,245,333)
Class B................................... (2,191,661) (28,721,224)
Class C................................... (315,445) (4,179,382)
----------- -------------
Total Repurchases........................... (13,863,660) $(184,145,939)
=========== =============
</TABLE>

F-16
<PAGE> 534
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

At June 30, 1998, capital aggregated $77,375,241, $103,908,446 and
$11,600,254 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.................................. 9,586,041 $ 113,481,993
Class B.................................. 3,875,397 46,006,833
Class C.................................. 476,868 5,674,440
----------- ---------------
Total Sales................................ 13,938,306 $ 165,163,266
=========== ===============
Repurchases:
Class A.................................. (9,437,958) $ (112,683,409)
Class B.................................. (2,400,562) (28,531,040)
Class C.................................. (359,118) (4,189,363)
----------- ---------------
Total Repurchases.......................... (12,197,638) $ (145,403,812)
=========== ===============
</TABLE>

At June 30, 1997, capital aggregated $78,128,681, $88,239,951 and
$10,313,111 for Classes A, B, and C, respectively. For the year ended June 30,
1997, transactions were as follows:

F-17
<PAGE> 535
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

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
SALE CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- -------------------------------------------------------------------------
<S> <C> <C>
First................................................. 5.00% 1.00%
Second................................................ 4.00% None
Third................................................. 3.00% None
Fourth................................................ 2.50% None
Fifth................................................. 1.50% None
Sixth and Thereafter.................................. None None
</TABLE>

For the nine months ended March 31, 1999 and the year ended June 30, 1998,
Van Kampen, as Distributor for the Fund, received commissions on sales of the
Fund's Class A shares of approximately $137,300 and $140,600, respectively, and
CDSC on redeemed shares of approximately $327,300 and $412,300, respectively.
Sales charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS
For the nine months ended March 31, 1999, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $445,834,772
and $386,873,307, respectively. For the year ended June 30, 1998, the cost of
purchases and proceeds from sales of investments, excluding short-term
investments, were $447,463,505 and $431,097,637, 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 to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this

F-18
<PAGE> 536
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

March 31, 1999
- --------------------------------------------------------------------------------

instance, the recognition of gain or loss is postponed until the disposal of the
security underlying the 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 to
provide the return of an index without purchasing all of the securities
underlying the index or to manage the Fund's overall exposure to the equity
markets.
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).
Transactions in futures contracts for the nine months ended March 31, 1999,
were as follows:

<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at June 30, 1998.............................. -0-
Futures Opened............................................ 33
Futures Closed............................................ (33)
---
Outstanding at March 31, 1999............................. -0-
===
</TABLE>

There were no transactions in futures contracts for the year ended June 30,
1998.

F-19
<PAGE> 537

PART C: OTHER INFORMATION

ITEM 23. EXHIBITS.
(a)(1) Agreement and Declaration of Trust(7)
(2) Certificate of Amendment(9)

(3) Certificate of Designation:

<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(9)
(ii) Van Kampen Growth Fund(9)
(iii) Van Kampen Mid Cap Value Fund+
(iv) Van Kampen Great American Companies Fund(9)
(v) Van Kampen Prospector Fund(9)
(vi) Van Kampen Aggressive Growth Fund(9)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>

(b) By-Laws(7)

<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(7)
(ii) Van Kampen Growth Fund(7)
(iii) Van Kampen Mid Cap Value Fund(7)
(iv) Van Kampen Great American Companies Fund(7)
(v) Van Kampen Prospector Fund(7)
(vi) Van Kampen Aggressive Growth Fund(7)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>

(d) Investment Advisory Agreement for:

<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(8)
(ii) Van Kampen Growth Fund(8)
(iii) Van Kampen Mid Cap Value Fund(8)
(iv) Van Kampen Great American Companies Fund(8)
(v) Van Kampen Prospector Fund(8)
(vi) Van Kampen Aggressive Growth Fund(8)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>

(e)(1) Distribution and Service Agreement for:

(2) Form of Dealer Agreement(12)

(3) Form of Broker Fully Disclosed Clearing Agreement(12)

(4) Form of Bank Fully Disclosed Clearing Agreement(12)

(f)(1) Form of Trustee Deferred Compensation Agreement(11)

(2) Form of Trustee Retirement Plan(11)

(g)(1) Custodian Contract(12)

(2) Transfer Agency and Service Agreement(8)

(h)(1) Fund Accounting Agreement(12)

(2) Amended and Restated Legal Services Agreement(12)

(i) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois):

<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(3)
(ii) Van Kampen Growth Fund(5)
(iii) Van Kampen Mid Cap Value Fund(5)
(iv) Van Kampen Great American Companies Fund(5)
(v) Van Kampen Prospector Fund(5)
(vi) Van Kampen Aggressive Growth Fund(6)
(vii) Van Kampen Small Cap Value Fund(12)
</TABLE>

(j) Consents of KPMG LLP:

<TABLE>
<C> <S>
(i) Van Kampen Utility Fund+
(ii) Van Kampen Growth Fund+
(iii) Van Kampen Mid Cap Value Fund+
</TABLE>

C-1
<PAGE> 538

<TABLE>
<C> <S>
(iv) Van Kampen Great American Companies Fund+
(v) Van Kampen Prospector Fund+
(vi) Van Kampen Aggressive Growth Fund+
(vii) Van Kampen Small Cap Value Fund(12)
</TABLE>

(k) Not Applicable
(l) Letter of Understanding relating to initial capital(7)
(m)(1) Distribution Plan pursuant to Rule 12b-1 for:

(2) Form of Shareholder Assistance Agreement(12)

(3) Form of Administrative Services Agreement(12)

(4) Service Plan for:

(o)(1) Amended Multi-Class Plan(8)

(2) Van Kampen Small Cap Value Fund Multi-Class Plan(12)

(p) Power of Attorney+

(z)(1) List of certain investment companies in response to Item
27(a)+

(2) List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)+

- ---------------
(1) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 29, 1986.

(2) Incorporated herein by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on June 8, 1993.

(3) Incorporated herein by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on August 1, 1995.

(4) Incorporated herein by reference to Post-Effective Amendment No. 24 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on August 29, 1995.

(5) Incorporated herein by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 13, 1995.

(6) Incorporated herein by reference to Post-Effective Amendment No. 26 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on March 15, 1996.

(7) Incorporated herein by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 25, 1996.

(8) Incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 28, 1997.

(9) Incorporated herein by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on September 30, 1998.

(10) Incorporated herein by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on March 1, 1999.

(11) Incorporated herein by reference to Post-Effective Amendment No. 81 to Van
Kampen Harbor Fund's Registration Statement on Form N-1A, File Numbers
2-12685 and 811-739, filed April 29, 1999.

(12) Incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on June 16, 1999.

+ Filed herewith.

C-2
<PAGE> 539

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

None.

ITEM 25. INDEMNIFICATION.

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

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

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

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

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

Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds, Inc. (the
"Distributor") and each of its trustees and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damages,
or expense and reasonable counsel fees) arising by reason of any person

C-3
<PAGE> 540

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

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

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:

See "Investment Advisory Services" in each Prospectus and "Investment
Advisory Agreement," "Other Agreements," and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Investment Advisory Corp. (the "Adviser"). For information as to the
business, profession, vocation or employment of a substantial nature of each of
the officers and directors of the Adviser, reference is made to the Adviser's
current Form ADV (File No. 801-18161) filed under the Investment Advisers Act of
1940, as amended, incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS

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

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

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

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

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-4
<PAGE> 541

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act") and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN EQUITY TRUST, certifies that it meets all of the requirements for
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, has duly caused this Amendment to this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized in the City of Oakbrook Terrace, and the State of Illinois on
the 29th day of July, 1999.

VAN KAMPEN EQUITY TRUST

By: /s/ A. THOMAS SMITH III

-------------------------------------
A. Thomas Smith III, Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed on July 29, 1999, by the following
persons in the capacities indicated.

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

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

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

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

/s/ RICHARD M. DEMARTINI* Trustee
- ------------------------------------------------
Richard M. DeMartini

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

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

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

/s/ DON G. POWELL* Trustee
- ------------------------------------------------
Don G. Powell

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

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

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

/s/ SUZANNE H. WOOLSEY* Trustee
- ------------------------------------------------
Suzanne H. Woolsey

/s/ PAUL G. YOVOVICH* Trustee
- ------------------------------------------------
Paul G. Yovovich
- ---------------
* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.
/s/ A. THOMAS SMITH III July 29, 1999
- ------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact
</TABLE>

C-5
<PAGE> 542

SCHEDULE OF EXHIBITS TO

POST-EFFECTIVE AMENDMENT 33 TO FORM N-1A AS

SUBMITTED TO THE SECURITIES AND EXCHANGE

COMMISSION ON JULY 29, 1999

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
(a) (3) (iii) Certificate of Designation--Mid Cap Value Fund
(j) Consents of KPMG LLP:
(i) Van Kampen Utility Fund
(ii) Van Kampen Growth Fund
(iii) Van Kampen Mid Cap Value Fund
(iv) Van Kampen Great American Companies Fund
(v) Van Kampen Prospector Fund
(vi) Van Kampen Aggressive Growth Fund
(p) Power of Attorney
(z) (1) List of certain investment companies in response to Item
27(a).
(2) List of officers and directors of Van Kampen Funds Inc.
in response to Item 27(b).
</TABLE>

<PAGE> 1

EXHIBIT (a)(3)(iii)

VAN KAMPEN EQUITY TRUST
Second Amended and Restated Certificate of Designation
of
Van Kampen Mid Cap Value Fund

The undersigned, being the Secretary of Van Kampen Equity Trust, a Delaware
business trust (the "Trust"), pursuant to the authority conferred upon the
Trustees of the Trust by Section 6.1 of the Trust's Agreement and Declaration of
Trust ("Declaration"), and by the affirmative vote of a Majority of the Trustees
does hereby amend and restate in its entirety the Amended and Restated
Certificate of Designation of the Van Kampen American Capital Value Fund Series
of the Trust dated December 12, 1996 by redesignating such Series as the Van
Kampen Mid Cap Value Fund Series (the "Fund") with the following rights,
preferences and characteristics:

1. Shares. The beneficial interest in the Fund shall be divided into Shares
having a nominal or par value of $0.01 per Share, of which an unlimited number
may be issued, which Shares shall represent interests only in the Fund. The
Trustees shall have the authority from time to time to authorize separate Series
of Shares for the Trust as they deem necessary or desirable.

2. Classes of Shares. The Shares of the Fund shall be initially divided into
three classes--Class A, Class B and Class C. The Trustees shall have the
authority from time to time to authorize additional Classes of Shares of the
Fund

3. Sales Charges. Each Class A, Class B and Class C Share shall be subject to
such sales charges, if any, as may be established from time to time by the
Trustees in accordance with the Investment Company Act of 1940 (the "1940 Act")
and applicable rules and regulations of the National Association of Securities
Dealers, Inc., all as set forth in the Fund's prospectus.

4. Conversion. Each Class B Share and certain Class C Shares of the Fund shall
be converted automatically, and without any action or choice on the part of the
Shareholder thereof, into Class A Shares of the Fund at such times and pursuant
to such terms, conditions and restrictions as may be established by the Trustees
and as set forth in the Fund's Prospectus.

5. Allocation of Expenses Among Classes. Expenses related solely to a particular
Class (including, without limitation, distribution expenses under an
administrative or service agreement, plan or other arrangement, however
designated) shall be borne by that Class and shall be appropriately reflected
(in a manner determined by the Trustees) in the net asset value, dividends,
distribution and liquidation rights of the Shares of that Class.

<PAGE> 2

6. Special Meetings. A special meeting of Shareholders of a Class of the Fund
may be called with respect to the Rule 12b-1 distribution plan applicable to
such Class or with respect to any other proper purpose affecting only holders of
shares of such Class at any time by a Majority of the Trustees.

7. Other Rights Governed by Declaration. All other rights, preferences,
qualifications, limitations and restrictions with respect to Shares of any
Series of the Trust or with respect to any Class of Shares set forth in the
Declaration shall apply to Shares of the Fund unless otherwise specified in this
Certificate of Designation, in which case this Certificate of Designation shall
govern.

8. Amendments, etc. Subject to the provisions and limitations of Section 9.5 of
the Declaration and applicable law, this Certificate of Designation may be
amended by an instrument signed in writing by a Majority of the Trustees (or by
any officer of the Trust pursuant to the vote of a Majority of the Trustees) or
when authorized to do so by the vote in accordance with the Declaration of the
holders of a majority of all the Shares of the Fund outstanding and entitled to
vote or, if such amendment affects the Shares of one or more but not all of the
Classes of the Fund, the holders of a majority of all the Shares of the affected
Classes outstanding and entitled to vote.

9. Incorporation of Defined Terms. All capitalized terms which are not defined
herein shall have the same meaning as ascribed to those terms in the
Declaration.

October 22, 1998

/s/ Ronald A. Nyberg
-------------------------------
Ronald A. Nyberg, Secretary

<PAGE> 1
Exhibit (j)(i)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Utility Fund:

We consent to the use of our report included in the Statement of Additional
Information which is incorporated by reference into the Prospectus and to the
reference to our Firm under the headings "Financial Highlights" in the
Prospectus and "Other Information" in the Statement of Additional Information.

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
Exhibit (j)(ii)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Growth Fund:

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
Exhibit (j)(iii)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Mid Cap Value Fund:

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
Exhibit (j)(iv)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Great American Companies Fund:

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
Exhibit (j)(v)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Prospector Fund:

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
Exhibit (j)(vi)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Van Kampen Aggressive Growth Fund:

KPMG LLP

Chicago, Illinois
July 29, 1999

<PAGE> 1
EXHIBIT (p)

POWER OF ATTORNEY

The undersigned, being Officers and Trustees of each of the Van Kampen
Open End Trusts (individually, a "Trust") as indicated on Schedule 1 attached
hereto and incorporated by reference, each a Delaware business trust except for
the Van Kampen Pennsylvania Tax Free Income Fund being a Pennsylvania business
trust (individually, a "Trust"), and being Officers and Directors of the Van
Kampen Series Fund, Inc. (the "Corporation"), a Maryland corporation, do hereby,
in the capacities shown below, appoint Richard F. Powers, III, Dennis J.
McDonnell and A. Thomas Smith III, each of Oakbrook Terrace, Illinois, as agents
and attorneys-in-fact with full power of substitution and resubstitution, for
each of the undersigned, to execute and deliver, for and on behalf of the
undersigned, any and all amendments to the Registration Statement filed by each
Trust or the Corporation with the Securities and Exchange Commission pursuant to
the provisions of the Securities Act of 1933 and the Investment Company Act of
1940.

This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together shall constitute
one instrument.

Dated: June 23, 1999

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
RICHARD F. POWERS, III President
---------------------------
Richard F. Powers, III

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

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

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

/s/ RICHARD M. DEMARTINI Trustee/Director
---------------------------
Richard M. DeMartini

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

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

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

/s/ DON G. POWELL Trustee/Director
---------------------------
Don G. Powell

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

/s/ FERNANDO SISTO, SC.D. Trustee/Director
---------------------------
Fernando Sisto, Sc. D.

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

/s/ SUZANNE H. WOOLSEY Trustee/Director
----------------------------
Suzanne H. Woolsey

/s/ PAUL G. YOVOVICH Trustee/Director
---------------------------
Paul G. Yovovich
</TABLE>
<PAGE> 2
SCHEDULE 1

VAN KAMPEN U.S. GOVERNMENT TRUST
VAN KAMPEN TAX FREE TRUST
VAN KAMPEN TRUST
VAN KAMPEN EQUITY TRUST
VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN TAX FREE MONEY FUND
VAN KAMPEN COMSTOCK FUND
VAN KAMPEN CORPORATE BOND FUND
VAN KAMPEN EMERGING GROWTH FUND
VAN KAMPEN ENTERPRISE FUND
VAN KAMPEN EQUITY INCOME FUND
VAN KAMPEN LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
VAN KAMPEN GOVERNMENT SECURITIES FUND
VAN KAMPEN GROWTH AND INCOME FUND
VAN KAMPEN HARBOR FUND
VAN KAMPEN HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN LIFE INVESTMENT TRUST
VAN KAMPEN PACE FUND
VAN KAMPEN REAL ESTATE SECURITIES FUND
VAN KAMPEN RESERVE FUND
VAN KAMPEN TAX-EXEMPT FUND
VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN WORLD PORTFOLIO SERIES TRUST

<PAGE> 1
EXHIBIT (z)(1)

Item 27(a)
- ----------

Van Kampen U.S. Government Trust
Van Kampen U.S. Government Fund
Van Kampen Tax Free Trust
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen California Tax Free Income Fund*
Van Kampen Michigan Tax Free Income Fund*
Van Kampen Missouri Tax Free Income Fund*
Van Kampen Ohio Tax Free Income Fund*
Van Kampen Trust
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Equity Trust
Van Kampen Aggressive Growth Fund
Van Kampen Great American Companies Fund
Van Kampen Growth Fund
Van Kampen Mid Cap Value Fund
Van Kampen Prospector Fund
Van Kampen Small Cap Value Fund*
Van Kampen Utility Fund
Van Kampen Equity Trust II
Van Kampen Technology Fund*
Van Kampen Pennsylvania Tax Free Income Fund
Van Kampen Tax Free Money Fund
Van Kampen Prime Rate Income Trust
Van Kampen Senior Floating Rate Fund
Van Kampen Comstock Fund
Van Kampen Corporate Bond Fund
Van Kampen Emerging Growth Fund
Van Kampen Enterprise Fund
Van Kampen Equity Income Fund
Van Kampen Exchange Fund
The Explorer Institutional Trust
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 2

Van Kampen Limited Maturity Government Fund
Van Kampen Global Managed Assets Fund
Van Kampen Government Securities Fund
Van Kampen Growth and Income Fund
Van Kampen Harbor Fund
Van Kampen High Income Corporate Bond Fund
Van Kampen Life Investment Trust on behalf of its series
Asset Allocation Portfolio
Comstock Portfolio*
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio
Van Kampen Pace Fund
Van Kampen Real Estate Securities Fund
Van Kampen Reserve Fund
Van Kampen Tax - Exempt Trust
Van Kampen High Yield Municipal Fund
Van Kampen U.S. Government Trust for Income
Van Kampen World Portfolio Series Trust
Van Kampen Global Government Securities Fund
Van Kampen Series Fund, Inc.
Van Kampen Aggressive Equity Fund
Van Kampen American Value Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Debt Fund*
Van Kampen Emerging Markets Fund
Van Kampen Equity Growth Fund
Van Kampen European Equity Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Global Fixed Income Fund
Van Kampen Global Franchise Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth and Income Fund II*
Van Kampen High Yield & Total Return Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund*
Van Kampen Latin American Fund
Van Kampen Mid Cap Growth Fund*
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund*
Van Kampen Value Fund
Van Kampen Worldwide High Income Fund
<PAGE> 3

<TABLE>
<S> <C>
Insured Municipals Income Trust Series 412
Strategic Municipal Trust, Intermediate Series 2
California Insured Municipals Income Trust Series 181
Florida Insured Municipals Income Trust Series 126
Michigan Insured Municipals Income Trust Series 158
Missouri Insured Municipals Income Trust Series 112
Pennsylvania Insured Municipals Income Trust Series 244
Van Kampen Focus Portfolios Insured Income Trust Series 74
Internet Trust Series 15
The Dow SM Strategic 10 Trust July 1999
Series
The Dow SM Strategic 10 Trust July 1999
Traditional Series
The Dow SM Strategic 5 Trust July 1999
Series
The Dow SM Strategic 5 Trust July 1999
Traditional Series
EAFE Strategic 20 Trust July 1999 Series

Strategic Picks Opportunity Trust July 1999 Series

Great International Firms Trust Series 9
Brand Name Equity Trust Series 10
Dow 30 Index Trust Series 7
Dow 30 Index and Treasury Trust Series 9
Global Energy Trust Series 10
Financial Institutions Trust Series 1
Edward Jones Select Growth Trust July 1999
Series
Morgan Stanley High-Technology 35 Index Trust Series 7
Pharmaceutical Trust Series 6
Telecommunications and Bandwidth Trust Series 6
Utility Trust Series 6
</TABLE>

<PAGE> 4

<TABLE>
<S> <C>
Roaring 2000s Trust Series 2
Roaring 2000s Trust Traditional Series 2
Josepthal - The Online Portfolio Series 1
NatCity - Great American Equities Trust Series 2
Baird - Financial Institutions Trust 1999 Series
Josepthal - Europe/Pacific Strategy Trust Series 2
</TABLE>

* Funds that have not commenced investment operations.

<PAGE> 1
EXHIBIT (z)(2)

Item 27(b)
- ----------
<TABLE>

<S> <C> <C>
Richard F. Powers III Chairman & Chief Executive Officer Oakbrook Terrace, IL
John H. Zimmerman III President Oakbrook Terrace, IL
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary;
Vice President and Secretary of the Funds
William R. Rybak Executive Vice President, Chief
Financial Officer & Treasurer Oakbrook Terrace, IL
Michael H. Santo Executive Vice President & Chief
Administrative Officer Oakbrook Terrace, IL
Paul R. Wolkenberg Executive Vice President Oakbrook Terrace, IL

Laurence J. Althoff Sr. Vice President & Controller Oakbrook Terrace, IL
James J. Boyne Sr. Vice President, Associate General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
John E. Doyle Sr. Vice President Oakbrook Terrace, IL
Richard G. Golod, Sr. Vice President Annapolis, MD
Steven T. Johnson Sr. Vice President Oakbrook Terrace, IL
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Walter E. Rein Sr. Vice President Oakbrook Terrace, IL
James J. Ryan Sr. Vice President Oakbrook Terrace, IL
Colette M. Saucedo Sr. Vice President Houston, TX
Frederick Shepherd Sr. Vice President Houston, TX
Steven P. Sorenson Sr. Vice President Oakbrook Terrace, IL
Michael L. Stallard Sr. Vice President Oakbrook Terrace, IL
Robert S. West Sr. Vice President Oakbrook Terrace, IL
Patrick J. Woelfel Sr. Vice President Oakbrook Terrace, IL
Edward G. Wood, III Sr. Vice President,
Chief Operating Officer; Oakbrook Terrace. IL
Vice President of the Funds

Patricia A. Bettlach 1st Vice President Chesterfield, MO
Glenn M. Cackovic 1st Vice President Laguna Niguel, CA
Eric J. Hargens 1st Vice President Orlando, FL
Gregory Heffington 1st Vice President Ft. Collins, CO
David S. Hogaboom 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President Danville, CA
Carl Mayfield 1st Vice President Lakewood, CO
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
Maura A. McGrath 1st Vice President New York, NY
Thomas Rowley 1st Vice President St. Louis, MO
Andrew J. Scherer 1st Vice President Oakbrook Terrace, IL
George J. Vogel 1st Vice President Oakbrook Terrace, IL
James D. Stevens 1st Vice President North Andover, MA
</TABLE>

<PAGE> 2

<TABLE>
<S> <C> <C>
James R. Yount 1st Vice President Mercer Island, WA

James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Scott C. Bemstiel Vice President Plainsboro, NJ
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Elizabeth M. Brown Vice President Houston, TX
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Christine Cleary Byrum Vice President Tampa, FL
Daniel R. Chambers Vice President Austin, TX
Richard J. Charlino Vice President Oakbrook Terrace, IL
Deanne Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
German Clavijo Vice President Atlanta, GA
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Suzanne Cummings Vice President Oakbrook Terrace, IL
Michael E. Eccleston Vice President Oakbrook Terrace, IL
Christopher J. Egan Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John G. Hansen Vice President Oakbrook Terrace, IL
Joseph Hays Vice President Cherry Hill, NJ
Susan J. Hill Vice President Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
Bryn M. Hoggard Vice President Houston, TX
Michael B. Hughes Vice President Oakbrook Terrace, IL
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Dana R. Klein Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Senior Compliance Director Oakbrook Terrace, IL
Richard D. Kozlowski Vice President Atlanta, GA
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
Tony E. Leal Vice President Daphne, AL
</TABLE>

<S> <C> <C>
S. William Lehew III Vice President Charlotte, NC
Eric Levinson Vice President San Francisco, CA
Jonathan Linstra Vice President Oakbrook Terrace, IL
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Linda S. MacAyeal Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
Stuart R. Moehlman Vice President Houston, TX
Ted Morrow Vice President Dallas, TX
Robert Muller, Jr. Vice President Cypress, TX
Peter Nicholas Vice President Beverly, MA
Steven R. Norvid Vice President Oakbrook Terrace, IL
Todd W. Page Vice President Oakbrook Terrace, IL
Gregory S. Parker Vice President Houston, TX
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Richard J. Poli Vice President Philadelphia, PA
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Fairlawn, OH
Daniel D. Reams Vice President Royal Oak, MI
Michael W. Rohr Vice President Oakbrook Terrace. IL
Jeffrey L. Rose Vice President Houston, TX
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Bedford Corners, NY
Christina L. Schmieder Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Gwen L. Shaneyfalt Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorenson Vice President Oakbrook Terrace, IL
Kimberly M. Spangler Vice President Fairfax, VA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Richard Stefanec Vice President Los Angles, CA
William C. Strafford Vice President Granger, IN
Mark A. Syswerda Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Todd A. Volkman Vice President Austin, TX
Daniel B. Waldron Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Weston B. Wetherell Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Asst. Secretary;
Assistant Secretary of the Funds
Frank L. Wheeler Vice President Oakbrook Terrace, IL
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Joel John Wilczewski Vice President Oakbrook Terrace, IL
Thomas M. Wilson Vice President Oakbrook Terrace, IL
Barbara A. Withers Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 4
<TABLE>

<S> <C> <C>
David M. Wynn Vice President Phoenix, AZ
Patrick M. Zacchea Vice President Oakbrook Terrace, IL

Scott F. Becker Asst. Vice President Oakbrook Terrace, IL
Brian E. Binder Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Gregory T. Brunk Asst. Vice President Oakbrook Terrace, IL
Gina Costello Asst. Vice President Oakbrook Terrace, IL
Sarah K. Geiser Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Laurie L. Jones Asst. Vice President Houston, TX
Robin R. Jordan Asst. Vice President Oakbrook Terrace, IL
Ivan R. Lowe Asst. Vice President Houston, TX
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Regina Rosen Asst. Vice President Oakbrook Terrace, IL
Pamela S. Salley Asst. Vice President Houston, TX
Thomas J. Sauerborn Asst. Vice President New York, NY
David T. Saylor Asst. Vice President Oakbrook Terrace, IL
Lauren B. Sinai Asst. Vice President Oakbrook Terrace, IL
Kristen L. Transier Asst. Vice President Houston, TX
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Sharon M. C. Wells Asst. Vice President Oakbrook Terrace, IL

Cathy Napoli Assistant Secretary Oakbrook Terrace, IL
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Rebecca Newman Officer Houston, TX
Theresa M. Renn Officer Oakbrook Terrace, IL
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
Richard F. Powers III Director Oakbrook Terrace, IL
A. Thomas Smith III Director Oakbrook Terrace, IL
William R. Rybak Director Oakbrook Terrace, IL
John H. Zimmerman III Director Oakbrook Terrace, IL
</TABLE>