VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST, 485BPOS, 1997-09-26

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
485BPOS, 1997-09-26

Previous: SCHWAB INVESTMENTS, 485APOS, 1997-09-26

Next: STRATUS FUND INC, 485BPOS, 1997-09-26

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1997

REGISTRATION NOS. 33-37879
811-6220
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 14 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 15 [X]
</TABLE>

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

(EXACT NAME OF REGISTRANT AS SPECIFIED IN THE DECLARATION OF TRUST)
ONE PARKVIEW PLAZA, OAKBROOK TERRACE, ILLINOIS 60181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(630) 684-6000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

RONALD A. NYBERG, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
VAN KAMPEN AMERICAN CAPITAL, INC.
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, IL 60181
(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPIES TO:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, IL 60606
(312) 407-0700
---------------------

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

It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)

[X] on September 28, 1997 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(i)

[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

[X] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

DECLARATION PURSUANT TO RULE 24f-2

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940 AND
INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION A FORM 24f-2 FOR ITS
FISCAL YEAR ENDING MAY 31, 1998 ON OR ABOUT AUGUST 29, 1998.
================================================================================
<PAGE> 2

EXPLANATORY NOTE

This Post-Effective Amendment No. 14 to the Registrant's Registration
Statement contains two Prospectuses and two Statements of Additional Information
describing the two series of the Registrant. The Registration Statement is
organized as follows:

Facing Page

Explanatory Note

Cross-Reference Page

Prospectus for:

Van Kampen American Capital Global Equity Fund

Van Kampen American Capital Global Government Securities Fund

Statement of Additional Information for:

Van Kampen American Capital Global Equity Fund

Van Kampen American Capital Global Government Securities Fund

Part C Information

Exhibits

<PAGE> 3

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
PROSPECTUS CAPTION
FORM N-1A ITEM PART A ------------------
<C> <S> <C>
1. Cover Page................................. Cover Page
2. Synopsis................................... Prospectus Summary; Shareholder Transaction
Expenses; Annual Fund Operating Expenses
and Example
3. Condensed Financial Information............ Financial Highlights; Fund Performance
4. General Description of Registrant.......... The Trust; Investment Objective and
Policies; Investment Practices; Description
of Shares of the Fund
5. Management of the Fund..................... Annual Fund Operating Expenses and Example;
The Trust; Investment Practices;
Investment Advisory Services; Inside Back
Cover
6. Capital Stock and Other Securities......... Alternative Sales Arrangements; Purchase of
Shares; Shareholder Services;
Distribution and Service Plans;
Redemption of Shares; Distribution and
Service Plans; Distributions from the
Fund; Tax Status; Description of Shares
of the Fund; Inside Back Cover
7. Purchase of Securities Being Offered....... Alternative Sales Arrangements; Purchase of
Shares; Shareholder Services;
Distribution and Service Plans
8. Redemption or Repurchase................... Shareholder Services; Redemption of Shares
9. Pending Legal Proceedings.................. Inapplicable
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION CAPTION
PART B -------------------------------------------
<C> <S> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ General Information
13. Investment Objectives and Policies......... Investment Policies and Techniques;
Options, Futures Contracts and Related
Options; Repurchase Agreements; Loans of
Portfolio Securities; Investment
Restrictions
14. Management of the Fund..................... General Information; Trustees and Officers;
Investment Advisory Agreements
15. Control Persons and Principal Holders of
Securities............................... General Information; Trustees and Officers;
Investment Advisory Agreements
16. Investment Advisory and Other Services..... General Information; Trustees and Officers;
Investment Advisory Agreements;
Distributor; Distribution and Service
Plans; Transfer Agent; Portfolio
Transactions and Brokerage; Other
Information
17. Brokerage Allocation and Other Practices... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities......... Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Determination of Net Asset Value; Purchase
and Redemption of Shares; Exchange
Privilege
20. Tax Status................................. Tax Status of the Fund
21. Underwriters............................... Distributor
22. Calculation of Performance Data............ Fund Performance
23. Financial Statements....................... Report of Independent Accountants;
Financial Statements; Notes to Financial
Statements
PART C
</TABLE>

Information required to be included in Part C is set forth under the
appropriate item in Part C of this registration statement.
<PAGE> 4

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

VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
- ------------------------------------------------------------------------------

Van Kampen American Capital Global Equity Fund (the "Fund") is a separate,
diversified series of Van Kampen American Capital World Portfolio Series Trust
(the "Trust"), an open-end management investment company. The Fund's investment
objective is to seek to provide long-term growth of capital. The Fund seeks to
achieve its investment objective by investing in an internationally diversified
portfolio of equity securities of companies located in any nation, including the
United States. There is no assurance that the Fund will achieve its investment
objective.

The Fund's investment adviser is Van Kampen American Capital Asset
Management, Inc. (the "Adviser"). Morgan Stanley Asset Management Inc. provides
sub-advisory services to the Adviser of the Fund (the "Subadviser"). This
Prospectus sets forth certain information that a prospective investor should
know before investing in the Fund. Please read it carefully and retain it for
future reference. The address of the Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, and its telephone number is (800) 421-5666.

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

A Statement of Additional Information, dated September 28, 1997, containing
additional information about the Fund is hereby incorporated in its entirety
into this Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling (800) 421-5666 or for Telecommunications
Device for the Deaf at (800) 421-2833. The Statement of Additional Information
has been filed with the Securities and Exchange Commission (the "SEC") and is
available along with other related materials of the Fund at the SEC's internet
web site (http://www.sec.gov).

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

THIS PROSPECTUS IS DATED SEPTEMBER 28, 1997.

<PAGE> 5

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 5
Annual Fund Operating Expenses and Example.................. 6
Financial Highlights........................................ 8
The Trust................................................... 10
Investment Objective and Policies........................... 10
Investment Practices........................................ 14
Investment Advisory Services................................ 19
Alternative Sales Arrangements.............................. 22
Purchase of Shares.......................................... 25
Shareholder Services........................................ 35
Redemption of Shares........................................ 39
Distribution and Service Plans.............................. 42
Distributions from the Fund................................. 44
Tax Status.................................................. 44
Fund Performance............................................ 50
Description of Shares of the Fund........................... 52
Additional Information...................................... 53
</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 ADVISER OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTOR TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION.

2
<PAGE> 6

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

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

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

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek to provide
long-term growth of capital. There is no assurance the Fund will achieve its
investment objective. See "Investment Objective and Policies."

INVESTMENT POLICY. The Fund seeks to achieve its investment objective by
investing in an internationally diversified portfolio of equity securities of
companies located in any nation, including the United States. See "Investment
Objective and Policies."

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

RISK FACTORS. Investing in equity securities of foreign issuers may subject the
Fund to risks of foreign political, economic and legal conditions and
developments. See "Investment Objective and Policies -- Risk Factors." The Fund
may purchase and sell options, futures contracts and related options, which
include additional risks. See "Investment Practices -- Using Options, Futures
Contracts and Related Options."

ALTERNATIVE SALES ARRANGEMENTS. The Fund offers three classes of shares to the
public, each with its own sales charge structure: Class A shares, Class B shares
and Class C shares. Each class has distinct advantages and disadvantages for
different investors, and investors may choose the class of shares that best
suits their circumstances and objectives. Each class of shares represents an
interest in the same portfolio of investments of the Fund. See "Alternative
Sales Arrangements."

Class A Shares. Class A shares are offered at net asset value per share plus a
maximum initial sales charge of 5.75% of the offering price (6.10% of the net
amount invested), reduced on investments of $50,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a contingent deferred sales charge ("CDSC") of 1.00% may be imposed on
redemptions made within one year of the purchase. Class A shares are subject to
an annual service fee of up to 0.25% of its average daily net assets
attributable to such class of shares. See "Purchase of Shares -- Class A Shares"
and "Distribution and Service Plans."

3
<PAGE> 7

Class B Shares. Class B shares are offered at net asset value per share and
are subject to a maximum CDSC of 5.00% on redemptions made within the first year
after purchase and declining thereafter to 0.00% after the fifth year. See
"Redemption of Shares." Class B shares are subject to a combined annual
distribution fee and service fee of up to 1.00% of the Fund's average daily net
assets attributable to such class of shares. See "Purchase of Shares -- Class B
Shares" and "Distribution and Service Plans." Class B shares convert
automatically to Class A shares eight years after the end of the calendar month
in which the shareholder's order to purchase was accepted. See "Alternative
Sales Arrangements -- Conversion Feature."

Class C Shares. Class C shares are offered at net asset value per share and
are subject to a CDSC of 1.00% on redemptions made within one year of purchase.
See "Redemption of Shares." Class C shares are subject to a combined annual
distribution fee and service fee of up to 1.00% of the Fund's average daily net
assets attributable to such class of shares. See "Purchase of Shares -- Class C
Shares" and "Distribution and Service Plans."

INVESTMENT ADVISERS. Van Kampen American Capital Asset Management, Inc. (the
"Adviser") is the Fund's investment adviser. Morgan Stanley Asset Management
Inc. (the "Subadviser") provides sub-advisory services to the Adviser.

DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor")
distributes the Fund's shares.

DISTRIBUTIONS FROM THE FUND. Dividends from net investment income and capital
gains, if any, are distributed annually. All dividends and distributions are
automatically reinvested in shares of the Fund at net asset value per share
(without sales charge) unless payment in cash is requested. See "Distributions
from the Fund."

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

4
<PAGE> 8

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price)................. 5.75%(1) None None
Maximum sales charge imposed on
reinvested dividends (as a
percentage of offering price)... None None None
Deferred sales charge (as a
percentage of the lesser of
original purchase price or Year
redemption proceeds)............ None(2) Year 1--5.00% 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage
of amount redeemed)............. None None None
Exchange 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 CDSC of 1.00% may be imposed on redemptions made
within one year of the purchase. See "Purchase of Shares -- Class A Shares."

5
<PAGE> 9

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average
daily net assets)........................ 1.00% 1.00% 1.00%
12b-1 Fees (as a percentage of average
daily net assets)(1)..................... 0.25% 1.00%(2) 1.00%(2)
Other Expenses (as a percentage of average
daily net assets)........................ 0.84% 0.86% 0.87%
Total Fund Operating Expenses (as a
percentage of average daily net
assets).................................. 2.09% 2.86% 2.87%
</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 "Distribution and Service Plans."

(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted as a Fund-level expense by NASD
Rules.

6
<PAGE> 10

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
EXAMPLE: ---- ----- ----- -----
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (i) an
operating expense ratio of 2.09% for
Class A shares, 2.86% for Class B shares
and 2.87% for Class C shares, (ii) a
5.00% annual return and (iii) redemption
at the end of each time period:
Class A................................ $77 $119 $163 $286
Class B................................ $79 $119 $166 $300*
Class C................................ $39 $ 89 $151 $320
You would pay the following expenses on the
same $1,000 investment assuming no
redemption at the end of each time
period:
Class A................................ $77 $119 $163 $286
Class B................................ $29 $ 89 $151 $300*
Class C................................ $29 $ 89 $151 $320
</TABLE>

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

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

7
<PAGE> 11

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Selected data for a share of beneficial interest
outstanding throughout each of the periods indicated)
- --------------------------------------------------------------------------------

The following financial highlights have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon was unqualified. The most recent
annual report (which contains financial highlights for the last five years) is
included in the Statement of Additional Information and may be obtained by
shareholders without charge by calling the telephone number on the 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
-------------------------------------------------------------------------------------
YEAR ENDED MAY 31, AUG. 5, 1991
--------------------------------------------------- (COMMENCEMENT OF DISTRIBUTION)
1997(E) 1996(A) 1995(A) 1994 1993(A) TO MAY 31, 1992(A)
------- ------- ------- ------- ------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................. $13.98 $11.79 $11.67 $ 10.76 $10.44 $ 9.33
-------- ------- ------- ------- ------- -----
Net Investment Gain (Loss)............. (.064) (.04) (.04) (.06) (.055) .025
Net Realized and Unrealized Gain on
Securities........................... 2.460 2.561 .42 1.0125 .7775 1.145
-------- ------- ------- ------- ------- -----
Total from Investment Operations........ 2.396 2.521 .38 .9525 .7225 1.17
-------- ------- ------- ------- ------- -----
Less:
Distributions in Excess of Net
Investment Income.................... .137 -0- -0- -0- -0- -0-
Distributions from and in Excess of Net
Realized Gain on Securities.......... .401 .331 .26 .0425 .4025 .06
-------- ------- ------- ------- ------- -----
Total Distributions..................... .538 .331 .26 .0425 .4025 .06
-------- ------- ------- ------- ------- -----
Net Asset Value, End of the Period...... $15.838 $13.98 $11.79 $ 11.67 $10.76 $10.44
======== ======= ======= ======= ======= =====
Total Return(b)......................... 17.67% 21.85% 3.36% 9.17% 7.13% 12.56%
Net Assets at End of the Period (In
millions).............................. $136.9 $106.7 $60.1 $41.8 $12.7 $8.4
Ratio of Expenses to Average Net
Assets(c).............................. 2.09% 2.22% 2.29% 2.46% 2.93% 2.07%
Ratio of Net Investment Loss to Average
Net Assets(c).......................... (.46%) (.30%) (.35%) (.46%) (.57%) .29%
Portfolio Turnover...................... 144% 94% 120% 116% 120% 135%
Average Commission Rate per Equity Share
Traded(d).............................. $.0206 $.0199 -- -- -- --
</TABLE>

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

(a) Based on average month-end 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) For the year ended May 31, 1993, the Ratios of Expenses and Net Investment
Loss to Average Net Assets would have been 3.28% and (.92%), respectively,
had the Adviser not reimbursed certain expenses of the Fund. The impact on
the Ratios due to the Adviser's reimbursement of certain expenses for other
periods was less than 0.01%.

(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.

(e) The Fund changed its investment subadviser effective April 1, 1997. See
"Investment Advisory Services."

(Table continued on following page)

8
<PAGE> 12

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------------------------------------------
NOV. 15, 1991
YEAR ENDED MAY 31, (COMMENCEMENT OF
---------------------------------------------- DISTRIBUTION)
1997(E) 1996(A) 1995(A) 1994 1993(A) TO MAY 31, 1992(A)
------- ------- ------- ------ ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $ 13.53 $11.50 $11.48 $10.67 $10.46 $ 9.78
------- ------ ------ ------ ------ -----
Net Investment Loss............................. (.139) (.14) (.13) (.13) (.135) (.005)
Net Realized and Unrealized Gain on
Securities.................................... 2.358 2.501 .41 .9825 .7475 .745
------- ------ ------ ------ ------ -----
Total from Investment Operations................. 2.219 2.361 .28 .8525 .6125 .74
------- ------ ------ ------ ------ -----
Less:
Distributions in Excess of Net Investment
Income........................................ .030 -0- -0- -0- -0- -0-
Distributions from and in Excess of Net Realized
Gain on Securities............................ .401 .331 .26 .0425 .4025 .06
------- ------ ------ ------ ------ -----
Total Distributions.............................. .431 .331 .26 .0425 .4025 .06
------- ------ ------ ------ ------ -----
Net Asset Value, End of the Period............... $15.318 $13.53 $11.50 $11.48 $10.67 $10.46
======= ====== ====== ====== ====== =====
Total Return(b).................................. 16.83% 20.90% 2.62% 8.21% 6.15% 7.58%
Net Assets at End of the Period (In millions).... $ 124.1 $ 92.8 $ 64.7 $ 48.8 $ 6.9 $ 1.2
Ratio of Expenses to Average Net Assets(c)....... 2.86% 2.99% 3.05% 3.21% 3.88% 3.11%
Ratio of Net Investment Loss to Average Net
Assets(c)....................................... (1.22%) (1.11%) (1.11%) (1.19%) (1.41%) (.12%)
Portfolio Turnover............................... 144% 94% 120% 116% 120% 135%
Average Commission Rate per Equity Share
Traded(d)....................................... $ .0206 $.0199 -- -- -- --

<CAPTION>
CLASS C SHARES
------------------------------------------------
JUNE 21, 1993
YEAR ENDED MAY 31, (COMMENCEMENT OF
--------------------------- DISTRIBUTION)
1997(E) 1996(A) 1995(A) TO MAY 31, 1994(A)
------- ------- ------- ------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period......... $ 13.66 $11.61 $11.59 $ 10.29
------- ------ ------ -------
Net Investment Loss............................. (.137) (.14) (.13) (.13)
Net Realized and Unrealized Gain on
Securities.................................... 2.372 2.521 .41 1.4725
------- ------ ------ -------
Total from Investment Operations................. 2.235 2.381 .28 1.3425
------- ------ ------ -------
Less:
Distributions in Excess of Net Investment
Income........................................ .030 -0- -0- -0-
Distributions from and in Excess of Net Realized
Gain on Securities............................ .401 .331 .26 .0425
------- ------ ------ -------
Total Distributions.............................. .431 .331 .26 .0425
------- ------ ------ -------
Net Asset Value, End of the Period............... $15.464 $13.66 $11.61 $ 11.59
======= ====== ====== =======
Total Return(b).................................. 16.82% 20.87% 2.60% 13.06%*
Net Assets at End of the Period (In millions).... $ 13.0 $ 9.2 $ 6.6 $ 5.1
Ratio of Expenses to Average Net Assets(c)....... 2.87% 3.00% 3.05% 3.21%
Ratio of Net Investment Loss to Average Net
Assets(c)....................................... (1.23%) (1.10%) (1.13%) (1.15%)
Portfolio Turnover............................... 144% 94% 120% 116%
Average Commission Rate per Equity Share
Traded(d)....................................... $ .0206 $.0199 -- --
</TABLE>

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

* Non-Annualized.

(a) Based on average month-end 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) For the year ended May 31, 1993, the Ratios of Expenses and Net Investment
Loss to Average Net Assets for Class B Shares would have been 4.50% and
(2.02%), respectively, had the Adviser not reimbursed certain expenses of
the Fund. The impact on the Ratios due to the Adviser's reimbursement of
certain expenses for the other periods presented was less than 0.01%.

(e) The Fund changed its investment subadviser effective April 1, 1997. See
"Investment Advisory Services."

9
<PAGE> 13

- ------------------------------------------------------------------------------
THE TRUST
- ------------------------------------------------------------------------------

The Trust is an open-end management investment company, commonly known as a
mutual fund. A mutual fund provides, for those who have similar investment
goals, a practical and convenient way to invest in a diversified portfolio of
securities by combining their resources in an effort to achieve such goals.

Van Kampen American Capital Asset Management, Inc. (the "Adviser") provides
investment advisory and administrative services to the Fund. The Adviser and its
affiliates also manage other mutual funds distributed by Van Kampen American
Capital Distributors, Inc. (the "Distributor"). To obtain prospectuses and other
information on any of these other funds, please call the telephone number on the
cover page of the Prospectus.

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

The investment objective of the Fund is to seek to provide long-term growth of
capital. The Fund seeks to achieve its investment objective by investing in an
internationally diversified portfolio of equity securities of companies located
in any nation, including the United States. The Fund intends to be invested in
equity securities of companies located in at least three countries, including
the United States. Under normal market conditions, at least 65% of the Fund's
total assets are so invested. Equity securities include common stocks, preferred
stocks and warrants or options to acquire such securities. In selecting
portfolio securities, the Fund attempts to take advantage of the differences
between economic trends and the anticipated performance of securities markets in
various countries.

The Adviser, subject to the direction of the Trustees, provides the Fund with
an overall investment program consistent with the Fund's investment objective
and policies. The Subadviser, subject to overall review by the Adviser and the
Fund's Trustees, is responsible for recommending an optimal geographic equity
allocation and is responsible for providing advice with respect to specific
investments. Investments may be shifted among the world's various capital
markets and among different types of securities in accordance with ongoing
analysis provided by the Adviser and the Subadviser of trends and developments
affecting such markets and securities. The Adviser and the Subadviser are
sometimes referred to herein collectively as the Adviser.

10
<PAGE> 14

The Adviser utilizes a "top-down" approach in selecting investments for the
Fund that emphasizes country selection and weighting rather than individual
securities selection. This approach reflects the Adviser's philosophy that a
diversified selection of securities representing exposure to world markets based
upon the economic outlook and current valuation levels for each country is an
effective way to maximize the return and minimize the risk associated with
global investment. There is no assurance that the Adviser's approach will be
successful or that the Fund's investment objective will be realized.

The Adviser determines country allocations for the Fund on an ongoing basis
within policy ranges dictated by each country's market capitalization and
liquidity. The Fund will invest in the United States and other industrialized
countries throughout the world that comprise the Morgan Stanley Capital
International World Index. These countries currently are Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Italy, Japan, the
Netherlands, New Zealand, Norway, Singapore/Malaysia, Spain, Sweden,
Switzerland, the United Kingdom and the United States. In addition, the Fund may
invest a portion of its assets in emerging country equity securities. The Fund
currently intends to invest in some or all of the following countries:
Argentina, Indonesia, Portugal, South Africa, Brazil, Malaysia, Philippines,
Thailand, India, Mexico, South Korea and Turkey.

By analyzing a variety of macroeconomic and political factors, the Adviser
develops fundamental projections on interest rates, currencies, corporate
profits and economic growth for each country. These country projections are then
used to determine what the Adviser believes to be a fair value for the stock
market of each country. Discrepancies between actual value and fair value, as
determined by the Adviser, provide an expected return for each stock market. The
expected return is adjusted by currency return expectations derived from the
Adviser purchasing-power parity exchange rate model to arrive at an expected
total return in U.S. Dollars. The final country allocation decision is then
reached by considering the expected total return in light of various country
specific considerations such as market size, volatility, liquidity and country
risk.

Within a particular country, investments are made through the purchase of
equity securities which, in the aggregate, replicate a broad market index, which
in most cases will be the Morgan Stanley Capital International ("MSCI") Index
for the particular country. The MSCI Indices measure the performance of stock
markets worldwide. The various MSCI Indices are based on the share prices of
companies listed on the local stock exchange of the specified country or
countries within a specified region. The combined market capitalization of
companies in these indices represent approximately 60 percent of the aggregate
market value of the covered stock exchanges. Companies included in the MSCI
country index replicate the industry composition of the local market and are a
representative sampling of large,

11
<PAGE> 15

medium and small companies, subject to liquidity. Non-domiciled companies traded
on the local exchange and companies with restricted float due to dominant
shareholders or cross-ownership are avoided. The Adviser may overweight or
underweight an industry segment of a particular index if it concludes this would
be advantageous to the Fund.

The Fund may purchase foreign securities in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs") or other securities
representing underlying shares of foreign companies. ADRs are publicly traded on
exchanges or over-the-counter in the United States and are issued through
"sponsored" or "unsponsored" arrangements. In a sponsored ADR arrangement, the
foreign issuer assumes the obligation to pay some or all of the depositary's
transaction fees, whereas under an unsponsored arrangement, the foreign issuer
assumes no obligations and the depositary's transaction fees are paid by the ADR
holders. In addition, less information is available in the United States about
an unsponsored ADR than about a sponsored ADR. The Fund may invest in ADRs
through both sponsored and unsponsored arrangements.

The Fund may invest cash temporarily in short-term debt instruments. Such
temporary investments will only be made with cash held to maintain liquidity or
pending investment. See "Temporary Short-Term Investments" herein.

The investment policies, the percentage limitations and the types of
securities in which the Fund may invest may be changed by the Trustees, unless
expressly governed by those limitations as described under "Investment
Practices -- Investment Restrictions" which can be changed only by action of the
shareholders.

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

RISK FACTORS. An investment in the Fund involves risks similar to those of
investing in foreign equity securities generally. Investment in equity
securities of foreign issuers may subject the Fund to risks of foreign
political, economic and legal conditions and developments. Such conditions or
developments might include favorable or unfavorable changes in currency exchange
rates, exchange control regulations (including currency blockage), expropriation
of assets of companies, imposition of withholding taxes on dividend or interest
payments, and possible difficulty in obtaining and enforcing judgments against a
foreign issuer. Also, foreign equity securities may not be as liquid and may be
more volatile than comparable domestic equity securities.

Issuers of foreign equity securities are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers.

12
<PAGE> 16

Brokerage costs incurred in purchasing and selling securities in foreign
securities markets generally are higher than such costs in comparable
transactions in domestic securities markets, and foreign custodial costs
relating to the Fund's portfolio securities are higher than domestic custodial
costs. See also "Investment Practices" for a discussion of certain additional
risks related to investment practices that may be utilized by the Fund,
including use of options, futures contracts and related options.

FOREIGN CURRENCY TRANSACTIONS. The value of the Fund's portfolio securities
that are traded in foreign markets may be affected by changes in currency
exchange rates and exchange control regulations. In addition, the Fund will
incur costs in connection with conversions between various currencies. The
Fund's foreign currency exchange transactions generally will be conducted on a
spot basis (that is, cash basis) at the spot rate for purchasing or selling
currency prevailing in the foreign currency exchange market. The Fund purchases
and sells foreign currency on a spot basis in connection with the settlement of
transactions in securities traded in such foreign currency. The Fund does not
purchase and sell foreign currencies as an investment.

The Fund also may enter into contracts with banks or other foreign currency
brokers or dealers to purchase or sell foreign currencies at a future date
("forward contracts") and purchase and sell foreign currency futures contracts
to hedge against changes in foreign currency exchange rates. A foreign currency
forward contract is a negotiated agreement between the contracting parties to
exchange a specified amount of currency at a specified future time at a
specified rate. The rate can be higher or lower than the spot rate between the
currencies that are the subject of the contract.

The Fund may attempt to hedge against changes in the value of the United
States dollar in relation to a foreign currency by entering into a forward
contract for the purchase or sale of the amount of foreign currency invested or
to be invested, or by buying or selling a foreign currency futures contract for
such amount. Such hedging strategies may be employed before the Fund purchases a
foreign security traded in the hedged currency which the Fund anticipates
acquiring or between the date the foreign security is purchased or sold and the
date on which payment therefor is made or received. Hedging against a change in
the value of a foreign currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions reduce
or preclude the opportunity for gain if the value of the hedged currency should
move in the direction opposite to the hedged position. The Fund will not
speculate in foreign currency forward or futures contracts or through the
purchase and sale of foreign currencies.

TEMPORARY SHORT-TERM INVESTMENTS. The Fund's policy is to be fully invested in
common stocks and securities convertible into common stocks. The Fund may,

13
<PAGE> 17

however, hold a portion of its assets in cash to meet redemptions and other
day-to-day operating expenses. In addition, the Fund may hold a portion or all
of assets in cash as a temporary defensive strategy when the Adviser determines
such a strategy is necessary in light of significant adverse market, economic,
political or other circumstances. It is impossible to predict when or for how
long the Fund will employ such defensive strategy. The Fund may invest cash held
for such purposes in obligations of the United States and of foreign
governments, including their political subdivisions, commercial paper, bankers'
acceptances, certificates of deposit, repurchase agreements collateralized by
these securities, and other short-term evidences of indebtedness. The Fund will
purchase commercial paper only if it is rated Prime-1 or Prime-2 by Moody's
Investors Services, Inc. or A-1 or A-2 by Standard & Poor's Ratings Group. The
Fund also may invest cash held for such purposes in short-term, high grade
foreign debt securities. High grade foreign debt securities are those debt
securities of foreign issuers which the Adviser determines to have
creditworthiness substantially equivalent to that of domestic issuers of debt
securities rated investment grade.

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

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
domestic or foreign 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 debt 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 a default by the other party. 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,
exceeds 10% of the value of the Fund's net assets. In the event of the
bankruptcy or other default of the seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying securities 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.

14
<PAGE> 18

Fund investing separately. The manner in which the joint account is managed is
subject to conditions set forth in an SEC exemptive order authorizing this
practice, which conditions are designed to ensure the fair administration of the
joint account and to protect the amounts in that account.

PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES. The Adviser is responsible for
the placement of orders for the purchase and sale of portfolio securities for
the Fund and the negotiation of brokerage commissions on such transactions.
Brokerage firms are selected on the basis of their professional capability for
the type of transaction and the value and quality of execution of services on a
continuing basis. The Adviser is authorized to place portfolio transactions to
the extent permitted by law, with brokerage firms affiliated with the Fund and
with brokerage firms participating in the distribution of shares of the Fund and
other Van Kampen American Capital mutual funds if it reasonably believes that
the quality of the execution and the commission are comparable to that available
from other qualified firms. The Adviser is authorized to pay higher commissions
to brokerage firms that provide 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. The
information received may be used by the Adviser in managing the assets of other
advisory accounts as well as in the management of the assets of the Fund.

PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and may involve the payment by the Fund of brokerage
commissions or dealer mark-up and other transaction costs on the sale of
securities as well as on the investment of the proceeds in other securities. The
portfolio turnover rate for a fiscal year is the ratio of the lesser of
purchases or sales of portfolio securities to the average value of portfolio
securities, excluding debt securities whose maturities at acquisition were one
year or less. The rate may exceed 100% in any given year, which is higher than
that of many other investment companies. A higher portfolio turnover rate
increases the Fund's transactions 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. The Fund's annual
portfolio turnover rate is shown in the table of "Financial Highlights."

LOANS OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
unaffiliated brokers, dealers and financial institutions provided that (a)
immediately after any such loan, the value of the securities loaned does not
exceed 15% of the total value of the Fund's assets, and (b) any securities loan
is collateralized in accordance with applicable regulatory requirements. Lending
portfolio securities involves risks of delay in recovery of the loaned
securities or, in some cases, loss of rights in the collateral should the
borrower fail financially.

15
<PAGE> 19

RESTRICTED SECURITIES. The Fund may invest up to 10% of its net assets in
restricted securities and other illiquid assets. As used herein, restricted
securities are those that have been sold in the United States without
registration under the Securities Act of 1933 ("1933 Act") and are thus subject
to restrictions on resale. Excluded from the limitation, however, are any
restricted securities which are eligible for resale pursuant to Rule 144A under
the 1933 Act and which have been determined to be liquid by the Trustees or by
the Adviser pursuant to Board-approved guidelines. The determination of
liquidity is based on the volume of reported trading in the institutional
secondary market for each security. Since it is not possible to predict with
assurance how the markets for restricted securities sold and offered under Rule
144A will develop, the Trustees will carefully monitor the Fund's investment in
these securities focusing on such factors, among others, as valuation, liquidity
and availability of information. This investment practice could have the effect
of increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities. These difficulties and delays could result in the Fund's
inability to realize a favorable price upon disposition of restricted
securities, and in some cases might make disposition of such securities at the
time desired by the Fund impossible. Since market quotations are not readily
available for restricted securities, such securities will be valued by a method
that the Fund's Trustees believe accurately reflects fair value. Also excluded
from this limitation are securities purchased by the Fund issued by other
investment companies to the extent permitted by (i) the 1940 Act, as amended
from time to time, (ii) the rules and regulations promulgated by the SEC under
the 1940 Act, as amended from time to time, or (iii) an exemption or other
relief from the provisions of the 1940 Act.

SHORT SALES AGAINST THE BOX. The Fund may from time to time make short sales
of securities it owns or has the right to acquire. A short sale is "against the
box" to the extent that the Fund contemporaneously owns or has the right to
obtain at no added cost securities identical to those sold short. In a short
sale, the Fund does not immediately deliver the securities sold and does not
receive the proceeds from the sale. The Fund is said to have a short position in
the securities sold until it delivers the securities sold, at which time it
receives the proceeds of the sale. The Fund may not make short sales or maintain
a short position if doing so would cause more than 25% of its total assets,
taken at market value, to be held as collateral for such sales.

To secure its obligation to deliver the securities sold short, the Fund will
deposit in escrow in a separate account with its Custodian an equal amount of
the securities sold short or securities convertible into or exchangeable for
such securities. The Fund may close out a short position by purchasing and
delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund may want to
continue to receive interest and dividend

16
<PAGE> 20

payments on securities in its portfolio that are convertible into the securities
sold short.

USING OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS. The Fund expects to
utilize options, futures contracts and options thereon in several different
ways, depending upon the status of the Fund's portfolio and the Adviser's
expectations concerning the securities markets.

In times of stable or rising security prices, the Fund generally seeks to be
fully invested in the equity securities. Even when the Fund is fully invested,
however, prudent management requires that at least a small portion of assets be
available as cash to honor redemption requests and for other short-term needs.
The Fund also may have cash on hand that has not yet been invested. The portion
of the Fund's assets that is invested in cash equivalents does not fluctuate
with security market prices, so that, in times of rising market prices, the Fund
may underperform the market in proportion to the amount of cash equivalents in
its portfolio. By purchasing futures contracts, however, the Fund can seek to
"equitize" the cash portion of its assets and may obtain performance equivalent
to investing 100% of its assets in equity securities.

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

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

17
<PAGE> 21

price within seven days. The staff of the SEC currently takes the position that,
in general, OTC options on securities other than U.S. Government securities
purchased by the Fund, and portfolio securities covering OTC options sold by the
Fund, are illiquid securities subject to the Fund's limitation on investing no
more than 10% of its assets in illiquid securities.

In certain cases the options and futures markets provide investment or risk
management opportunities that are not available from direct investments in
securities. In addition, some strategies can be performed with greater ease and
at lower cost by utilizing the options and futures markets rather than
purchasing or selling portfolio securities.

Potential Risks of Options, Futures Contracts and Related Options. The
purchase and sale of options and futures contracts involve risks different from
those involved with direct investments in underlying securities. While
utilization of options, futures contracts and similar instruments may be
advantageous to the Fund, if the Adviser is not successful in employing such
instruments in managing the Fund's investments, the Fund's performance will be
worse than if the Fund did not make such investments. In addition, the Fund
would pay commissions and other costs in connection with such investments, which
may increase the Fund's expenses and reduce its return.

In order to prevent leverage in connection with the purchase of futures
contracts by the Fund, an amount of cash or liquid securities equal to the
market value of the obligation under the futures contracts (less any related
margin deposits) will be maintained in a segregated account with the Custodian.
The Fund may not invest more than 10% of its net assets in illiquid securities,
including OTC Options and repurchase agreements which have a maturity of longer
than seven days.

INVESTMENT RESTRICTIONS. The Fund has adopted a number of fundamental
investment restrictions that may not be changed without approval by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")). The percentage
limitations need only be met at the time the investment is made or other
relevant action taken. These restrictions provide, among other things, that the
Fund may not:

2. Invest more than 5% of its total assets (taken at current value) in
securities of a single issuer other than the United States Government,
its agencies or instrumentalities, or hold more than 10% of the
outstanding voting securities of an issuer, 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

18
<PAGE> 22

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. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of its
net assets, or pledge more than 10% of its net assets in connection with
permissible borrowings or purchase additional securities when money
borrowed exceeds 5% of its net assets. Margin deposits or payments in
connection with the writing of options or in connection with the purchase
or sale of forward contracts, futures, foreign currency futures and
related options, are not deemed to be a pledge or other encumbrance.

4. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.

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

THE ADVISER. The Adviser is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a
diversified asset management company with more than two million retail investor
accounts, extensive capabilities for managing institutional portfolios, and more
than $60 billion under management or supervision. Van Kampen American Capital's
more than 50 open-end and 37 closed-end funds and more than 2,500 unit
investment trusts are professionally distributed by leading financial advisers
nationwide. Van Kampen American Capital Distributors, Inc., the distributor of
the Fund and the sponsor of the Funds mentioned above, is also a wholly-owned
subsidiary of Van Kampen American Capital. Van Kampen American Capital is an
indirect wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
The Adviser's principal office is located at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181.

19
<PAGE> 23

merchant banking; stock brokerage and research services; credit services; asset
management; trading of futures, options, foreign exchange, commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; and global custody, securities clearance
services and securities lending.

THE SUBADVISER. The Subadviser is an indirect wholly-owned subsidiary of
Morgan Stanley, Dean Witter, Discover & Co. and is an affiliate of the Adviser.
The Subadviser provides portfolio management and named fiduciary services to
various closed-end and open-end investment companies, taxable and nontaxable
institutions, international organizations and individuals investing in United
States and international equities and fixed income securities. At September 15,
1997, the Subadviser had, together with its affiliated investment management
companies, assets under management (including assets under fiduciary advisory
control) totaling approximately $190 billion. The Subadviser emphasizes a global
investment strategy and benefits from research coverage of a broad spectrum of
investment opportunities worldwide and draws upon the capabilities of its asset
management specialists located in various offices throughout the world,
including New York, London, Tokyo, Singapore, Bombay, Hong Kong, Milan and
Sydney. The Subadviser also draws upon the research capabilities of Morgan
Stanley, Dean Witter, Discover & Co. and its other affiliates as well as the
research and investment ideas of other companies whose brokerage services the
Subadviser utilizes. The address of the Subadviser is 1221 Avenue of the
Americas, New York, New York 10020.

MSAM began providing subadvisory services to the Fund effective April 1, 1997.
John Govett & Co. Limited ("Govett") had provided subadvisory services to the
Fund until March 31, 1997. The MSAM subadvisory agreement is similar to the
former Govett subadvisory agreement, except that the MSAM subadvisory agreement
permits, but does not require, the Adviser and MSAM to allocate to MSAM
responsibility for selecting investments in domestic securities as well as
foreign securities. Govett's responsibilities had been limited solely to foreign
securities. Effective April 1, 1997, MSAM has assumed the responsibility for
advising the Fund with respect to investments in domestic securities.

20
<PAGE> 24

custodian fees, legal and accounting fees, the costs of reports and proxies to
shareholders, trustees' fees (other than those who are affiliated persons as
defined in the 1940 Act of the Adviser, Distributor or Van Kampen American
Capital), and all other business expenses not specifically assumed by the
Adviser. Advisory (management) fee, and total operating expense, ratios are
shown under the caption "Annual Fund Operating Expenses and Example" herein.

The Adviser has entered into a sub-advisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser, subject to the overall review by the Adviser
and the Fund's Trustees, is responsible for recommending an optimal geographic
equity allocation among various markets and currencies and is responsible for
providing advice with respect to specific investments in such markets, including
the Fund's investments in domestic securities. Pursuant to the Sub-advisory
Agreement, the Subadviser receives on an annual basis 50% of the compensation
received by the Adviser.

From time to time as the Adviser, the Subadviser or the Distributor may deem
appropriate, they may voluntarily undertake to reduce the Fund's expenses by
reducing the fees payable to them to the extent of, or bearing expenses in
excess of, such limitations as they may establish.

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

PERSONAL INVESTMENT POLICIES. The Fund, the Adviser and the Subadviser have
adopted Codes of Ethics designed to recognize the fiduciary relationship between
the Fund and the Adviser, Subadviser and their employees. The Codes 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. Effective April 1, 1997, Barton M. Biggs, Madhav Dhar,
Francine J. Bovich and Ann D. Thivierge assumed the primary responsibility for
the day-to-day management of the Fund's portfolio.

Since 1980, Mr. Biggs has been Chairman and a director of the Subadviser, and
a Managing Director of the Subadviser and Morgan Stanley & Co. Incorporated
since 1975. Mr. Biggs is a director of Morgan Stanley Group, Inc. and a director
and chairman of other investment companies of the Subadviser. Mr. Biggs holds a
B.A. from Yale University and an M.B.A. from New York University.

Mr. Dhar is Managing Director of the Subadviser and Morgan Stanley & Co.
Incorporated. He has been with the Subadviser since 1984. Mr. Dhar is a co-head

21
<PAGE> 25

of the Subadviser's emerging markets group, and has been involved in the
launching of the Subadviser's country funds. Mr. Dhar holds a B.S. from St.
Stephens College in Delhi University (India) and an M.B.A. from Carnegie-Mellon
University.

Ms. Bovich has been with the Subadviser since 1993. She is responsible for
portfolio management and communication of MSAM's asset allocation strategy to
institutional investor clients. Prior to 1993, Ms. Bovich was a Principal and
Executive Vice President of Westwood Management Corp. Prior to that, Ms. Bovich
was a Managing Director of Citicorp Investment Management, Inc. where she was
responsible for the Institutional Investment Management group. Ms. Bovich holds
a B.A. in Economics from Connecticut College and an M.B.A. in Finance from New
York University.

Ms. Thivierge is a Principal of the Subadviser. She is a member of MSAM asset
allocation committee, primarily representing the Total Fund Management team
since its inception in 1991. Ms. Thivierge has been with the Subadviser since
1986. Prior to 1986, Ms. Thivierge was with Edgewood Management Company. Ms.
Thivierge holds a B.A. in International Relations from James Madison College,
Michigan State University, and an M.B.A. in Finance from New York University.

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

The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares of the Fund that is most beneficial given the amount of the
purchase and the length of time the investor expects to hold the shares.

CLASS A SHARES. Class A shares are sold at net asset value plus an initial
maximum sales charge of up to 5.75% of the offering price (6.10% of the net
amount invested), reduced on investments of $50,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a CDSC of 1.00% may be imposed on certain redemptions made within one year of
the purchase. Class A shares are subject to an ongoing service fee at an annual
rate of up to 0.25% of the Fund's aggregate average daily net assets
attributable to the Class A shares. Certain purchases of Class A shares qualify
for reduced initial sales charges. See "Purchase of Shares -- Class A Shares."

22
<PAGE> 26

have a higher expense ratio and to pay lower dividends than those related to
Class A shares. Class B shares convert automatically to Class A shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted. See "Purchase of Shares -- Class B Shares."

CLASS C SHARES. Class C shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within one year of purchase. Class C shares
are subject to an ongoing service fee at an annual rate of up to 0.25% of the
Fund's aggregate average daily net assets attributable to the Class C shares and
an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Class C
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
C shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. See "Purchase of Shares -- Class
C Shares."

CONVERSION FEATURE. Class B shares purchased on or after June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares eight years after the end of the calendar month in which the
shares were purchased. Class B shares purchased before June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares six years after the end of the calendar month in which the shares
were purchased. Class C shares purchased before January 1, 1997, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares ten years after the end of the calendar month in which such
shares were purchased. Such conversion will be on the basis of the relative net
asset values per share, without the imposition of any sales load, fee or other
charge.

The conversion 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 Internal Revenue Code of 1986, as amended
(the "Code"), 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.

23
<PAGE> 27

shares. To assist investors in making this determination, the table under the
caption "Annual Fund Operating Expenses and Example" sets forth examples of the
charges applicable to each class of shares. In this regard, Class A shares may
be more beneficial to the investor who qualifies for reduced initial sales
charges or purchases at net asset value. It is presently the policy of the
Distributor not to accept any order of $500,000 or more for Class B shares or
any order of $1 million or more for Class C shares as it ordinarily would be
more beneficial for such an investor to purchase Class A shares.

Class A shares are not subject to an ongoing distribution fee and,
accordingly, receive correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase for accounts
under $1 million, investors in Class A shares do not have all their funds
invested initially and, therefore, initially own fewer shares. Other investors
might determine that it is more advantageous to purchase either Class B shares
or Class C shares and have all their funds invested initially, although
remaining subject to a CDSC. Ongoing distribution fees on Class B shares and
Class C shares may be offset to the extent of the additional funds originally
invested and any return realized on those funds. However, there can be no
assurance as to the return, if any, which will be realized on such additional
funds. For investments held for ten years or more, the relative value upon
liquidation of the three classes tends to favor Class A shares or Class B
shares, rather than Class C shares.

Class A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
Class B shares may be appropriate for investors who wish to avoid a front-end
sales charge, put 100% of their investment dollars to work immediately or have a
longer-term investment horizon. Class C shares may be appropriate for investors
who wish to avoid a front-end sales charge, put 100% of their investment dollars
to work immediately, have a shorter-term investment horizon or desire a short
CDSC.

The distribution expenses incurred by the Distributor in connection with the
sale of the shares will be reimbursed, in the case of Class A shares, from the
proceeds of the initial sales charge and, in the case of Class B shares and
Class C shares, from the proceeds of the ongoing distribution fee and any CDSC
incurred upon redemption within five years or one year, respectively, of
purchase. Sales personnel of broker-dealers distributing the Fund's shares and
other persons entitled to receive compensation for selling such shares may
receive differing compensation for selling such shares. INVESTORS SHOULD
UNDERSTAND THAT THE PURPOSE AND FUNCTION OF THE CDSC AND ONGOING DISTRIBUTION
FEE WITH RESPECT TO THE CLASS B SHARES AND CLASS C SHARES ARE THE SAME AS THOSE
OF THE INITIAL SALES CHARGE WITH RESPECT TO CLASS A SHARES. See "Distribution
and Service Plans."

24
<PAGE> 28

GENERAL. Dividends paid by the Fund with respect to Class A shares, Class B
shares and Class C shares will be calculated in the same manner at the same time
on the same day except that the higher distribution fees and transfer agency
costs relating to Class B shares or Class C shares will be borne by the
respective class. See "Distributions from the Fund." Shares of the Fund may be
exchanged, subject to certain limitations, for shares of the same class of
certain other mutual funds advised by the Adviser and its affiliates and
distributed by the Distributor. See "Shareholder Services -- Exchange
Privilege."

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

GENERAL

The Fund offers three classes of shares to the public on a continuous basis
through the Distributor as principal underwriter, which is located at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares also are offered
through members of the National Association of Securities Dealers, Inc. ("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").
The term "dealers" and "brokers" are sometimes referred to herein as "authorized
dealers."

Initial investments must be at least $500 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. Shares of the Fund may be sold in foreign countries where
permissible. 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 purchased on any business day through authorized
dealers. Shares also may be purchased by completing the application accompanying
this Prospectus and forwarding the application, through the authorized dealer,
to the shareholder service agent, ACCESS Investor Services, Inc. ("ACCESS"), a
wholly-owned subsidiary of Van Kampen American Capital. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares.

25
<PAGE> 29

the value of the Fund's 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. With respect to foreign securities, income is accrued by the Fund
on the ex date or when data becomes available, whichever is later. Securities
listed or traded on a national securities exchange are valued at the last sale
price. Unlisted securities and listed securities for which the last sale price
is not available are valued at the most recent bid price. Options and futures
contracts are valued at the last sale price or if no sales are reported, at the
mean between the bid and asked prices. Short-term investments and other
securities are valued in the manner described in the Statement of Additional
Information.

Generally, the net asset values per share of the Class A shares, Class B
shares and Class C shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class A
shares, Class B shares and Class C shares may differ from one another,
reflecting the daily expense accruals of the higher distribution fee and
transfer agency costs applicable with respect to the Class B shares and Class C
shares and the differential in the dividends paid on the classes of shares. The
price paid for shares purchased is based on the next calculation of net asset
value (plus sales charges, where applicable) after an order 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. Orders received by
authorized dealers after the close of the Exchange are priced based on the next
close, provided they are received by the Distributor prior to the Distributor's
close of business on such day. It is the responsibility of authorized dealers to
transmit orders received by them to the Distributor so they will be received
prior to such time. Orders of less than $500 are mailed by the authorized dealer
and processed at the offering price next calculated after receipt by ACCESS.

Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights and is identical in all respects,
except that (i) Class B shares and Class C shares bear the expenses of the
deferred sales arrangement and any expenses (including the higher distribution
fee and transfer agency costs) resulting from such sales arrangement, (ii)
generally, each class has exclusive voting rights with respect to approvals of
the Rule 12b-1 distribution plan pursuant to which its distribution fee or
service fee is paid, (iii) each class has different exchange privileges, (iv)
certain shares are subject to a conversion feature and (v) certain shares have
different shareholder service options available. The net income attributable to
Class B shares and Class C shares and the dividends payable on Class B shares
and Class C shares will be reduced by the amount of the distribution fee and
other expenses associated with such shares. Sales personnel of authorized
dealers distributing the Fund's shares and other persons entitled to receive
compensation for selling such shares may receive differing compensation for
selling Class A shares, Class B shares or Class C shares.

26
<PAGE> 30

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. Fees may include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. In some instances additional compensation or promotional incentives may
be offered to brokers, dealers or financial intermediaries that have sold or may
sell significant amounts of shares during specified periods of time. The
Distributor may provide additional compensation to Edward D. Jones & Co. or an
affiliate thereof based on a combination of its sales of shares and increases in
assets under management. 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 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.

CLASS A SHARES

The public offering price of Class A shares is the next determined net asset
value plus a sales charge, as set forth below.

SALES CHARGE TABLE

<TABLE>
<CAPTION>
REALLOWED
AS % OF TO DEALERS
SIZE OF AS % OF NET AMOUNT (AS A % OF
INVESTMENT OFFERING 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>

27
<PAGE> 31

responsible for purchases of $1 million or more 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.

In addition to the reallowances from the applicable public offering price
described above, the Distributor may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash or other
compensation, to authorized dealers that sell shares of the Fund. Authorized
dealers which are reallowed all or substantially all of the sales commissions
may be deemed to be underwriters for purposes of the 1933 Act.

The Distributor may also pay financial institutions (which may include banks)
and other industry professionals that provide services to facilitate
transactions in shares of the Fund for their clients a transaction fee up to the
level of the reallowance allowable to authorized dealers described herein. Such
financial institutions, other industry professionals and authorized dealers are
hereinafter referred to as "Service Organizations." 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.

QUANTITY DISCOUNTS

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

Investors, or their 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, their
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.

28
<PAGE> 32

As used herein, "Participating Funds" refers to certain open-end investment
companies advised by the Adviser or Van Kampen American Capital Investment
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 preceding 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 preceding
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
thirteen-month period to determine the sales charge as outlined in the preceding
sales charge table. The size of investment shown in the preceding sales charge
table also includes purchases of shares of the Participating Funds over a
thirteen-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 thirteen-month period starting up to
90 days before the date of execution of a Letter of Intent. Each investment made
during the period receives the reduced sales charge applicable to the total
amount of the investment goal. If the goal is not achieved within the period,
the investor must pay the difference between the sales charges applicable to the
purchases made and the sales charges previously paid. The initial purchase must
be for an amount equal to at least 5% of the minimum total purchased 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 back-dating
provisions, an adjustment will be made at the expiration of the Letter of Intent
to give effect to the lower charge. Such adjustments in sales charge will be
used to purchase additional shares for the shareholder at the applicable
discount category. Additional information is contained in the application form
accompanying this Prospectus.

OTHER PURCHASE PROGRAMS

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

29
<PAGE> 33

Unit Investment Trust Reinvestment Programs. The Fund permits unitholders of
unit investment trusts to reinvest distributions from such trusts in Class A
shares of the Fund, at net asset value and with no minimum initial or subsequent
investment requirement, if the administrator of an investor's unit investment
trust program meets certain uniform criteria relating to cost savings by the
Fund and the Distributor. The total sales charge for all other investments made
from unit trust distributions will be 1.00% of the offering price (1.01% of net
asset value). Of this amount, the Distributor will pay to the 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 applicable
terms and conditions thereof, 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 ACCESS with appropriate backup data
for each participating investor in a computerized format fully compatible with
ACCESS's processing system.

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

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

(1) Current or retired trustees or directors of funds advised by the Adviser
or Van Kampen American Capital Investment Advisory Corp. and such persons'
families and their beneficial accounts.

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

30
<PAGE> 34

accounts they beneficially own, or, in the case of any such financial
institution, when purchasing for retirement plans for such institution's
employees.

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

(5) Trustees and other fiduciaries purchasing shares for retirement plans of
organizations with retirement plan assets of $3 million or more and which
invest in multiple fund families through national wirehouse alliance
programs.

(6) 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.

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

31
<PAGE> 35

follows: 1.00% on sales to $5 million, plus 0.50% on the next $5 million
and 0.25% on the excess over $10 million. For purchases on February 1,
1997 and thereafter, a commission will be paid as follows: 1.00% on sales
to $2 million, plus 0.80% on the next $1 million, plus 0.50% on the next
$47 million and 0.25% on the excess over $50 million.

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

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

Purchase orders made pursuant to clause (4) may be placed either through
authorized dealers as described above or directly with ACCESS by the investment
adviser, trust company or bank trust department, provided that ACCESS 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 herein under "Distribution and Service Plans"
on purchases made as described in (3) through (8) 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.

CLASS B SHARES

Class B shares are offered at net asset value. Class B shares which are
redeemed within five years of purchase are subject to a CDSC at the rates set
forth in the

32
<PAGE> 36

following table charged as a percentage of the dollar amount subject thereto.
The 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 charge is assessed on shares derived from reinvestment of
dividends or capital gains distributions. 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 CDSC, 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 purchases of shares, all payments
during a month are aggregated and deemed to have been made on the last day of
the month.
- ------------------------------------------------------------------------------

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

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

In determining whether a CDSC 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 CDSC, second of shares held for over five years or
shares acquired pursuant to reinvestment of dividends or distributions and third
of shares held longest during the five-year period.

To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If at such time the investor makes
his or her first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$400 of the $600 redemption proceeds is subject to a deferred sales charge at a
rate of 4.00% (the applicable rate in the second year after purchase).

A commission or transaction fee of 4.00% of the purchase amount will be paid
to authorized dealers and at the time of purchase. Additionally, the Distributor
may,

33
<PAGE> 37

from time to time, pay additional promotional incentives, in the form of cash or
other compensation, to authorized dealers that sell Class B shares of the Fund.

CLASS C SHARES

Class C shares are offered at net asset value. Class C shares which are
redeemed within the first year of purchase are subject to a CDSC of 1.00%. The
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 charge is assessed on shares derived from reinvestment of dividends
or capital gains distributions. It is presently the policy of the Distributor
not to accept any order in an amount of $1 million or more for Class C shares
because it ordinarily will be more advantageous for an investor making such an
investment to purchase Class A shares.

In determining whether a CDSC 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 CDSC, and second, of shares held for more than one
year or shares acquired pursuant to reinvestment of dividends or distributions.

A commission or transaction fee of 1.00% of the purchase amount will be paid
to authorized dealers at the time of purchase. Authorized dealers also will also
be paid ongoing commissions and transaction fees of up to 0.75% of the average
daily net assets of the Fund's Class C shares annually commencing in the second
year after purchase. Additionally, the Distributor may, from time to time, pay
additional promotional incentives in the form of cash or other compensation, to
authorized dealers that sell Class C shares of the Fund.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The CDSC is waived on redemptions of Class B shares and Class C shares (i)
following the death or disability (as defined in the Code) of a shareholder,
(ii) in connection with required minimum distributions from an IRA or other
retirement plan, (iii) pursuant to the Fund's systematic withdrawal plan but
limited to 12% annually of the initial value of the account and (iv) effected
pursuant to the right of the Fund to liquidate a shareholder's account as
described herein under "Redemption of Shares." The CDSC is also waived on
redemptions of Class C shares as it relates to the reinvestment of redemption
proceeds in shares of the same class of the Fund within 120 days after
redemption. See the Statement of Additional Information for further discussion
of waiver provisions.

34
<PAGE> 38

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

The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. The
following is a description of such services.

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

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

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gains distributions in shares of
the Fund. Such shares are acquired at net asset value (without sales charge) on
the record date. Unless the shareholder instructs otherwise, the reinvestment
plan is automatic. This instruction may be made by telephone by calling (800)
421-5666 ((800) 421-2833 for the hearing impaired) or in writing to ACCESS. The
investor may, on the initial application or prior to any declaration, instruct
that dividends be paid in cash and capital gains distributions be reinvested at
net asset value, or that both dividends and capital gains distributions be paid
in cash.

35
<PAGE> 39

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

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

AUTOMATED CLEARING HOUSE ("ACH") DEPOSITS. Holders of Class A shares can use
ACH to have redemption proceeds deposited electronically into their bank
accounts. Redemptions transferred to a bank account via the ACH plan are
available to be credited to the account on the second business day following
normal payment. In order to utilize this option, the shareholder's bank must be
a member of Automated Clearing House. In addition, the shareholder must fill out
the appropriate section of the account application. The shareholder must also
include a voided check or deposit slip from the bank account into which
redemptions are to be deposited together with the completed application. Once
ACCESS has received the application and the voided check or deposit slip, such
shareholder's designated bank account, following any redemption, will be
credited with the proceeds of such redemption. Once enrolled in the ACH plan, a
shareholder may terminate participation at any time by writing ACCESS.

DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanying this
Prospectus or by calling (800) 421-5666 ((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 as of the payable date of the
distribution.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the net asset values of each fund on

36
<PAGE> 40

the date of the exchange without sales charge. Shares of any Participating Fund
may be exchanged for shares of any other 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. Additional funds may be added from time to time as determined by
the Fund's Board of Trustees as Participating Funds.

When Class B shares and Class C shares are exchanged among Participating
Funds, the holding period for purposes of computing the CDSC is based upon the
date of the initial purchase of such shares from a Participating Fund (the
"original fund"). Upon redemption from the Participating Funds complex of funds,
Class B shares and Class C shares are subject to the CDSC schedule imposed by
the original fund.

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

A shareholder wishing to make an exchange may do so by sending a written
request to ACCESS, or by contacting the telephone transaction line at (800)
421-5684. A shareholder automatically has telephone exchange privileges unless
otherwise designated in the application form accompanying this Prospectus. Van
Kampen American Capital and its subsidiaries, including ACCESS (collectively,
"VKAC"), and the Fund employ procedures considered by them to be reasonable to
confirm that instructions communicated by telephone are genuine. Such procedures
include requiring certain personal identification information prior to acting
upon telephone instructions, tape recording telephone communications, and
providing written confirmation of instructions communicated by telephone. If
reasonable procedures are employed, neither VKAC nor the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine.
VKAC and the Fund may be liable for any losses due to unauthorized or fraudulent
instructions if reasonable procedures are not followed. Exchanges are effected
at the net asset value per share next calculated after the request is received
in good order with adjustment for any additional sales charge (if applicable).
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
file a specific written request. The Fund reserves the

37
<PAGE> 41

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

A prospectus of any of these mutual 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.

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

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

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under this plan are reinvested in additional shares
at the next determined net asset value. If periodic withdrawals continuously
exceed reinvested dividends and capital gains distributions, the shareholder's
original investment will be correspondingly reduced and ultimately exhausted.
Withdrawals made concurrently with the purchase of additional shares ordinarily
will be disadvantageous to the shareholder because of the duplication of sales
charges. Any taxable gain or loss will be recognized by the shareholder upon
redemption of shares.

38
<PAGE> 42

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

REGULAR REDEMPTIONS. Shareholders may redeem for cash some or all of their
shares of the Fund at any time. To do so, a written request in proper form must
be sent directly to ACCESS, P.O. Box 418256, Kansas City, Missouri 64141-9256.
Shareholders may also place redemption requests through an authorized dealer.
Orders received from authorized dealers must be at least $500 unless transmitted
via the FUNDSERV network. The redemption price for such shares is the net asset
value next calculated after an order is received by 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.

As described herein under "Purchase of Shares," redemptions of Class B shares
and Class C shares are subject to a CDSC. In addition, a CDSC of 1.00% may be
imposed on certain redemptions of Class A shares made within one year of
purchase for investments of $1 million or more. The CDSC incurred upon
redemption is paid to the Distributor in reimbursement for distribution-related
expenses. A custodian of a retirement plan account may charge fees based on the
custodian's fee schedule.

The request for redemption 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. In some cases, however,
other documents may be necessary. For example, although the Fund normally does
not issue certificates for shares, it will do so if a special request has been
made to ACCESS. In the case of shareholders holding certificates, the
certificates for the shares being redeemed 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 60 days must
accompany the redemption request. IRA redemption requests should be sent to the
IRA custodian to be forwarded to

39
<PAGE> 43

ACCESS. Where Van Kampen American Capital Trust Company serves as
custodian, special IRA, 403(b)(7), or Keogh distribution forms must be obtained
from and be forwarded to Van Kampen American Capital Trust Company, P.O. Box
944, Houston, Texas 77001-0944. Contact the custodian for information.

In the case of redemption requests sent directly to ACCESS, the redemption
price is the net asset value per share next determined after the request is
received. Payment for shares redeemed will be made by check mailed within seven
days after acceptance by ACCESS 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. If the shares to be redeemed have
been recently purchased by check, ACCESS may delay mailing a redemption check
until it confirms the purchase check has cleared, which may take up to fifteen
days. A taxable gain or loss will be recognized by the shareholder upon
redemption of shares.

The Fund may redeem any shareholder account with a net asset 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 is required and the shareholder is given an
opportunity to purchase the required value of additional shares at the next
determined net asset value without sales charge. Any applicable CDSC will be
deducted from the proceeds of this redemption. Any involuntary redemption may
only occur if the shareholder account is less than the minimum initial
investment due to shareholder redemptions.

TELEPHONE REDEMPTIONS. In addition to the regular redemption procedures set
forth above, the Fund permits redemption of shares by telephone and for
redemption proceeds to be sent to the address of record for the account or to
the bank account of record as described below. To establish such privilege, a
shareholder must complete the appropriate section of the application
accompanying this Prospectus or call the Fund at (800) 421-5666 to request that
a copy of the Telephone Redemption Authorization form be sent to them for
completion. To redeem shares, contact the telephone transaction line at (800)
421-5684. VKAC and the Fund employ procedures considered by them to be
reasonable to confirm that instructions communicated by telephone are genuine.
Such procedures include requiring certain personal identification information
prior to acting upon telephone instructions, tape recording telephone
communications and providing written confirmation of instructions communicated
by telephone. If reasonable procedures are employed, neither VKAC nor the Fund
will be liable for following telephone instructions which it reasonably believes
to be genuine. VKAC and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed. Telephone redemptions may not be available if the shareholder cannot
reach ACCESS by telephone, whether because all telephone lines are busy or for
any other reason; in such case, a shareholder would have to use

40
<PAGE> 44

the Fund's regular redemption procedure previously described. Requests received
by ACCESS prior to 4:00 p.m., New York time, on a regular business day will be
processed at the net asset value per share determined that day. These privileges
are available for all accounts other than retirement accounts. The telephone
redemption privilege is not available for shares represented by certificates. If
an account has multiple owners, ACCESS may rely on the instructions of any one
owner.

For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check 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 are expected to be wired on the next business day following the date
of redemption. This service is also not available with respect to shares held in
an individual retirement account (IRA) for which Van Kampen American Capital
Trust Company acts as custodian. The Fund reserves the right at any time to
terminate, limit or otherwise modify this redemption privilege.

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

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

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 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 CDSC
paid

41
<PAGE> 45

upon such redemption. Such reinstatement is made at the net asset value (without
sales charge except as described under "Shareholder Services -- Exchange
Privilege") next determined after the order is received, which must be within
180 days after the date of the redemption. Reinstatement at net asset value is
also offered to participants in those eligible retirement plans held or
administered by Van Kampen American Capital Trust Company for repayment of
principal (and interest) on their borrowings on such plans.

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

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

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

42
<PAGE> 46

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

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

The Distributor's actual expenses with respect to Class B shares or Class C
shares for any given year may exceed the amounts payable to the Distributor with
respect to such class of shares under the Distribution Plan, the Service Plan
and payments received pursuant to the CDSC. In such event, with respect to any
such class of shares, any unreimbursed expenses will be carried forward and paid
by the Fund (up to the amount of the actual expenses incurred) in future years
so long as such Distribution Plan is in effect. Except as mandated by applicable
law, the Fund does not impose any limit with respect to the number of years into
the future that such unreimbursed expenses may be carried forward (on a Fund
level basis). Because such expenses are accounted on a Fund level basis, in
periods of extreme net asset value fluctuation such amounts with respect to a
particular 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
May 31, 1997, there were $3,958,720 and $286,561 of unreimbursed distribution
expenses with respect to Class B shares and Class C shares, respectively,
representing 3.19% and 2.20% of the Fund's average net assets attributable to
Class B shares and Class C shares, respectively. If the Distribution Plan was
terminated or not continued, the Fund would not be contractually obligated to
pay the Distributor for any expenses not previously reimbursed by the Fund or
recovered through CDSCs.

43
<PAGE> 47

some state-chartered commercial banks from underwriting or dealing in the Fund's
shares. In addition, state securities laws on this issue may differ from the
interpretations of federal law, and banks and financial institutions may be
required to register as dealers pursuant to state law. In the unlikely event
that a court were to find that these laws prevent such banks from providing such
services described above, the Fund would seek alternate providers and expects
that shareholders would not experience any disadvantage.

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

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 distributions.

DIVIDENDS. Dividends from stocks and interest earned from other investments
are the Fund's main source of income. Substantially all of this income, less
expenses, is distributed annually as dividends to shareholders. Unless the
shareholder instructs otherwise, dividends are automatically applied to purchase
additional shares of the Fund at the next determined net asset value. See
"Shareholder Services -- Reinvestment Plan."

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 their purchase prices. The Fund distributes to shareholders at
least once a year the excess, if any, of its total profits on the sale of
securities during the year over its total losses on the sale of securities,
including capital losses carried forward from prior years under tax laws. As in
the case of income dividends, capital gains distributions are automatically
reinvested in additional shares of the Fund at net asset value unless the
shareholder elects otherwise. See "Shareholder Services -- Reinvestment Plan."

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

FEDERAL INCOME TAXATION. The Fund has qualified and intends to continue to
qualify each year and to elect to be treated as a regulated investment company
under Subchapter M of the Code. To qualify as a regulated investment company,

44
<PAGE> 48

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 tax-exempt interest, 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 31 of each year, at least 98% of its ordinary income (not including
tax-exempt income) for such year and at least 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 31 of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.

If the Fund failed to qualify as a regulated investment company or failed to
satisfy the 90% distribution requirement in any taxable year, the Fund would be
taxed as an ordinary corporation on its taxable income (even if such income were
distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. 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 mark-to-market some of the positions in its portfolio (i.e.,
treat them as if they were sold for fair market value at the end of the
tax-year), which may cause the Fund to recognize income without receiving cash
with which to make distributions in

45
<PAGE> 49

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.

The Fund's ability to dispose of portfolio securities may be limited by the
requirement for qualification as a regulated investment company that less than
30% of the Fund's annual gross income be derived from the disposition of
securities held for less than three months. Under recently enacted legislation,
this requirement will no longer be applicable to the Fund beginning on June 1,
1998.

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.

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 gains 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 gains dividends), see "Capital Gains Rates Under the 1997 Tax
Act" 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. Fund distributions
will not qualify

46
<PAGE> 50

for the dividends received deduction for corporations, except to the extent the
Fund receives dividends from domestic corporations.

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 31 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 and other taxes imposed by foreign countries and
U.S. possessions. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. Investors may be entitled to claim
United States foreign tax credits with respect to such taxes, subject to certain
provisions and limitations contained in the Code. If more than 50% in value of
the Fund's total assets at the close of its fiscal year consists of securities
of foreign issuers, the Fund will be eligible to and may file elections with the
Internal Revenue Service pursuant to which shareholders of the Fund will be
required to (i) include their respective pro rata portions of such taxes in
their United States income tax returns as gross income, and (ii) treat such
respective pro rata portions as taxes paid by them. Each shareholder will be
entitled, subject to certain limitations, to either deduct his respective pro
rata portions of such foreign taxes in computing his taxable incomes or use them
as foreign tax credits against his United States federal income taxes. No
deduction for such foreign taxes may be claimed by a shareholder who does not
itemize deductions. Each shareholder will be notified annually whether the
foreign taxes paid by the Fund will "pass through" for that year and, if so,
such notification will designate (i) the shareholder's portion of the foreign
taxes paid to each such country and (ii) the portion of dividends that represent
income derived from sources within each such country. The amount of foreign
taxes for which a shareholder may claim a credit in any year will be subject to
an overall limitation such that the credit may not exceed the shareholder's
United States federal income tax attributable to the shareholder's foreign
source taxable income. This limitation generally applies separately to certain
specific categories of foreign source income including "passive income" which
includes, among other types of income, dividends and interest. The foregoing is
only a general description of the foreign tax credit under current law. Because
application of the depends on the particular circumstances of each shareholder,
shareholders are advised to consult their own tax advisers.

47
<PAGE> 51

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.

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: (1) at least 75% of its gross income is passive or (2) 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 (i) on a
portion of any "excess distribution" received on the stock or (ii) on any gain
from a sale or disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the regulated investment company distributes the PFIC
income as a taxable dividend to its stockholders. 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 by the Fund to satisfy the distribution requirement for avoiding
income and excise taxes. In many instances it may be very difficult to make this
election due to certain requirements imposed with respect to the election.

Under provisions of the Taxpayer Relief Act of 1997 (the "1997 Tax Act")
generally effective for taxable years ending after 1997, the Fund may make an
election to annually mark-to-market certain publicly traded PFIC stock (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 distributions of, the PFIC stock. This amount would not be deductible
from the Fund's taxable income.

48
<PAGE> 52

The PFIC Mark-to-Market Election applies to the taxable year for which made and
to all subsequent taxable years, unless the PFIC stock ceases to be publicly
traded or the Internal Revenue Service consents to revocation of the election.
By making the PFIC Mark-to-Market Election, the Fund could ameliorate the
adverse tax consequences arising from its ownership of PFIC stock, but in any
particular year may be required to recognize income in excess of the
distributions it receives from the PFIC and proceeds from the dispositions of
PFIC stock.

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.

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. Any loss recognized upon a taxable
disposition of shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gains dividends received with respect
to such shares. For a summary of the tax rates applicable to capital gains, see
"Capital Gains Rates Under the 1997 Tax Act" below. 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 UNDER THE 1997 TAX ACT. Under the 1997 Tax Act, the
maximum tax rates applicable to net capital gains recognized by individuals and
other non-corporate taxpayers are (i) the same as ordinary income rates for
capital assets held for one year or less, (ii) 28% for capital assets held for
more than one year but not more than 18 months and (iii) 20% for capital assets
held for more than 18 months. Under the 1997 Tax Act, the Treasury is authorized
to issue regulations that address the application of the new capital gains rates
to sales and exchanges by regulated investment companies and to sales and
exchanges of interests in regulated investment companies, but no such
regulations have been issued as of the date hereof. It is expected that the new
tax rates for capital gains under the 1997 Tax Act described above will apply to
distributions of capital gains dividends by regulated investment companies such
as the Fund as well as to sales and exchanges of shares in regulated investment
companies such as the Fund. With respect to capital losses recognized on
dispositions of shares held six months or less where such losses are treated as
long-term capital losses to the extent of prior

49
<PAGE> 53

capital gains dividends received on such shares (see "Sale of Shares" above), it
is unclear how such capital losses offset the capital gains referred to above.
Shareholders should consult their own tax advisors as to the application of the
new capital gains rates to their particular circumstances.

GENERAL. The federal, state and local 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 a one year period or for the life of the Fund. 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 a maximum sales charge of 5.75% 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 CDSC 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.

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.

Total return is calculated separately for Class A shares, Class B shares and
Class C shares of the Fund. Class A shares total return figures include the
maximum sales charge of 5.75%; Class B shares and Class C shares total return
figures include any applicable CDSC. Because of the differences in sales charges
and distribution fees, the total returns for each of the classes will differ.

50
<PAGE> 54

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.

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 ratings or rankings 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 Index, Standard & Poor's indices, or NASDAQ, 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 Fund
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 provided in narrative form. These hypotheticals will be
accompanied by standard performance information required by the SEC as described
above.

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

51
<PAGE> 55

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

The Trust was originally incorporated in the State of Maryland on May 25,
1990. The Trust was reorganized as a business trust under the laws of the state
of Delaware on August 31, 1995 and adopted its current name as of that time. The
authorized capitalization of the Trust consists of an unlimited number of shares
of beneficial interest, par value $0.01 per share. The Trust may establish from
time to time one or more separate series, such as the Fund, and authorize
separate classes of shares of such series. 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. Shares issued by the Fund
are fully paid, non-assessable and, except as described herein, have no
preemptive or conversion rights.

Each class of shares represents an interest in the same assets of the Fund and
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. There are no conversion, preemptive or other subscription
rights, except with respect to the conversion of certain shares into Class A
shares as described herein. In the event of liquidation, each of the shares of
the Fund is entitled to its portion of all of the Fund's net assets after all
debt and expenses of the Fund have been paid. Since Class B shares and Class C
shares pay higher distribution fees and transfer agency costs, the liquidation
proceeds to Class B shareholders and Class C shareholders are likely to be lower
than to other shareholders.

The Fund does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of 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
1940 Act. More detailed information concerning the Fund is set forth in the
Statement of Additional Information.

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

52
<PAGE> 56

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

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

The fiscal year end of the Fund is May 31. The Fund sends to its shareholders
at least semi-annually reports showing the Fund's portfolio and other
information. An Annual Report, containing financial statements audited by the
Fund's independent accountants, is sent to shareholders each year. After the end
of each year, shareholders will receive federal tax information regarding
dividends and capital gains distributions.

For Automated Telephone Service which provides 24-hour direct dial access to
fund facts and shareholder account information, dial (800) 847-2424. For
inquiries through Telecommunications Device for the Deaf (TDD) dial (800)
421-2833.

53
<PAGE> 57

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

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

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

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

FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 847-2424

VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181

Investment Adviser

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

Investment Subadviser

MORGAN STANLEY ASSET
MANAGEMENT INC.
1221 Avenue of the Americas
New York, New York 10020

Distributor

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

Transfer Agent

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

Custodian

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

Legal Counsel

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

Independent Accountants

PRICE WATERHOUSE LLP
1201 Louisiana
Suite 2900
Houston, TX 77002
<PAGE> 58

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

GLOBAL EQUITY FUND

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

P R O S P E C T U S

SEPTEMBER 28, 1997

------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 59

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

VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------

Van Kampen American Capital Global Government Securities Fund (the "Fund")
is a separate, non-diversified series of Van Kampen American Capital World
Portfolio Series Trust (the "Trust"), an open-end management investment company.
The Fund's primary investment objective is to seek to provide a high level of
current income. The Fund's secondary investment objectives are capital
appreciation and protection of principal. The Fund seeks to achieve its
investment objectives by investing primarily in an international portfolio of
high quality foreign and U.S. government bonds and by actively managing the
maturity structure and currency exposure of its portfolio. There is no assurance
that the Fund will achieve its investment objectives.

A Statement of Additional Information, dated September 28, 1997, containing
additional information about the Fund is hereby incorporated by reference in its
entirety into this Prospectus. A copy of the Statement of Additional Information
may be obtained without charge by calling (800) 421-5666 or for
Telecommunications Device For the Deaf at (800) 421-2833. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission (the "SEC") and is available along with other related materials of
the Fund at the SEC's internet web site (http://www.sec.gov).

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

THIS PROSPECTUS IS DATED SEPTEMBER 28, 1997.

<PAGE> 60

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Shareholder Transaction Expenses............................ 5
Annual Fund Operating Expenses and Example.................. 6
Financial Highlights........................................ 8
The Trust................................................... 10
Investment Objectives and Policies.......................... 10
Risk Factors................................................ 13
Investment Practices........................................ 14
Investment Advisory Services................................ 22
Alternative Sales Arrangements.............................. 25
Purchase of Shares.......................................... 28
Shareholder Services........................................ 38
Redemption of Shares........................................ 43
Distribution and Service Plans.............................. 46
Distributions from the Fund................................. 48
Tax Status.................................................. 48
Fund Performance............................................ 54
Description of Shares of the Fund........................... 56
Additional Information...................................... 58
</TABLE>

2
<PAGE> 61

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

THE FUND. Van Kampen American Capital Global Government Securities Fund (the
"Fund") is a separate, non-diversified series of Van Kampen American Capital
World Portfolio Series Trust (the "Trust"). The Trust is an open-end management
investment company organized as a Delaware business trust.

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

INVESTMENT OBJECTIVES. The primary investment objective of the Fund is to seek
to provide a high level of current income. The Fund's secondary investment
objectives are capital appreciation and protection of capital. There is no
assurance the Fund will achieve its investment objectives. See "Investment
Objectives and Policies."

INVESTMENT POLICY. The Fund seeks to achieve its investment objective by
investing primarily in an international portfolio of high quality foreign and
U.S. government bonds. The Fund may invest in securities of supranational
issuers. The Fund may enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or contracts based on
financial indices, including any index of U. S. Government securities or foreign
government securities, and may purchase and write put and call options to buy or
sell futures contracts.

RISK FACTORS. Investing in securities issued by foreign governments and
corporations involves considerations and possible risks not typically associated
with investing in obligations issued by the United States government. The values
of foreign investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy or
changed circumstances in dealings between nations. See "Investment Objectives
and Policies" and "Risk Factors." The use of options, futures contracts and
options on futures contracts may include additional risks. See "Investment
Practices."

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

Class A Shares. Class A shares are offered at net asset value per share plus
a maximum initial sales charge of 4.75% of the offering price (4.99% of the net
amount invested), reduced on investments of $100,000 or more. Investments of

3
<PAGE> 62

$1 million or more are not subject to any sales charge at the time of purchase,
but a contingent deferred sales charge ("CDSC") of 1.00% may be imposed on
certain redemptions made within one year of purchase. The Fund pays an annual
service fee of up to 0.25% of its average daily net assets attributable to such
class of shares. See "Purchase of Shares -- Class A Shares" and "Distribution
and Service Plans."

Class B Shares. Class B shares are offered at net asset value per share and
are subject to a maximum CDSC of 4.00% on redemptions made within the first or
second year after purchase, declining thereafter to 0.00% after the fifth year.
See "Redemption of Shares." Class B shares are subject to a combined annual
distribution fee and service fee of up to 1.00% of the Fund's average daily net
assets attributable to such class of shares. See "Purchase of Shares -- Class B
Shares" and "Distribution and Service Plans." Class B shares convert
automatically to Class A shares eight years after the end of the calendar month
in which the shareholder's order to purchase was accepted. See "Alternative
Sales Arrangements -- Conversion Feature."

DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor")
distributes the Fund's shares.

DISTRIBUTIONS FROM THE FUND. Income dividends are paid monthly; any net short-
term or long-term capital gains are distributed at least annually. All dividends
and distributions are automatically reinvested in shares of the Fund at net
asset value per share (without a sales charge) unless payment in cash is
requested. See "Distributions from the Fund."

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

4
<PAGE> 63

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price)................. 4.75%(1) None None
Maximum sales charge imposed on
reinvested dividends (as a
percentage of offering price)... None None None
Deferred sales charge (as a
percentage of the lesser of
original purchase price or Year
redemption proceeds)............ None(2) Year 1--4.00% 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage
of amount redeemed)............. None None None
Exchange fee...................... None None None
</TABLE>

- ------------------------------------------------------------------------------
(1) Reduced for purchases of $100,000 and over. See "Purchase of Shares -- Class
A Shares."

5
<PAGE> 64

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average
daily net assets)........................ 0.75% 0.75% 0.75%
12b-1 Fees (as a percentage of average
daily net assets)(1)..................... 0.25% 1.00%(2) 1.00%(2)
Other Expenses (as a percentage of average
daily net assets)........................ 0.57% 0.58% 0.58%
Total Fund Operating Expenses (as a
percentage of average daily net
assets).................................. 1.57% 2.33% 2.33%
</TABLE>

(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted as a fund-level expense by NASD
Rules.

6
<PAGE> 65

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
EXAMPLE: ------- ------- ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (i) an
operating expense ratio of 1.57% for
Class A shares, 2.33% for Class B shares
and 2.33% for Class C shares, (ii) a
5.00% annual return and (iii) redemption
at the end of each time period:
Class A............................... $63 $ 95 $129 $225
Class B............................... $64 $103 $140 $248*
Class C............................... $34 $ 73 $125 $267
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................... $63 $ 95 $129 $225
Class B............................... $24 $ 73 $125 $248*
Class C............................... $24 $ 73 $125 $267
</TABLE>

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

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

7
<PAGE> 66

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

FINANCIAL HIGHLIGHTS (Selected data for a share of beneficial interest
outstanding throughout each of the periods indicated)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS A SHARES
-------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, NOVEMBER 15, 1991
-------------------------------------------------------------- (COMMENCEMENT OF DISTRIBUTION)
1997(A)(D) 1996 1995 1994 1993(A) TO MAY 31, 1992(A)
---------- -------- -------- -------- -------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $7.92 $8.24 $8.26 $9.01 $9.07 $9.43
-------- -------- -------- -------- -------- -------
Net Investment Income........ .526 .56 .60 .78 .845 .59
Net Realized and Unrealized
Loss on Securities......... (.310) (.328) (.016) (.5715) (.123) (.5245)
-------- -------- -------- -------- -------- -------
Total from Investment
Operations................... .216 .232 .584 .2085 .722 .0655
-------- -------- -------- -------- -------- -------
Less:
Distributions from Net
Investment Income.......... .532 .552 .604 .726 .782 .4255
Distributions from and in
Excess of Net Realized Gain
on Securities.............. -0- -0- -0- .2325 -0- -0-
-------- -------- -------- -------- -------- -------
Total Distributions........... .532 .552 .604 .9585 .782 .4255
-------- -------- -------- -------- -------- -------
Net Asset Value, End of the
Period....................... $7.604 $7.92 $8.24 $8.26 $9.01 $9.07
======== ======== ======== ======== ======== =======
Total Return(b)............... 2.65% 2.81% 7.52% 1.89% 8.47% .71%
Net Assets at End of the
Period (In millions)......... $25.7 $36.4 $47.9 $62.8 $36.1 $25.0
Ratio of Expenses to Average
Net Assets(c)................ 1.57% 1.51% 1.42% 1.45% 1.52% .50%
Ratio of Net Investment Income
to Average Net Assets(c)..... 6.58% 6.66% 7.18% 8.12% 9.33% 10.41%
Portfolio Turnover............ 161% 239% 209% 236% 301% 289%
</TABLE>

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

(a) Based on average month-end 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 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%.

(d) The Fund changed its investment subadviser effective April 1, 1997. See
"Investment Advisory Services."

(Table continued on following page)

8
<PAGE> 67

<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------------------------------------------
NOVEMBER 15, 1991
YEAR ENDED MAY 31, (COMMENCEMENT OF
---------------------------------------------- DISTRIBUTION)
1997(A)(D) 1996 1995 1994 1993(A) TO MAY 31, 1992(A)
---------- ----- ------ ------ ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $ 7.96 $8.28 $ 8.30 $ 9.04 $9.09 $ 9.43
------ ----- ------ ------ ----- -----
Net Investment Income............ .477 .49 .53 .69 .78 .55
Net Realized and Unrealized Loss
on Securities.................. (.320) (.318) (.006) (.5435) (.12) (.5005)
------ ----- ------ ------ ----- -----
Total from Investment
Operations....................... .157 .172 .524 .1465 .66 .0495
------ ----- ------ ------ ----- -----
Less:
Distributions from Net Investment
Income......................... .472 .492 .544 .654 .71 .3895
Distributions from and in Excess
of Net Realized Gain on
Securities..................... -0- -0- -0- .2325 -0- -0-
------ ----- ------ ------ ----- -----
Total Distributions............... .472 .492 .544 .8865 .71 .3895
------ ----- ------ ------ ----- -----
Net Asset Value, End of the
Period........................... $7.645 $7.96 $ 8.28 $ 8.30 $9.04 $ 9.09
====== ===== ====== ====== ===== =====
Total Return(b)................... 2.00% 2.06% 6.69% 1.07% 7.95% .53%
Net Assets at End of the Period
(In millions).................... $ 56.9 $97.7 $123.4 $147.5 $56.7 $ 22.5
Ratio of Expenses to Average Net
Assets(c)........................ 2.33% 2.27% 2.18% 2.22% 2.19% 1.02%
Ratio of Net Investment Income to
Average Net Assets(c)............ 5.86% 5.91% 6.41% 7.30% 8.66% 9.86%
Portfolio turnover rate........... 161% 239% 209% 236% 301% 289%

<CAPTION>
CLASS C SHARES
----------------------------------------------------------
APRIL 12, 1993
YEAR ENDED MAY 31, (COMMENCEMENT OF
------------------------------------- DISTRIBUTION)
1997(A)(D) 1996 1995 1994 TO MAY 31, 1993(A)
---------- ------ ------ ------ ------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $ 7.91 $ 8.22 $ 8.25 $ 8.99 $ 9.00
------ ------ ------ ------ ------
Net Investment Income............ .471 .46 .51 .63 .095
Net Realized and Unrealized Loss
on Securities.................. (.324) (.278) .004 (.4835) .011
------ ------ ------ ------ ------
Total from Investment
Operations....................... .147 .182 .514 .1465 .106
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .472 .492 .544 .654 .116
Distributions from and in Excess
of Net Realized Gain on
Securities..................... -0- -0- -0- .2325 -0-
------ ------ ------ ------ ------
Total Distributions............... .472 .492 .544 .8865 .116
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $7.585 $ 7.91 $ 8.22 $ 8.25 $ 8.99
====== ====== ====== ====== ======
Total Return(b)................... 1.88% 2.20% 6.60% 1.19% 8.78%*
Net Assets at End of the Period
(In millions).................... $ 5.6 $ 9.5 $ 18.5 $ 23.5 $ 1.4
Ratio of Expenses to Average Net
Assets(c)........................ 2.33% 2.27% 2.18% 2.22% 2.63%
Ratio of Net Investment Income to
Average Net Assets(c)............ 5.84% 5.91% 6.42% 7.13% 10.06%
Portfolio turnover rate........... 161% 239% 209% 236% 301%
</TABLE>

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

* Non-Annualized

(a) Based on average month-end 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 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%.

(d) The Fund changed its investment subadviser effective April 1, 1997. See
"Investment Advisory Services."

9
<PAGE> 68

- ------------------------------------------------------------------------------
THE TRUST
- ------------------------------------------------------------------------------

The Trust is an open-end management investment company, commonly known as a
mutual fund. A mutual fund provides, for those who have similar investment
goals, a practical and convenient way to invest in a portfolio of securities by
combining their resources in an effort to achieve such goals.

Van Kampen American Capital Asset Management, Inc. (the "Adviser") provides
investment advisory and administrative services to the Fund. The Adviser and its
affiliates also manage other mutual funds distributed by Van Kampen American
Capital Distributors, Inc. (the "Distributor"). To obtain Prospectuses and other
information on any of these other funds, please call the telephone number on the
cover page of the Prospectus.

- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- ------------------------------------------------------------------------------

The primary investment objective of the Fund is to seek to provide a high
level of current income. The Fund's secondary objectives are capital
appreciation and protection of principal. The Fund seeks to achieve its
investment objectives by investing primarily in an international portfolio of
high quality foreign and U.S. government debt securities and by actively
managing the maturity structure and currency exposure of its portfolio. Under
normal circumstances, the Fund invests at least 65% of its total assets in
government securities. Government securities include debt securities issued or
guaranteed by the United States or foreign governments or their agencies,
authorities or instrumentalities. The Fund may invest all or a portion of its
remaining assets in high quality debt securities of U.S. and foreign
corporations.

Under normal market conditions, the Fund invests in obligations of at least
three countries. These countries may include the United States, the countries of
Western Europe, Japan, Australia, New Zealand and Canada. Obligations of any
other country may also be considered for investment. Securities of any one
issuer (other than the United States government) will represent no more than 25%
of the Fund's total assets. The Fund may purchase securities that are issued by
the government of one nation but denominated in the currency of another nation
(or in a multinational currency unit).

The Fund may also invest in debt obligations of supranational lending entities
organized or supported by several national governments. The supranational
entities in which the Fund may invest include the following: International Bank
for Reconstruction and Development (World Bank), established to promote
reconstruction and economic development in its member nations; European Coal and
Steel Community, a partnership of 12 European countries created to establish a
common

10
<PAGE> 69

market for coal and steel and to further the economic development of its member
countries; European Investment Bank, established to finance investment projects
that contribute to the balanced development of the European Economic Community;
European Bank for Reconstruction & Development, whose objectives are to foster
the transition toward open market economies and to promote private and
entrepreneurial initiative in countries of central and eastern Europe;
Inter-American Development Bank, established to further the development of its
Latin American member countries; African Development Bank, established to
contribute to the economic development and social progress of its African member
countries; and Asian Development Bank, established to promote economic growth
and cooperation in Asia and the Far East. The Fund may from time to time invest
up to 25% of its total assets in these and other supranational entities.

The Adviser, subject to the direction of the Trustees, provides the Fund with
an overall investment program consistent with the Fund's objectives and
policies. The Adviser is solely responsible for advising the Fund with respect
to investments in the United States. The Subadviser, subject to overall review
by the Adviser and the Trustees, is responsible for recommending an optimal
asset allocation and currency exposure of the Fund's assets among various
markets and for recommending particular securities in such markets. The Adviser
and the Subadviser are sometimes referred to as the Adviser.

The Fund limits its purchases of debt securities to high quality obligations.
For debt obligations other than commercial paper, this includes securities that
are rated Aa3 or better by Moody's Investors Service ("Moody's") or AA- or
better by Standard & Poor's Ratings Group ("S&P"), or that are not rated but
considered by the Adviser to be of equivalent quality. A description of the
Moody's and S&P ratings is included in the Statement of Additional Information.

The Fund's portfolio is managed in accordance with a global investment
strategy, which means that the Fund's investments are allocated among securities
denominated in the United States dollar and the currencies of a number of
foreign countries and, within each such country, among different types of debt
securities. The Fund's exposure with respect to each currency is adjusted based
on Fund management's perception of the most favorable markets and issuers. In
this regard, the percentage of assets invested in securities of a particular
country or denominated in a particular currency will vary in accordance with
Fund management's assessment of the relative yield and appreciation potential of
such securities and the relationship of a country's currency to the United
States dollar. Fundamental economic strength, credit quality and interest rate
trends are the principal factors considered by Fund management in determining
whether to increase or decrease the emphasis placed upon a particular type of
security within the Fund's investment portfolio.

11
<PAGE> 70

The returns available from foreign currency denominated debt obligations can
be adversely affected by changes in exchange rates. The Adviser believes that
the use of foreign currency hedging techniques, including "cross-hedges" (see
"Investment Practices -- Forward Foreign Currency Exchange Contracts"), can help
protect against changes in the United States dollar value of income available
for distribution to shareholders and declines in the net asset value of the
Fund's shares resulting from adverse changes in currency exchange rates. For
example, the return available from securities denominated in a particular
foreign currency would diminish in the event the value of the United States
dollar increased against such currency. Such a decline could be partially or
completely offset by an increase in value of a hedge involving a foreign
currency contract, or by a cross-hedge involving a forward currency contract,
where such contract is available on terms more advantageous to the Fund than a
contract to sell the currency in which the position being hedged is denominated.
It is the Adviser's belief that hedges and cross-hedges can therefore provide
significant protection of net asset value in the event of a general rise in the
United States dollar against foreign currencies. However, a hedge or cross-hedge
cannot protect completely against exchange rate risks, and if Fund management is
incorrect in its judgment of future exchange rate relationships, the Fund could
be in a less advantageous position than if such a hedge had not been
established.

The investment objectives and policies, the percentage limitations and the
kinds of securities in which the Fund may invest may be changed by the Trustees
without shareholder action unless expressly governed by those limitations as
described under "Investment Practices and Restrictions" which can be changed
only by action of the shareholders. A change in the Fund's investment objectives
may result in the Fund having investment objectives different from that which a
shareholder deemed appropriate at the time of investment. See also the Statement
of Additional Information.

TEMPORARY SHORT-TERM INVESTMENTS. The Fund's policy generally is to invest in
a global portfolio of longer term debt securities. In the interest of preserving
shareholders' capital and consistent with the Fund's investment objectives, the
Adviser may employ a temporary defensive investment strategy if it determines
such a strategy to be warranted. Under a defensive strategy, the Fund may hold
cash (United States dollars or foreign currencies) or invest a portion or all of
its assets in high quality money market instruments. It is impossible to predict
when or for how long the Fund will employ defensive strategies. Money market

12
<PAGE> 71

instruments in which the Fund may invest include, but are not limited to, the
following instruments of United States or foreign issuers: government
securities; commercial paper; bank certificates of deposit and bankers'
acceptances; and repurchase agreements related to any of the foregoing. The Fund
will only purchase commercial paper if it is rated Prime-1 or Prime-2 by Moody's
or A-1 or A-2 by S&P or, if not rated, is considered by the Adviser to be of
equivalent quality. In addition, for temporary defensive reasons, such as during
times of international political or economic uncertainty, most or all of the
Fund's investments may be made in the United States and denominated in United
States dollars.

Under such a temporary defensive strategy, the Fund would invest at least 25%
of its assets in securities issued by banks. See "Investment
Practices -- Investment Restrictions." Such investments may include certificates
of deposit, time deposits, bankers' acceptances, and obligations issued by bank
holding companies, as well as repurchase agreements entered into with banks. In
such event, the Fund would have greater exposure to the risk factors which are
characteristic of such investments. In particular, the value of and investment
return on the Fund's shares would be affected by economic or regulatory
developments in or related to the banking industry. Sustained increases in
interest rates can adversely affect the availability and cost of funds for a
bank's lending activities, and a deterioration in general economic conditions
could increase the exposure to credit losses. The banking industry is also
subject to the effects of the concentration of loan portfolios in particular
businesses such as real estate, energy, agriculture or high technology-related
companies; concentration of loan portfolios in lesser developed country loans
and highly leveraged transaction loans; national and local regulation; and
competition within those industries as well as with other types of financial
institutions. In addition, the Fund's investments in commercial banks located in
several foreign countries are subject to additional risks due to the combination
in such banks of commercial banking and diversified securities activities.

- ------------------------------------------------------------------------------
RISK FACTORS
- ------------------------------------------------------------------------------

FOREIGN SECURITIES AND CURRENCIES. Investing in securities issued by foreign
governments and corporations involves considerations and possible risks not
typically associated with investing in obligations issued by the United States
government. The values of foreign investments are affected by changes in
currency rates or exchange control regulations, application of foreign tax laws,
including withholding taxes, changes in governmental administration or economic
or monetary policy (in this country or abroad) or changed circumstances in
dealings between nations. Foreign currency exchange rates are determined by
forces of supply and demand on the foreign exchange markets. These forces are
themselves affected by the international balance of payments and other economic
and financial conditions,

13
<PAGE> 72

government intervention, speculation and other factors. Moreover, foreign
currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. Costs are incurred in connection with
conversions between various currencies. In addition, foreign brokerage
commissions and dealer mark-ups are generally higher than in the United States,
and foreign securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States. Investments in
foreign countries could be affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations, and could be subject to extended settlement periods.

NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company,
which means the Fund is not limited in the proportion of its assets that may be
invested in the securities of a single issuer. However, the Fund intends to
conduct its operations so as to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"), which
requires, among other things, that the Fund limit its investments so that, at
the close of each quarter of the taxable year, (i) not more than 25% of the
market value of the Fund's total assets are invested in securities of a single
issuer (other than the U.S. Government, its agencies and instrumentalities) and
(ii) at least 50% of the market value of its total assets is invested in cash,
securities of the U.S. Government, its agencies and instrumentalities and other
securities limited in respect of any one issuer to an amount not greater than 5%
of the market value of the Fund's total assets and not more than 10% of the
outstanding voting securities of such issuer. For purposes of the Fund's
requirements to maintain diversification for tax purposes, the issuer of a loan
participation will be the underlying borrower. In cases where the Fund does not
have recourse directly against the borrower, both the borrower and each agent
bank and co-lender interposed between the Fund and the borrower will be deemed
issuers of the loan participation for tax diversification purposes. Since the
Fund, as a non-diversified investment company, may invest in a smaller number of
individual issuers than a diversified investment company, an investment in the
Fund may, under certain circumstances, present greater risks to an investor than
an investment in a diversified company.

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

14
<PAGE> 73

determining the yield during the holding period. Repurchase agreements involve
certain risks in the event of a default by the other party. 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,
exceeds 10% of the value of the Fund's net assets. In the event of the
bankruptcy or other default of the seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying security 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 aggregates
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 greater
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 the SEC exemptive order obtained by the Fund authorizing
this practice, which conditions are designed to ensure the fair administration
of the joint account and to protect the amounts in that account.

PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES. The Adviser is responsible
for the placement of orders for the purchase and sale of portfolio securities
for the Fund and the negotiation of brokerage commissions on such transactions.
Brokerage firms are selected on the basis of their professional capability for
the type of transaction and the value and quality of execution services rendered
on a continuing basis. The Fund's portfolio securities generally are traded in
the over-the-counter market through dealers. A dealer is a securities firm or
bank which makes a market for securities by opening a position at one price and
closing the position at a slightly more favorable price. The difference between
the prices is known as a spread. Foreign currency and forward currency exchange
contracts are traded in a similar fashion in a dealer market maintained
primarily by large commercial banks. The Fund will pay brokerage commissions in
connection with transactions in exchange-traded options, futures contracts and
related options. Spreads or commissions for transactions executed in foreign
markets often are higher than in the United States. The Adviser is authorized to
place portfolio transactions to the extent permitted by law, with brokerage
firms affiliated with the Fund and with brokerage firms participating in the
distribution of shares of the Fund and other Van Kampen American Capital mutual
funds if they reasonably believe that the quality of the execution and the
commission are comparable to that available from other qualified firms. The
Adviser is authorized to pay higher commissions to brokerage firms that

15
<PAGE> 74

provide 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. The information received may be used
by the Adviser in managing the assets of other advisory accounts as well as in
the management of the assets of the Fund.

PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and may involve the payment by the Fund of brokerage
commissions or dealer spreads and other transaction costs on the sale of
securities as well as on the investment of the proceeds in other securities. The
portfolio turnover rate for a fiscal year is the ratio of the lesser of
purchases or sales of portfolio securities to the average value of portfolio
securities, excluding debt securities whose maturities at acquisition were one
year or less. The Fund expects its portfolio turnover rate to be as much as 400%
in any given year. An annual turnover rate of 400% occurs, for example, when the
dollar equivalent of all securities in the Fund's portfolio are replaced four
times over the period of one year. A high rate of portfolio turnover involves
correspondingly greater expenses than a lower rate, which expenses must be borne
by the Fund and its shareholders. A high portfolio turnover rate may also result
in the realization of substantial net short-term capital gains. See "Tax
Status." The Fund's annual portfolio turnover rate is shown in the table of
"Financial Highlights."

ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. As used herein, securities are considered illiquid if, in
the ordinary course of business, the Fund would not be able to dispose of the
security and receive the proceeds of the sale within seven days. Since market
quotations are not readily available for illiquid securities, such securities
will be valued by a method that the Fund's Trustees believe accurately reflects
fair value.

16
<PAGE> 75

may not make short sales or maintain a short position if doing so would cause
more than 25% of its total assets, taken at market value, to be involved in such
sales.

The Fund may close out a short position by purchasing and delivering an equal
amount of the securities sold short, rather than by delivering securities
already held by the Fund, because the Fund may want to continue to receive
interest and dividend payments on securities in its portfolio.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices
including any index of United States government securities or foreign government
securities ("futures contracts") and may purchase and write put and call options
to buy or sell futures contracts ("options on futures contracts"). A "sale" of a
futures contract means the acquisition of a contractual obligation to deliver
the securities or foreign currencies called for by the contract at a specified
price on a specified date. A "purchase" of a futures contract means the
incurring of a contractual obligation to acquire the securities or foreign
currencies called for by the contract at a specified price on a specified date.
The purchaser of a futures contract on an index agrees to take or make delivery
of an amount of cash equal to the difference between a specified multiple of the
value of the index on the expiration date of the contract ("current contract
value") and the price at which the contract was originally struck. No physical
delivery of the fixed-income securities underlying the index is made. Options on
futures contracts to be written or purchased by the Fund will be traded on
United States or foreign exchanges. These investment techniques are used to
hedge against anticipated future changes in interest or exchange rates which
otherwise might either adversely affect the value of the Fund's portfolio
securities or adversely affect the price of securities which the Fund intends to
purchase at a later date.

OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write put and call
options on foreign currencies to increase the Fund's gross income and for the
purpose of protecting against declines in the United States dollar value of
foreign currency denominated portfolio securities and against increases in the
United States dollar cost of such securities to be acquired. As in the case of
other kinds of options, however, the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium received, and
the Fund could be required to cover its position by purchasing or selling
foreign currencies at disadvantageous exchange rates, thereby incurring losses.
The purchase of an option on a foreign currency may constitute an effective
hedge against fluctuations in exchange rates although, in the event of rate
movements adverse to the Fund's position, the Fund may forfeit the entire amount
of the premium plus related transaction costs. Options on foreign currencies
written or purchased by the Fund are traded on

17
<PAGE> 76

United States and foreign exchanges or over-the-counter. There is no specific
percentage limitation on the Fund's investments in options on foreign
currencies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may purchase or sell
forward foreign currency exchange contracts ("forward contracts") to attempt to
minimize the risk to the Fund from adverse changes in the relationship between
the United States dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers. The Fund may enter into a forward contract, for
example, when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the United States dollar
price of the security ("transaction hedge"). Additionally, when the Fund
believes that a foreign currency may suffer a substantial decline against the
United States dollar, it may enter into a forward sale contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency, or when the
Fund believes that the United States dollar may suffer a substantial decline
against foreign currency, it may enter into a forward purchase contract to buy
that foreign currency for a fixed dollar amount ("position hedge"). In this
situation, the Fund may, in the alternative, enter into a forward contract to
sell a different foreign currency for a fixed United States dollar amount where
the Fund believes that the United States dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline in the
United States dollar value of the currency in which portfolio securities of the
Fund are denominated ("cross-hedge").

The Fund's custodian will place cash or liquid securities in a segregated
account having a value equal to the aggregate amount of the Fund's commitments
under forward contracts entered into with respect to position hedges and
cross-hedges. If the value of the securities placed in the segregated account
declines, additional cash or liquid securities are placed in the account on a
daily basis so that the value of the account equals the amount of the Fund's
commitments with respect to such contracts. As an alternative to maintaining all
or part of the segregated account, the Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency being hedged by a
forward sale contract at a price no higher than the forward contract price or
the Fund may purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high or
higher than the forward contract price. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it had not entered
into such contracts.

OPTIONS ON PORTFOLIO SECURITIES. The Fund may purchase or sell options on
certain of its portfolio securities at such time and from time to time as Fund
management shall determine to be appropriate and consistent with the investment

18
<PAGE> 77

objective of the Fund. Generally, the Fund expects that options purchased or
sold by it will be conducted on recognized securities exchanges.

The Fund is authorized to purchase and sell over-the-counter options ("OTC
Options"). OTC options are purchased from or sold to securities dealers,
financial institutions or other parties ("Counterparties") through direct
bilateral agreement with the Counterparty. The Fund will sell only OTC Options
(other than over-the-counter currency options) that are subject to a buy-back
provision permitting the Fund to require to the Counterparty to sell the option
back to the Fund at a formula price within seven days. The staff of the SEC
currently takes the position that, in general, OTC options on securities other
than U.S. Government securities purchased by the Fund, and portfolio securities
covering OTC options sold by the Fund, are illiquid securities subject to the
Fund's limitation on investing no more than 10% of its assets in illiquid
securities.

Purchasing and selling option contracts is a highly specialized activity which
involves investment techniques and risks different from those ordinarily
associated with investment companies, although the Fund believes that the
transactions in options where the Fund owns the underlying security, tends to
reduce such risks.

POTENTIAL RISKS OF OPTIONS, FUTURES AND FORWARD CONTRACTS. The successful use
of the foregoing investment techniques depends on the ability of the Fund's
Adviser to forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an unexpected manner, the
Fund may not achieve the anticipated benefits of futures contracts, options or
forward contracts or may realize losses and thus be in a worse position than if
such strategies had not been used. Unlike many exchange-traded futures contracts
and options on futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
In addition, the correlation between movements in the prices of such instruments
and movements in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses. The Fund's
ability to dispose of its positions in futures contracts, options and forward
contracts will depend on the availability of liquid markets in such instruments.
Markets in options and futures with respect to a number of fixed-income
securities and currencies are relatively new and still developing. It is
impossible to predict the amount of trading interest that may exist in various
types of futures contracts, options and forward contracts. If a secondary market
does not exist with respect to an option purchased or written by the Fund
over-the-counter, it might not be possible to effect a closing transaction in
the option (i.e., dispose of the option) with the result that (i) an option
purchased by the Fund would have to be exercised in order for the Fund to
realize any profit and (ii) the Fund may not be able to sell currencies or
portfolio securities covering an option written by the Fund until the option
expires or it delivers the underlying

19
<PAGE> 78

futures contract or currency upon exercise. Therefore, no assurance can be given
that the Fund will be able to utilize these instruments effectively for the
purposes set forth above.

In order to prevent leverage in connection with the purchase of futures
contracts or call options thereon by the Fund, an amount of cash or liquid
securities equal to the market value of the obligation under the futures
contracts (less any related margin deposits) will be maintained in a segregated
account with the Custodian. Furthermore, the Fund's ability to engage in options
and futures transactions may be limited by tax considerations.

SECURITY FORWARD COMMITMENTS. The Fund may purchase or sell securities on a
"when issued" or "delayed delivery" basis ("Forward Commitments"). These
transactions occur when securities are purchased or sold by the Fund with
payment and delivery taking place in the future, frequently a month or more
after such transaction. The price is fixed on the date of the commitment, and
the seller continues to accrue interest on the securities covered by the Forward
Commitment until delivery and payment takes place. At the time of settlement,
the market value of the securities may be more or less than the purchase or sale
price.

The Fund may settle a Forward Commitment either by taking delivery of the
securities or by reselling or repurchasing a Forward Commitment on or before the
settlement date. The Fund's use of Forward Commitments may increase its overall
investment exposure and thus its potential for gain or loss. When engaging in
Forward Commitments, the Fund relies on the other party to complete the
transaction; should the other party fail to do so, the Fund might lose a
purchase or sale opportunity that could be more advantageous than alternative
opportunities at the time of the failure.

INVESTMENT RESTRICTIONS. The Fund has adopted a number of fundamental
investment restrictions that may not be changed without the approval by a vote
of a majority of the outstanding voting securities of the Fund (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")). The percentage
limitations need only be met at the time the investment is made or other
relevant action taken. These restrictions provide, among other things, that the
Fund may not:

1. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would be invested in a single
industry except that, if the value of securities owned by the Fund with
remaining maturities of less than 13 months exceeds 35% of the value of
the Fund's total assets, the Fund will invest at least 25% of its assets
in securities issued by banks. Although this policy is not applicable to
securities issued by government or political subdivisions because such
issues are not members of any industry, the Fund

20
<PAGE> 79

does not intend to invest more than 25% of its total assets in the
securities issued or guaranteed by any government (except U.S. Government,
its agencies or instrumentalities). For purposes of this restriction,
issuers are not considered to be of a single industry if their primary
economic characteristics are materially different.

2. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of its
net assets, or pledge more than 10% of its net assets in connection with
permissible borrowings or purchase additional securities when money
borrowed exceeds 5% of its net assets. Margin deposits or payments in
connection with the writing of options, or in connection with the purchase
or sale of forward contracts, futures, foreign currency futures and
related options, are not deemed to be a pledge or other encumbrance.

3. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.

4. Write, purchase or sell puts, calls or combinations thereof, except that
the Fund may (i) write covered or fully collateralized call options, write
secured put options, and enter into closing or offsetting purchase
transactions with respect to such options, (ii) purchase and sell options
to the extent that the premiums paid for all such options owned at any
time do not exceed 10% of its total assets and (iii) engage in
transactions in interest rate futures contracts and related options
provided that such transactions are entered into for bona fide hedging
purposes (or that the underlying commodity value of the Fund's long
positions does not exceed the sum of certain identified liquid investments
as specified in CFTC regulations), provided further that the aggregate
initial margin and premiums do not exceed 5% of the fair market value of
the Fund's total assets, and provided further that the Fund may not enter
into net aggregate long and short futures contracts or related options if
more than 50% of the Fund's total assets would be so invested.

21
<PAGE> 80

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

THE ADVISER. The Adviser is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a
diversified asset management company with more than two million retail investor
accounts, extensive capabilities for managing institutional portfolios, and more
than $60 billion under management or supervision. Van Kampen American Capital's
more than 50 open-end and 37 closed-end funds and more than 2,500 unit
investment trusts are professionally distributed by leading financial advisers
nationwide. Van Kampen American Capital Distributors, Inc., the distributor of
the Fund and the sponsor of the Funds mentioned above, is also a wholly-owned
subsidiary of Van Kampen American Capital. Van Kampen American Capital is an
indirect wholly owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
The Adviser's principal office is located at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181.

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

22
<PAGE> 81

Witter, Discover & Co. and its other affiliates as well as the research and
investment ideas of other companies whose brokerage services the Subadviser
utilizes. The address of the Subadviser is 1221 Avenue of the Americas, New
York, New York 10020.

MSAM began providing subadvisory services to the Fund effective April 1, 1997.
John Govett & Co. Limited had provided subadvisory services to the Fund until
March 31, 1997.

ADVISORY AGREEMENTS. The Trust retains the Adviser to manage the investment of
the Fund's assets and to place orders for the purchase and sale of the Fund's
portfolio securities. Under an investment advisory agreement between the Adviser
and the Trust (the "Advisory Agreement"), the Trust pays the Adviser a monthly
fee computed at the annual rate of 0.75% of the Fund's average daily net assets.
Under the Advisory Agreement, the Trust also reimburses the Adviser for the cost
of the Fund's accounting services, which include maintaining its financial books
and records and calculating its daily net asset value. Operating expenses paid
by the Fund include shareholder service agency fees, service fees, distribution
fees, custodian fees, legal and accounting fees, the costs of reports and
proxies to shareholders, trustees' fees (other than those who are affiliated
persons as defined in the 1940 Act of the Adviser, Distributor or Van Kampen
American Capital), and all other business expenses not specifically assumed by
the Adviser. Advisory (management) fees, and total operating expense ratios are
shown under the caption "Annual Fund Operating Expenses and Example" herein.

The Adviser has entered into a sub-advisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser, subject to overall review by the Adviser and
the Trustees, is responsible for recommending an optimal asset allocation and
currency exposure of the Fund's assets among various markets and for
recommending particular securities in such markets. Pursuant to the Sub-advisory
Agreement, the Subadviser receives on an annual basis 50% of the compensation
received by the Adviser.

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

PERSONAL INVESTING POLICIES. The Fund, the Adviser and the Subadviser have
adopted Codes of Ethics designed to recognize the fiduciary relationship between
the Fund and the Adviser and the Subadviser and their employees. The Codes

23
<PAGE> 82

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. Effective April 1, 1997, J. David Germany, Michael B.
Kushma, Paul E. O'Brien and Robert M. Smith assumed the primary responsibility
for the day-to-day management of the Fund's Portfolio.

J. David Germany joined the Subadviser in 1996 and has been a portfolio
manager with the Adviser's affiliate, Miller Anderson & Sherrerd, LLP ("MAS")
since 1991. He was Vice President & Senior Economist for Morgan Stanley & Co.
Incorporated from 1989 to 1991. He assumed responsibility for the Global Fixed
Income and International Fixed Income Portfolios of the MAS-advised MAS Funds in
1993 and the MAS Funds' Multi-Asset-Class Portfolio in 1994. Mr. Germany was
Senior Staff Economist (International Finance and Macroeconomics) to the Council
of Economic Advisors -- Executive Office of the President from 1986 through 1987
and an Economist with the Board of Governors of the Federal Reserve
System --Division of International Finance from 1983 through 1987. He holds a
A.B. degree from Princeton University and a Ph.D. in Economics from the
Massachusetts Institute of Technology.

Michael B. Kushma, a Principal at Morgan Stanley & Co. Incorporated, joined
the firm in 1987. He was a member of Morgan Stanley & Co. Incorporated's global
fixed income strategy group in the fixed income division from 1987-1995 where he
became the division's senior government bond strategist. He joined the
Subadviser in 1995 where he took responsibility for the global fixed income
portfolio. Mr. Kushma received an A.B. in economics from Princeton University in
1979, an M. Sc. in economics from the London School of Economics in 1981 and an
M.Phil. in economics from Columbia University in 1983.

Paul F. O'Brien joined the Subadviser and MAS in 1996. He was head of European
Economics from 1993 through 1995 for JP Morgan and as Principal Administrator
from 1991 through 1992 for the Organization for Economic Cooperation and
Development. He assumed responsibility for the MAS-advised MAS Funds' Global
Fixed Income and International Fixed Income Portfolios in 1996. Mr. O'Brien
holds a B.S. degree from the Massachusetts Institute of Technology and a Ph.D.
in Economics from the University of Minnesota.

Robert Smith, a Principal of Morgan Stanley & Co. Incorporated, joined the
Subadviser in June 1994 and has had or shared primary responsibility for
managing the Morgan Stanley Global Fixed Income Fund's assets since July 1994.
Prior to joining the Adviser he spent eight years as Senior Portfolio
Manager -- Fixed Income at the State of Florida Pension Fund. Mr. Smith's
responsibilities included active total-rate-of-return management of long term
portfolios and supervision of

24
<PAGE> 83

other fixed income managers. A graduate of Florida State University with a B.S.
in Business, Mr. Smith also received an M.B.A. -- Finance from Florida State and
holds a Chartered Financial Analyst (CFA) designation.
- ------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- ------------------------------------------------------------------------------

CLASS A SHARES. Class A shares are sold at net asset value plus an initial
maximum sales charge of up to 4.75% of the offering price (4.99% of the net
amount invested), reduced on investments of $100,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a CDSC of 1.00% may be imposed on certain redemptions made within one year of
the purchase. Class A shares are subject to an ongoing service fee at an annual
rate of up to 0.25% of the Fund's aggregate average daily net assets
attributable to the Class A shares. Certain purchases of Class A shares qualify
for reduced initial sales charges. See "Purchase of Shares -- Class A Shares."

CLASS B SHARES. Class B shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within five years of purchase. Class B
shares are subject to an ongoing service fee at an annual rate of up to 0.25% of
the Fund's aggregate average daily net assets attributable to the Class B shares
and an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class B shares. Class B
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
B shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. Class B shares convert
automatically to Class A shares eight years after the end of the calendar month
in which the shareholder's order to purchase was accepted. See "Purchase of
Shares -- Class B Shares."

25
<PAGE> 84

CONVERSION FEATURE. Class B shares purchased on or after June 1, 1996, and
any dividend reinvestment plan shares received thereon, automatically convert to
Class A shares eight years after the end of the calendar month in which the
shares were purchased. Class B shares purchased before June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares six years after the end of the calendar month in which the shares
were purchased. Class C shares purchased before January 1, 1997, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares ten years after the end of the calendar month in which such
shares were purchased. Such conversion will be on the basis of the relative net
asset values per share, without the imposition of any sales load, fee or other
charge.

FACTORS FOR CONSIDERATION. In deciding which class of shares to purchase,
investors should take into consideration their investment goals, present and
anticipated purchase amounts, time horizons and temperaments. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the aggregate fees and CDSC on Class B shares and Class C shares would be less
than the initial sales charge on Class A shares purchased at the same time, and
to what extent such differential would be offset by the higher dividends per
share on Class A shares. To assist investors in making this determination, the
table under the caption "Annual Fund Operating Expenses and Example" sets forth
examples of the charges applicable to each class of shares. In this regard,
Class A shares may be more beneficial to the investor who qualifies for reduced
initial sales charges or purchases at net asset value. It is presently the
policy of the Distributor not to accept any order of $500,000 or more for Class
B shares or any order of $1 million or more for Class C shares as it ordinarily
would be more beneficial for such an investor to purchase Class A shares.

26
<PAGE> 85

funds invested initially, although remaining subject to a CDSC. Ongoing
distribution fees on Class B shares and Class C shares may be offset to the
extent of the additional funds originally invested and any return realized on
those funds. However, there can be no assurance as to the return, if any, which
will be realized on such additional funds. For investments held for ten years or
more, the relative value upon liquidation of the three classes tends to favor
Class A shares or Class B shares, rather than Class C shares.

Class A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
In addition, the check writing privilege is only available for Class A shares
(see "Shareholder Services -- Check Writing Privilege"). Class B shares may be
appropriate for investors who wish to avoid a front-end sales charge, put 100%
of their investment dollars to work immediately or have a longer-term investment
horizon. Class C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately, have a shorter-term investment horizon or desire a short CDSC
schedule.

GENERAL. Dividends paid by the Fund with respect to Class A shares, Class B
shares and Class C shares will be calculated in the same manner at the same time
on the same day, except that the higher distribution fees and transfer agency
costs relating to Class B shares or Class C shares will be borne by the
respective class. See "Distributions from the Fund." Shares of the Fund may be
exchanged, subject to certain limitations, for shares of the same class of
certain other mutual funds advised by the Adviser and its affiliates and
distributed by the Distributor. See "Shareholder Services -- Exchange
Privilege."

27
<PAGE> 86

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

GENERAL

Shares of the Fund may be purchased on any business day through authorized
dealers. Shares also may be purchased by completing the application accompanying
this prospectus and forwarding the application through the authorized dealer, to
the shareholder service agent, ACCESS Investor Services, Inc. ("ACCESS"), a
wholly-owned subsidiary of Van Kampen American Capital. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares.

Shares are offered at the next determined net asset value per share, plus a
front-end or contingent deferred sales charge depending on the class of shares
chosen by the investor, as shown in the tables herein. Net asset value per share
for each class 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. Net asset value per share for each class is determined
by dividing the value of the Fund's 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.

Securities listed or traded on a national securities exchange are valued at
the mean of representative quoted bid or asked prices. Unlisted securities and
listed securities for which such prices are not available are valued at prices
of comparable securities. Options and futures contracts are valued at the last
sale price or if no sales are reported, at the mean between the bid and asked
prices. Short-term investments are valued at cost plus interest earned
(amortized cost), which

28
<PAGE> 87

approximates market value. The net asset value of the Fund is computed by (i)
valuing long-term debt obligations at the mean of representative quoted bid or
asked prices for such securities or, if such prices are not available, at prices
for securities of comparable maturity, quality and type, however, when the
Adviser deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used, (ii) valuing short-term debt obligations with
remaining maturities in excess of 60 days at the mean of representative quoted
bid and asked prices for such securities or, if such prices are not available,
using the prices for securities of comparable maturity, quality and type, (iii)
valuing short-term debt securities with 60 days or less remaining to maturity by
amortizing such securities to maturity based on their cost to the Fund. Options
and futures contracts and options thereon which are traded on exchanges are
valued at their last sale or settlement price as of the close of such exchanges,
or, if no sales are reported, at the mean between the last reported bid and
asked prices. Over-the-counter options are valued at the average of the last bid
prices obtained from dealers. Any other assets will be valued at fair value as
determined in good faith by the Trustees of the Fund.

Generally, the net asset values per share of the Class A shares, Class B
shares, and Class C shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class A
shares, Class B shares and Class C shares may differ from one another,
reflecting the daily expense accruals of the higher distribution fee and
transfer agency costs applicable with respect to the Class B shares and Class C
shares and the differential in the dividends paid on the classes of shares. The
price paid for shares purchased is based on the next calculation of net asset
value (plus sales charges, where applicable) after an order 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. Orders received by
authorized dealers after the close of the Exchange are priced based on the next
close, provided they are received by the Distributor prior to the Distributor's
close of business on such day. It is the responsibility of authorized dealers to
transmit orders received by them to the Distributor so they will be received
prior to such time. Orders of less than $500 are mailed by the authorized dealer
and processed at the offering price next calculated after receipt by ACCESS.

29
<PAGE> 88

on Class B shares and Class C shares will be reduced by the amount of the
distribution fee and other expenses associated with such shares. Sales personnel
of authorized dealers distributing the Fund's shares and other persons entitled
to receive compensation for selling such shares may receive differing
compensation for selling Class A shares, Class B shares or Class C shares.

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. Fees may include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. In some instances additional compensation or promotional incentives may
be offered to brokers, dealers or financial intermediaries that have sold or may
sell significant amounts of shares during specific 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 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.

30
<PAGE> 89

CLASS A SHARES

The public offering price of Class A shares is the next determined net asset
value plus a sales charge, as set forth below.

SALES CHARGE TABLE

<TABLE>
<CAPTION>
REALLOWED TO
AS % OF AS % OF DEALERS (AS
SIZE OF OFFERING NET AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE)
<S> <C> <C> <C>
- --------------------------------------------------------------------------
Less than $100,000................. 4.75% 4.99% 4.25%
$100,000 but less than $250,000.... 3.75% 3.90% 3.25%
$250,000 but less than $500,000.... 2.75% 2.83% 2.25%
$500,000 but less than
$1,000,000....................... 2.00% 2.04% 1.75%
$1,000,000 or more*................ * * *
- --------------------------------------------------------------------------
</TABLE>

* No sales charge is payable at the time of purchase on investments of $1
million or more, although for such investments the Fund imposes a CDSC
of 1.00% on redemptions made within one year of the purchase. A
commission will be paid to authorized dealers who initiate and are
responsible for purchases of $1 million or more as follows: 1.00% on
sales to $2 million, plus 0.80% on the next $1 million and 0.50% on the
excess over $3 million.

In addition to the reallowances from the applicable public offering price
described above, the Distributor may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash or other
compensation, to authorized dealers that sell shares of the Fund. Authorized
dealers which are reallowed all or substantially all of the sales charges may be
deemed to be underwriters for purposes of the Securities Act of 1933.

31
<PAGE> 90

QUANTITY DISCOUNTS

Volume Discounts. The size of investment shown in the preceding preceding
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.

32
<PAGE> 91

between the sales charges applicable to the purchases made and the sales charges
previously paid. The initial purchase must be for an amount equal to at least 5%
of the minimum total purchased 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 back-dating provisions, an adjustment will be made at
the expiration of the Letter of Intent to give effect to the lower charge. Such
adjustments in sales charge will be used to purchase additional shares for the
shareholder at the applicable discount category. Additional information is
contained in the application form accompanying this Prospectus.

OTHER PURCHASE PROGRAMS

33
<PAGE> 92

their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.

(1) Current or retired trustees or directors of funds advised by the Adviser
or Van Kampen American Capital Investment Advisory Corp. and such persons'
families and their beneficial accounts.

(2) Current or retired directors, officers and employees of Morgan Stanley,
Dean Witter, Discover & Co. Group Inc. 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 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.

(6) 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.

34
<PAGE> 93

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 American Capital Trust Company served as
custodian will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees,
except under certain uniform criteria established by the Distributor from
time to time. Prior to February 1, 1997, a commission will be paid to
authorized dealers who initiate and are responsible for such purchases
within a rolling twelve-month period as follows: 1.00% on sales to $5
million, plus 0.50% on the next $5 million and 0.25% on the excess over
$10 million. For purchases on February 1, 1997 and thereafter, a
commission will be paid as follows: 1.00% on sales to $2 million, plus
0.80% on the next $1 million, plus 0.50% on the next $47 million and 0.25%
on the excess over $50 million.

35
<PAGE> 94

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

CLASS B SHARES

Class B shares are offered at net asset value. Class B shares which are
redeemed within five years of purchase are subject to a CDSC at the rates set
forth in the following table charged as a percentage of the dollar amount
subject thereto. The 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 charge is assessed on shares derived from
reinvestment of dividends or capital gains distributions. 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.

36
<PAGE> 95

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

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------
<S> <C>
First................................. 4.00%
Second................................ 4.00%
Third................................. 3.00%
Fourth................................ 2.50%
Fifth................................. 1.50%
Sixth and After....................... None
</TABLE>

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

A commission or transaction fee of 4.00% of the purchase amount will be paid
to authorized dealers and at the time of purchase. Additionally, the Distributor
may, from time to time, pay additional promotional incentives in the form of
cash or other compensation, to authorized dealers that sell Class B shares of
the Fund.

CLASS C SHARES

37
<PAGE> 96

In determining whether a CDSC 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 CDSC and second of shares held for more than one year
or shares acquired pursuant to reinvestment of dividends or distributions.

A commission or transaction fee of 1.00% of the purchase amount will be paid
to authorized dealers at the time of purchase. Authorized dealers also will be
paid ongoing commissions and transaction fees of up to 0.75% of the average
daily net assets of the Fund's Class C shares annually commencing in the second
year after purchase. Additionally, the Distributor may, from time to time, pay
additional promotional incentives in the form of cash or other compensation, to
authorized dealers that sell Class C shares of the Fund.

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The CDSC is waived on redemptions of Class B shares and Class C shares (i)
following the death or disability (as defined in the Code) of a shareholder,
(ii) in connection with required minimum distributions from an IRA or other
retirement plan, (iii) pursuant to the Fund's systematic withdrawal plan but
limited to 12% annually of the initial value of the account and (iv) effected
pursuant to the right of the Fund to liquidate a shareholder's account as
described herein under "Redemption of Shares." The CDSC also is waived on
redemptions of Class C shares as it relates to the reinvestment of redemption
proceeds in shares of the same class of the Fund within 120 days after
redemption. See the Statement of Additional Information for further discussion
of waiver provisions.

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

The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. The
following is a description of such services.

INVESTMENT ACCOUNT. Each shareholder has an investment account under which
the investor's shares are held by ACCESS, the Fund's transfer agent. ACCESS
performs bookkeeping, data processing and administrative services relative to
the maintenance of shareholder accounts. Except as described in this Prospectus,
after each share transaction in an account, the shareholder receives a statement
showing the activity in the account. Each shareholder who has an account in any
of the Participating Funds will receive statements quarterly from ACCESS showing
any reinvestments of dividends and capital gains distributions and any other
activity in the account since the preceding statement. Such shareholders also
will receive separate confirmations for each purchase or sale transaction other
than reinvestment of dividends and capital gains distributions and systematic
purchases or

38
<PAGE> 97

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
ACCESS.

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

39
<PAGE> 98

appropriate section of the account application. The shareholder must also
include a voided check or deposit slip from the bank account into which
redemptions are to be deposited together with the completed application. Once
ACCESS has received the application and the voided check or deposit slip, such
shareholder's designated bank account, following any redemption, will be
credited with the proceeds of such redemption. Once enrolled in the ACH plan, a
shareholder may terminate participation at any time by writing ACCESS.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the net asset values of each fund on
the date of the exchange without any sales charge. Shares of the Fund are
subject to a 30-day holding period requirement before exchange. Shares of any
Participating Fund may be exchanged for shares of any other 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 prospectus for such fund. Additional funds may be added from time to
time as determined by the Fund's Board of Trustees as Participating Funds.

When Class B shares and Class C shares are exchanged among Participating
Funds, the holding period for purposes of the CDSC is based on the date of the
initial purchase of such shares from a Participating Fund (the "original fund").
Upon redemption from the Participating Funds complex of funds, Class B shares
and Class C shares are subject to the CDSC schedule of the original fund.

Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes. If the shares being 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.

40
<PAGE> 99

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

41
<PAGE> 100

established on a form made available by the Fund. See "Shareholder Services --
Retirement Plans."

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

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

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

42
<PAGE> 101

Additional Information for further information regarding the establishment of
the privilege.
- ------------------------------------------------------------------------------
REDEMPTION OF SHARES
- ------------------------------------------------------------------------------

43
<PAGE> 102

days must accompany the redemption request. IRA redemption requests should be
sent to the IRA custodian to be forwarded to ACCESS. Where Van Kampen American
Capital Trust Company serves as custodian, special IRA, 403(b)(7), or Keogh
distribution forms must be obtained from and be forwarded to Van Kampen American
Capital Trust Company, P.O. Box 944, Houston, Texas 77001-0944. Contact the
custodian for information.

In the case of redemption requests sent directly to ACCESS, the redemption
price is the net asset value per share next determined after the request is
received. Payment for shares redeemed will be made by check mailed within seven
days after acceptance by ACCESS 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. If the shares to be redeemed have
been recently purchased by check, ACCESS may delay mailing a redemption check
until the purchase check has cleared, which may take up to fifteen days. A
taxable gain or loss will be recognized by the shareholder upon redemption of
shares.

44
<PAGE> 103

lines are busy or for any other reason; in such case, a shareholder would have
to use the Fund's regular redemption procedure previously described. Requests
received by ACCESS prior to 4:00 p.m., New York time, on a regular business day
will be processed at the net asset value per share determined that day. These
privileges are available for all accounts other than retirement accounts. The
telephone redemption privilege is not available for shares represented by
certificates. If an account has multiple owners, ACCESS may rely on the
instructions of any one owner.

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

45
<PAGE> 104

such redemption in Class C shares of the Fund with credit given for any CDSC
paid upon such redemption. Such reinstatement is made at the net asset value
(without sales charge except as described under "Shareholder
Services -- Exchange Privilege") next determined after the order is received,
which must be within 180 days after the date of the redemption. Reinstatement at
net asset value is also offered to participants in those eligible retirement
plans held or administered by Van Kampen American Capital Trust Company for
repayment of principal (and interest) on their borrowings on such plans.

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

46
<PAGE> 105

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

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

The Distributor's actual expenses with respect to Class B shares or Class C
shares for any given year may exceed the amounts payable to the Distributor with
respect to such class of shares under the Distribution Plan, the Service Plan
and payments received pursuant to the CDSC. In such event, with respect to any
such class of shares, any unreimbursed expenses will be carried forward and paid
by the Fund (up to the amount of the actual expenses incurred) in future years
so long as such Distribution Plan is in effect. Except as mandated by applicable
law, the Fund does not impose any limit with respect to the number of years into
the future that such unreimbursed expenses may be carried forward (on a Fund
level basis). Because such expenses are accounted on a Fund level basis, in
periods of extreme net asset value fluctuation such amounts with respect to a
particular 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
May 31, 1997, there were $7,288,417 and $694,089 of unreimbursed distribution
expenses with respect to Class B shares and Class C shares, respectively,
representing 12.81% and 12.27% of the Fund's average net assets attributable to
Class B shares and Class C shares, respectively. If the Distribution Plan was
terminated or not continued, the Fund would not be contractually obligated to
pay the Distributor for any expenses not previously reimbursed by the Fund or
recovered through CDSC.

47
<PAGE> 106

The Distributor will not use the proceeds from the CDSC applicable to a
particular class of shares to defray distribution-related expenses attributable
to any other class of shares. Various federal and state laws prohibit national
banks and some state-chartered commercial banks from underwriting or dealing in
the Fund's shares. In addition, state securities laws on this issue may differ
from the interpretations of federal law, and banks and financial institutions
may be required to register as dealers pursuant to state law. In the unlikely
event that a court were to find that these laws prevent such banks from
providing such services described above, the Fund would seek alternate providers
and expects that shareholders would not experience any disadvantage.

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

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 distributions.

DIVIDENDS. Interest earned from debt securities are the Fund's main source of
income. This income, less expenses, is distributed monthly as dividends to
shareholders. Unless the shareholder instructs otherwise, dividends and capital
gains distributions are automatically applied to purchase additional shares of
the Fund at the next determined net asset value. See "Shareholder
Services -- Reinvestment Plan."

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 their purchase prices. The Fund at least annually distributes to
shareholders its net capital gains, which are the excess of the Fund's net
long-term capital gains, if any on the sale of securities during the year over
its net short-term capital losses on the sale of securities, including capital
losses carried forward from prior years in accordance with tax laws ("capital
gains distributions"). As in the case of income dividends, capital gains
distributions are automatically reinvested in additional shares of the Fund at
net asset value. See "Shareholder Services -- Reinvestment Plan."

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

FEDERAL INCOME TAXATION. The Fund has qualified and intends to continue to
qualify each year and to elect to be treated as a regulated investment company

48
<PAGE> 107

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.

49
<PAGE> 108

recognize income 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.

50
<PAGE> 109

The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. Fund distributions
will not qualify for the dividends received deduction for corporations, except
to the extent the Fund receives dividends from domestic corporations.

Income from investments in foreign securities received by the Fund may be
subject to income, withholding and other taxes imposed by foreign countries and
U.S. possessions. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. Investors may be entitled to claim
United States foreign tax credits with respect to such taxes, subject to certain
provisions and limitations contained in the Code. If more than 50% in value of
the Fund's total assets at the close of its fiscal year consists of securities
of foreign issuers, the Fund will be eligible to and may file elections with the
Internal Revenue Service pursuant to which shareholders of the Fund will be
required to (i) include their respective pro rata portions of such taxes in
their United States income tax returns as gross income, and (ii) treat such
respective pro rata portions as taxes paid by them. Each shareholder will be
entitled, subject to certain limitations, to either deduct his respective pro
rata portions of such foreign taxes in computing his taxable income or use them
as foreign tax credits against his United States federal income taxes. No
deduction for such foreign taxes may be claimed by a shareholder who does not
itemize deductions. Each shareholder will be notified annually whether the
foreign taxes paid by the Fund will "pass through" for that year and, if so,
such notification will designate (i) the shareholder's portion of the foreign
taxes paid to each such country and (ii) the portion of dividends that represent
income derived from sources within each such country. The amount of foreign
taxes for which a shareholder may claim a credit in any year will be subject to
an overall limitation such that the credit may not exceed the shareholder's
United States federal income tax attributable to the shareholder's foreign
source taxable income. This limitation generally applies separately to certain
specific categories of foreign source income including "passive incomes" which
includes, among other types of income, dividends and interest. The foregoing is
only a general description of the foreign tax credit under current law. Because
application of the depends on the particular

51
<PAGE> 110

circumstances of each shareholder, shareholders are advised to consult their own
tax advisers.

52
<PAGE> 111

makes a PFIC Mark-to-Market Election an amount equal to the interest charge
that would otherwise accrue with respect to distributions on, or distributions
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 PFIC stock ceases to be
publicly traded or the Internal Revenue Service consents to revocation of the
election. By making the PFIC Mark-to-Market Election, the Fund could ameliorate
the adverse tax consequences arising from its ownership of PFIC stock, but in
any particular year may be required to recognize income in excess of the
distributions it receives from the PFIC and proceeds from the dispositions of
PFIC stock.

53
<PAGE> 112

and exchanges of shares in regulated investment companies such as the Fund. With
respect to capital losses recognized on dispositions of shares held six months
or less where such losses are treated as long-term capital losses to the extent
of prior capital gains dividends received on such shares (see "Sale of Shares"
above), it is unclear how such capital losses offset the capital gains referred
to above. Shareholders should consult their own tax advisors as to the
application of the new capital gains rates to their particular circumstances.

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

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 a maximum sales charge of 4.75% 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 CDSC 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 by the Fund.

In addition to total return information, the Fund may also advertise its
current "yield." Yield figures are based on historical earnings and are not
intended to indicate future performance. Yield is determined by analyzing the
Fund's net

54
<PAGE> 113

income per share for a 30-day (or one-month) period (which period will be stated
in the advertisement), and dividing by the maximum offering price per share on
the last day of the period. A "bond equivalent" annualization method is used to
reflect a semiannual compounding.

For purposes of calculating yield quotations, net income is determined by a
standard formula prescribed by the SEC to facilitate comparison with yields
quoted by other investment companies. Net income computed for this formula
differs from net income reported by the Fund in accordance with generally
accepted accounting principles and from net income computed for federal income
tax reporting purposes. Thus the yield computed for a period may be greater or
less than the Fund's then current dividend rate.

The Fund's yield is not fixed and will fluctuate in response to prevailing
interest rates and the market value of portfolio securities, and as a function
of the type of securities owned by the Fund, portfolio maturity and the Fund's
expenses.

Yield quotations should be considered relative to changes in the net asset
value of the Fund's shares, the Fund's investment policies, and the risks of
investing in shares of the Fund. The investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

To increase the yield of the Fund, the Adviser, may from time to time, limit
its management fee. A yield quotation which reflects an expense reimbursement or
subsidization by the Adviser will be higher than a yield quotation without such
expense reimbursement or subsidization. The Adviser may stop limiting its
management fees at any time without prior notice.

Yield and total return are calculated separately for Class A shares, Class B
shares and Class C shares. Class A shares total return figures include the
maximum sales charge of 4.75%; Class B shares and Class C shares total return
figures include any applicable CDSC. Because of the differences in sales charges
and distribution fees, the total returns for each of the classes 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

55
<PAGE> 114

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.

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 ratings or rankings prepared by Lipper Analytical Services, Inc., CDA,
Morningstar Mutual Funds or similar independent services which monitor the
performance of mutual funds or with the Consumer Price Index, the Dow Jones
Industrial Average 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 Fund 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 refer to
results of top performing world bond markets as compiled by Morgan Stanley
Capital International or other independent statistical services.

The Fund may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

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

The Trust was originally incorporated in the State of Maryland on May 25,
1990. The Trust was reorganized as a business trust under the laws of the State
of Delaware as of August 31, 1995 and adopted its current name as of that time.
The authorized capitalization of the Trust consists of an unlimited number of
shares of beneficial interest, par value $0.01 per share. The Trust may
establish from time to time one or more separate series, such as the Fund, and
authorize separate classes of shares of such series. The Fund currently offers
three classes of shares, designated Class A shares, Class B shares and Class C
shares. Other classes may be

56
<PAGE> 115

established from time to time. Shares issued by the Fund are fully paid, non-
assessable and, except as described herein, have no preemptive or conversion
rights.

57
<PAGE> 116

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

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

The fiscal year end of the Fund is May 31. The Fund sends to its shareholders
at least semi-annually reports showing the Fund's portfolio and other
information. An annual report, containing financial statements audited by the
Fund's independent accountants, is sent to shareholders each year. After the end
of each year, shareholders will receive federal income tax information regarding
dividends and capital gains distributions.

For Automated Telephone Service which provides 24-hour direct dial access to
Fund facts and shareholder account information, dial (800) 847-2424. For
inquiries through Telecommunications Device for the Deaf (TDD) dial (800)
421-2833.

58
<PAGE> 117

EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 341-2911
PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 421-5666
DEALERS--FOR DEALER
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS, OR
REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE
NUMBER--(800) 421-5666
FOR SHAREHOLDER AND DEALER
INQUIRIES THROUGH
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
DIAL (800) 421-2833
FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 847-2424
VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT
SECURITIES FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Adviser
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Subadviser
MORGAN STANLEY ASSET
MANAGEMENT INC.
1221 Avenue of the Americas
New York, New York 10020
Distributor
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Transfer Agent
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen American Capital
Global Government Securities Fund
Custodian
STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street
P.O. Box 1713
Boston, MA 02105-1713
Attn: Van Kampen American Capital
Global Government Securities Fund
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
PRICE WATERHOUSE LLP
1201 Louisiana
Suite 2900
Houston, TX 77002
<PAGE> 118

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

GLOBAL GOVERNMENT
SECURITIES FUND

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

P R O S P E C T U S

SEPTEMBER 28, 1997

- ------ ------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 119

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND

Van Kampen American Capital Global Equity Fund (the "Fund") is a separate,
diversified series of Van Kampen American Capital World Portfolio Series Trust
(the "Trust"), an open-end management investment company. 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 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 American Capital Distributors, Inc. at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or (800) 421-5666.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information......................................... B-2
Investment Policies and Techniques.......................... B-3
Options, Futures Contracts and Related Options.............. B-3
Repurchase Agreements....................................... B-9
Loans of Portfolio Securities............................... B-9
Investment Restrictions..................................... B-9
Trustees and Officers....................................... B-11
Legal Counsel............................................... B-19
Investment Advisory Agreements.............................. B-19
Distributor................................................. B-20
Distribution and Service Plans.............................. B-21
Transfer Agent.............................................. B-22
Portfolio Transactions and Brokerage........................ B-22
Determination of Net Asset Value............................ B-23
Purchase and Redemption of Shares........................... B-24
Exchange Privilege.......................................... B-26
Tax Status of the Fund...................................... B-27
Fund Performance............................................ B-27
Other Information........................................... B-27
Report of Independent Accountants........................... B-29
Financial Statements........................................ B-30
Notes to Financial Statements............................... B-58
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 28, 1997.

B-1
<PAGE> 120

GENERAL INFORMATION

Van Kampen American Capital World Portfolio Series Trust, formerly known as
American Capital World Portfolio Series, Inc. (the "Trust"), was originally
incorporated in Maryland on May 25, 1990. The Trust was reorganized under the
laws of the State of Delaware as a business trust and adopted its present name
as of August 31, 1995. The Trust currently is comprised of two series: Van
Kampen American Capital Global Equity Fund (the "Fund") and Van Kampen American
Capital Global Government Securities Fund.

Van Kampen American Capital Asset Management, Inc. (the "Adviser"), Van
Kampen American Capital Distributors, Inc. (the "Distributor"), and ACCESS
Investor Services, Inc. ("ACCESS") are wholly-owned subsidiaries of Van Kampen
American Capital, Inc. ("VKAC"), which is an indirect wholly-owned subsidiary of
Morgan Stanley, Dean Witter, Discover & Co. The principal office of the Fund,
the Adviser, the Distributor and VKAC is located at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181.

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

VKAC offers one of the industry's broadest lines of
investments -- encompassing mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to VKAC in more than 2 million
investor accounts. VKAC has one of the largest research teams (outside of the
rating agencies) in the country.

VKAC uses an investment process designed to attempt to produce consistently
good short-term results, which should help lead to superior long-term
performance.

Fully Invested: Money invested in a VKAC stock fund will normally be fully
invested in the market to attempt to maximize the potential for long-term
returns. The importance of being fully invested can be illustrated by the
following comparison. By missing the 30 best months during the past 69 years,
the value of $1.00 invested in 1926 was $19.48 at the end of 1996, compared to
$1,370.95 for $1.00 that was invested for the entire period (Source: Micropal,
Inc.). Of course, past performance is no guarantee of future results.

Broadly Diversified: A broadly diversified portfolio usually reduces risk
and increases relative stability. Since VKAC's goal is consistency, a broadly
diversified portfolio across industries is emphasized. VKAC stock funds are
varied both in terms of the number of industries and the number of stocks within
each industry in which they invest. Generally, the stock funds invest in twelve
broad economic sectors, and in many individual stocks within each sector.

Clearly Defined: The basic characteristics of VKAC funds are determined by
a pre-defined profile which remains constant over time.

As of September 15, 1997, 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 SEPTEMBER 15, 1997 OF SHARES OWNERSHIP
-------------------------- ------------------ --------- ----------
<S> <C> <C> <C>
Van Kampen American Capital Trust Company 2,262,552 A 25.08%
2800 Post Oak Blvd. 2,369,231 B 28.26%
Houston, TX 77056 147,055 C 16.76%
</TABLE>

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

B-2
<PAGE> 121

INVESTMENT POLICIES AND TECHNIQUES

The following disclosures supplement disclosures set forth under the same
caption in the Prospectus and do not, standing alone, present a complete
explanation of the matters disclosed.

The investment objective of the Fund is to seek to provide long-term growth
of capital.

The Fund may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) or
other securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted but rather in the currency of the
market in which they are traded. ADRs are receipts typically issued by an
American bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe by banks or
depositories which evidence a similar ownership arrangement. Generally, ADRs in
registered form, are designed for use in United States securities markets and
EDRs, in bearer form, are designed for use in European securities markets.

OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS

The Fund may engage in transactions in options, futures contracts and
related options on futures contracts. Set forth below is certain additional
information regarding options, futures contracts and related options. See
Prospectus for further information.

WRITING CALL AND PUT OPTIONS

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

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

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

The Fund intends to limit its ability to write options such that the
aggregate value of the securities underlying the calls or the obligations
underlying the puts determined as of the date the options are sold shall not
exceed 25% of its net assets.

Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction", which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously written by the Fund. The Fund would realize a
gain (loss) if the premium plus commission paid in the closing purchase
transaction is less (greater) than the premium it received on the sale of the
option. The Fund would also realize a gain if an option it has written lapses
unexercised.

B-3
<PAGE> 122

The Fund could write options that are listed on an exchange as well as
options which are privately negotiated in over-the-counter transactions. The
Fund could close out its position as writer of an option only if a liquid
secondary market exists for options of that series, but there is no assurance
that such a market will exist, particularly in the case of over-the-counter
options, since they can be closed out only with the other party to the
transaction. Alternatively, the Fund could purchase an offsetting option, which
would not close out its position as a writer, but would provide an asset of
equal value to its obligation under the option written. If the Fund is not able
to enter into a closing purchase transaction or to purchase an offsetting option
with respect to an option it has written, it will be required to maintain the
securities subject to the call or the collateral underlying the put until a
closing purchase transaction can be entered into (or the option is exercised or
expires), even though it might not be advantageous to do so.

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

PURCHASING CALL AND PUT OPTIONS

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

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

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

The Fund may purchase either listed or over-the-counter options.

OPTIONS ON STOCK INDEXES

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

Some stock index options are based on a broad market index such as the
Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower index such as the Standard & Poor's 100. Indexes are also based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index. A stock index fluctuates with changes in the
market values of the stocks included in the index. Options are currently traded
on The Chicago Board Options Exchange, the American Stock Exchange and other
exchanges. The Fund may write or purchase options which are listed on an
exchange as well as options which are traded over-the-counter.

B-4
<PAGE> 123

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

FOREIGN CURRENCY OPTIONS

The Fund may purchase and write options on foreign currencies to reduce the
risk of currency exchange fluctuation. Premiums paid for such put and call
options will be limited to no more than five percent of the Fund's net assets at
any given time. Options on foreign currencies operate similarly to options on
securities, and are traded primarily in the over-the-counter market, although
options on foreign currencies are traded on United States and foreign exchanges.
Exchange-traded options are expected to be purchased by the Fund from time to
time and over-the-counter options may also be purchased, but only when the
Adviser believes that a liquid secondary market exists for such options,
although there can be no assurance that a liquid secondary market will exist for
a particular option at any specific time. Options on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investment generally. See "Investment Practices and Restrictions -- Using
Options, Futures Contracts and Related Options" in the Prospectus.

The value of a foreign currency option is dependent upon the value of the
underlying foreign currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or both
currencies and has no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the interbank
market (conducted directly between currency traders, usually large commercial
banks, and their customers) involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (i.e., less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets.

FUTURES CONTRACTS

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

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

Currently, stock index futures contracts can be purchased with respect to
the Standard & Poor's 500 Stock Index on the Chicago Mercantile Exchange
("CME"), the New York Stock Exchange Composite Index on the New York Futures
Exchange and the Value Line Stock Index on the Kansas City Board of Trade.
Differences in the stocks included in the indexes may result in differences in
correlation of the futures contracts with movements in the value of the
securities being hedged.

The Fund also may invest in foreign stock index futures traded outside the
United States. Foreign stock index futures traded outside the United States
include the Nikkei Index of 225 Japanese stocks traded on the

B-5
<PAGE> 124

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

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

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

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

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

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

B-6
<PAGE> 125

the price of the futures contracts and of the underlying securities, currency or
index, the risk of market distortion, the illiquidity risk and the risk of error
in anticipating price movement.

There may be an imperfect correlation (or no correlation) between movements
in the price of the futures contracts and of the securities being hedged. The
risk of imperfect correlation increases as the composition of the securities
being hedged diverges from the securities, currency or index upon which the
futures contract is based. If the price of the futures contract moves less than
the price of the securities being hedged, the hedge will not be fully effective.
To compensate for the imperfect correlation, the Fund could buy or sell futures
contracts in a greater (lesser) dollar amount than the dollar amount of
securities being hedged if the historical volatility of the securities being
hedged is greater than the historical volatility of the securities, currency or
index underlying the futures contract. Conversely, the Fund could buy or sell
futures contracts in a lesser dollar amount than the dollar amount of the
securities being hedged if the historical volatility of the securities being
hedged is less than the historical volatility of the securities, currency or
index underlying the futures contract. It is also possible that the value of
futures contracts held by the Fund could decline at the same time as portfolio
securities being hedged; if this occurred, the Fund would lose money on the
futures contract in addition to suffering a decline in value in the portfolio
securities being hedged.

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

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

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

B-7
<PAGE> 126

circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may partially or completely offset losses on the futures
contract. However, as described in the Prospectus, there is no guarantee that
the price of the securities being hedged will, in fact, correlate with the price
movements in a futures contract and thus provide an offset to losses on the
futures contract.

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

OPTIONS ON FUTURES CONTRACTS

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

RISKS OF TRANSACTIONS IN OPTIONS ON FUTURES CONTRACTS

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

ADDITIONAL RISKS OF OPTIONS AND FUTURES TRANSACTIONS

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

B-8
<PAGE> 127

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with domestic or foreign
banks or broker-dealers deemed to be creditworthy by the Adviser under
guidelines approved by the Trustees. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a debt
security and the seller agrees to repurchase the obligation at a future time and
set price, usually not more than seven days from the date of purchase, thereby
determining the yield during the purchaser's holding period. Repurchase
agreements are fully collateralized by the underlying debt securities and are
considered to be loans under the Investment Company Act of 1940, as amended
("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 securities unless the seller defaults under its repurchase
obligation. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and loss 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. See "Investment
Practices -- Repurchase Agreements" in the Prospectus for further information.

LOANS OF PORTFOLIO SECURITIES

The Fund may lend portfolio securities to unaffiliated brokers, dealers and
financial institutions provided that cash or liquid securities equal in value to
100% of the market value of the securities loaned are deposited by the borrower
with the Fund and are marked to market daily. While such securities are on loan,
the borrower is required to pay the Fund any income accruing thereon.
Furthermore, the Fund may invest the cash collateral in portfolio securities
thereby increasing the return to the Fund as well as increasing the market risk
to the Fund. The Fund will not lend its portfolio securities if such loans are
not permitted by the laws or regulations of any state in which its shares are
qualified for sale. However, should the Fund believe that lending securities is
in the best interests of its shareholders, it would consider withdrawing it
shares from sale in any such state.

Loans would be made for short-term purposes and subject to termination by
the Fund in the normal settlement time, currently three business days after
notice, or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities which occurs during the term of the loan inures to the
Fund and its shareholders, but any gain can be realized only if the borrower
does not default. The Fund may pay reasonable finders', administrative and
custodial fees in connection with a loan.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions which may not be changed
without approval by the vote of a majority of its outstanding voting shares
which is defined by the 1940 Act as the lesser of (i) 67% or more of the voting
securities present at the meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy; or (ii) more
than 50% of the 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. Engage in the underwriting of securities of other issuers, except that
the Fund may sell an investment position even though it may be deemed
to be an underwriter under the federal securities laws.

B-9
<PAGE> 128

3. Invest more than 5% of its total assets (taken at current value) in
securities of a single issuer other than the United States Government,
its agencies or instrumentalities, or hold more than 10% of the
outstanding voting securities of an issuer, 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.

4. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of
its net assets, or pledge more than 10% of its net assets in connection
with permissible borrowings or purchase additional securities when
money borrowed exceeds 5% of its net assets. Margin deposits or
payments in connection with the writing of options or in connection
with the purchase or sale of forward contracts, futures, foreign
currency futures and related options are not deemed to be a pledge or
other encumbrance.

5. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend
securities in an amount exceeding 15% of the total assets of the Fund.
The purchase of a portion of an issue of securities described under (i)
above distributed publicly, whether or not the purchase is made on the
original issuance, is not considered the making of a loan.

6. Make short sales of securities, unless at the time of the sale it owns
or has the right to acquire an equal amount of such securities;
provided that this prohibition does not apply to the writing of options
or the sale of forward contracts, futures, foreign currency futures or
related options.

7. Purchase securities on margin but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with forward contracts, futures,
foreign currency futures or related options is not considered the
purchase of a security on margin.

8. Buy or sell real estate or interests in real estate including real
estate limited partnerships, provided that the foregoing prohibition
does not apply to a purchase and sale of publicly traded (i) securities
which are secured by real estate, (ii) securities representing
interests in real estate, and (iii) securities of companies principally
engaged in investing or dealing in real estate.

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

10. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related
options including foreign currency futures contracts and related
options and forward contracts.

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

In addition to the foregoing fundamental policies which may not be changed
without shareholder approval, the Fund is subject to the following policies
which may be amended by the Trustees and which apply at the time of purchase of
portfolio securities.

1. The Fund may not invest in securities issued by other investment
companies except as part of a merger, reorganization or other
acquisition and except to the extent permitted by (i) the 1940 Act,

B-10
<PAGE> 129

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

3. The Fund may not invest in securities of any company if any officer or
trustee of the Trust or of the Adviser owns more than 0.50% of the
outstanding securities of such company, and such officers and trustees
who own more than 0.50% own in the aggregate more than 5% of the
outstanding securities of such issuer.

4. The Fund may not invest in interests in oil, gas, or other mineral
exploration or development programs or invest in oil, gas, or mineral
leases, except that the Fund may acquire securities of public companies
which themselves are engaged in such activities.

5. The Fund may not invest more than 5% of its total assets in securities
of unseasoned issuers which have been in operation directly or through
predecessors for less than three years, 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.

6. The Fund may not purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets (taken at current value) would
be invested in securities that are illiquid by virtue of the absence of
a readily available market. This policy includes repurchase agreements
maturing in more than seven days and over-the-counter options held by
the Fund and that portion of assets used to cover such options. This
policy does not apply to restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act")
which the Trustees or the Adviser under Board approved guidelines, may
determine are liquid nor does it apply to other securities, for which,
notwithstanding legal or contractual restrictions on resale, a liquid
market exists. Also excluded from this limitation on restricted
securities are securities purchased by the Fund issued by other
investment companies to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated
by the SEC under the 1940 Act, as amended from time to time, or (iii)
an exemption or other relief from the provisions of the 1940 Act.

TRUSTEES AND OFFICERS

The tables below list the trustees and officers of the Trust (of which the
Fund is a separate series) and other executive officers of the Fund's investment
adviser and their principal occupations for the last five years and their
affiliations, if any, with VK/AC Holding, Inc. ("VKAC Holding"), Van Kampen
American Capital, Inc. ("Van Kampen American Capital" or "VKAC"), Van Kampen
American Capital Investment Advisory Corp. ("Advisory Corp."), Van Kampen
American Capital Asset Management, Inc. ("Asset Management"), Van Kampen
American Capital Distributors, Inc., the distributor of the Fund's shares (the
"Distributor") and ACCESS Investors Services Inc., the Fund's transfer agent
("ACCESS"). Advisory Corp. and Asset Management sometimes are referred to herein
collectively as the "Advisers". For purposes

B-11
<PAGE> 130

hereof, the term "Fund Complex" includes each of the open-end investment
companies advised by the Advisers (excluding the Van Kampen American Capital
Exchange Fund and the Common Sense Trust).

TRUSTEES

Richard M. DeMartini*..................... President and Chief Operating Officer, Dean Witter
Two World Trade Center Capital, a division of Dean Witter Reynolds Inc. Mr.
66th Floor DeMartini is a Director of InterCapital Funds, Dean
New York, NY 10048 Witter Distributors, Inc. and Dean Witter Trust Company.
Date of Birth: 10/12/52 Trustee of the TCW/DW Funds. Director of the National
Healthcare Resources, Inc. Formerly Vice Chairman of the
Board of the National Association of Securities Dealers,
Inc. and Chairman of the Board of the Nasdaq Stock
Market, Inc. Trustee/Director of each of the funds in the
Fund Complex.
Linda Hutton Heagy........................ Co-Managing Partner of Heidrick & Stuggles, an executive
Sears Tower search firm. Prior to 1997, Partner, Ray & Berndtson,
233 South Wacker Drive Inc. An executive recruiting and management consulting
Suite 7000 firm. Formerly, Executive Vice President of ABN AMRO,
Chicago, IL 60606 N.A., a Dutch bank holding company. Prior to 1992,
Date of Birth: 06/03/48 Executive Vice President of La Salle National Bank.
Trustee on the University of Chicago Hospitals Board, The
International House Board and the Women's Board of the
University of Chicago. Trustee/Director of each of the
funds in the Fund Complex.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and Member of the Investment Committee
of the Joyce Foundation, a private foundation.
Trustee/Director of each of the funds in the Fund
Complex.
Jack E. Nelson............................ President, Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President, Nelson Ivest Brokerage Services Inc.,
Date of Birth: 02/13/36 a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors
Protection Corp. ("SIPC"). Trustee/Director of each of
the funds in the Fund Complex.
Jerome L. Robinson........................ President, Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director, Pacesetter Software, a software
Date of Birth: 10/10/22 programming company specializing in white collar
productivity. Director, Panasia Bank. Trustee/Director of
each of the funds in the Fund Complex.

</TABLE>

B-12
<PAGE> 131

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Phillip B. Rooney......................... Vice Chairman and Director of The ServiceMaster Company,
One ServiceMaster Way a business and consumer services. Director of Illinois
Downers Grove, IL 60515 Tool Works, Inc., a manufacturing company; the Urban
Date of Birth: 07/08/44 Shopping Centers Inc., a retail mall management company;
and Stone Container Corp., a paper manufacturing company.
Trustee, University of Notre Dame. Formerly, President
and Chief Executive Officer, Waste Management Inc., an
environmental services company, and prior to that
President and Chief Operating Officer, Waste Management
Inc. Trustee/Director of each of the funds in the Fund
Complex.
Fernando Sisto............................ Professor Emeritus and, prior to 1995, Dean of the
155 Hickory Lane Graduate School, Stevens Institute of Technology.
Closter, NJ 07624 Director, Dynalysis of Princeton, a firm engaged in
Date of Birth: 08/02/24 engineering research. Trustee/Director of each of the
funds in the Fund Complex.
Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom (Illinois), legal counsel to the funds in the Fund
Chicago, IL 60606 Complex, open-end funds advised by Van Kampen American
Date of Birth: 08/22/39 Capital Management, Inc. and closed-end funds advised by
Advisory Corp. Trustee/Director of each of the funds in
the Fund Complex, open-end funds advised by Van Kampen
American Capital Management, Inc. and closed-end funds
advised by Advisory Corp.
</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 and is an interested
person of Asset Management with respect to certain funds advised by Asset
Management by reason of his firm in the past acting as legal counsel to Asset
Management. Mr. DeMartini is an interested person of the Fund and the Advisers
by reason of his position with Dean Witter Capital and its affiliates.

OFFICERS

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

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

Dennis J. McDonnell......... President President and a Director of VKAC.
Date of Birth: 05/20/42 President, Chief Operating Officer and a
Director of the Advisers. Director or
officer of certain other subsidiaries of
VKAC. Prior to November 1996, Executive
Vice President and a Director of VKAC
Holding. President of each of the funds in
the Fund Complex. President, Chairman of
the Board and Trustee of other investment
companies advised by the Advisers or their
affiliates.

</TABLE>

B-13
<PAGE> 132
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>

Peter W. Hegel.............. Vice President Executive Vice President of the Advisers.
Date of Birth: 06/25/56 Director of Asset Management. Officer of
certain other subsidiaries of VKAC. Vice
President of each of the funds in the Fund
Complex and certain other investment
companies advised by the Advisers or their
affiliates.

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

Ronald A. Nyberg............ Vice President and Secretary Executive Vice President, General Counsel
Date of Birth: 07/29/53 and Secretary of VKAC. Executive Vice
President, General Counsel, Assistant
Secretary and a Director of the Advisers
and the Distributor. Executive Vice
President, General Counsel and Assistant
Secretary of ACCESS. Director or officer of
certain other subsidiaries of VKAC.
Director of ICI Mutual Insurance Co., a
provider of insurance to members of the
Investment Company Institute. Prior to
November 1996, Executive Vice President,
General Counsel and Secretary of VKAC
Holding. 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.

Don G. Powell Chairman, President, Chief Executive
2800 Post Oak Blvd. Officer and a Director of VKAC. Chairman,
Houston, TX 77056 Chief Executive Officer and a Director of
Date of Birth: 10/19/39 the Advisers and the Distributor. Chairman
and a Director of ACCESS. Director or
officer of certain other subsidiaries of
VKAC. Chairman of the Board of Governors
and the Executive Committee of the
Investment Company Institute. Prior to
November, 1996, President, Chief Executive
Officer and a Director of VKAC Holding.
President, Chief Executive Officer and a
Trustee/Director of certain investment
companies advised by Asset Management and
prior to July 1996, President, Chief
Executive Officer and a Trustee of the
funds in the Fund Complex and closed-end
investment companies advised by Advisory
Corp.

Alan T. Sachtleben.......... Vice President Executive Vice President of the Advisers.
Date of Birth: 04/20/42 Director of Asset Management. Director or
officer of certain other subsidiaries of
VKAC. Vice President of each of the funds
in the Fund Complex and certain other
investment companies advised by the
Advisers or their affiliates.
</TABLE>

B-14
<PAGE> 133

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
Paul R. Wolkenberg.......... Vice President Executive Vice President of the VKAC, the
Date of Birth: 11/10/44 Advisers and the Distributor. President,
Chief Executive Officer and a Director of
ACCESS. Director or officer of certain
other subsidiaries of VKAC. Vice President
of each of the funds in the Fund Complex
and certain other investment companies
advised by the Advisers or their
affiliates.

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

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

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

Nicholas Dalmaso............ Assistant Secretary Vice President and Assistant Secretary of
Date of Birth: 03/01/65 VKAC. Vice President and Assistant
Secretary of the Advisers and the
Distributor. Officer of certain other
subsidiaries of VKAC. Assistant Secretary
of each of the funds in the Fund Complex
and other investment companies advised by
the Advisers or the affiliates.

Huey P. Falgout, Jr......... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Advisers,
the Distributor and ACCESS. Officer of
certain other subsidiaries of VKAC.
Assistant Secretary of each of the funds in
the Fund Complex and other investment
companies advised by the Advisers or the
affiliates.

Scott E. Martin............. Assistant Secretary Senior Vice President, Deputy General
Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC.
Senior Vice President, Deputy General
Counsel and Secretary of the Advisers, the
Distributor and ACCESS. Officer of certain
other subsidiaries of VKAC. Prior to
November 1996, Senior Vice President,
Deputy General Counsel and Assistant
Secretary of VKAC Holding. Assistant
Secretary of each of the funds in the Fund
Complex and other investment companies
advised by the Advisers or the affiliates.
</TABLE>

B-15
<PAGE> 134

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ----------------------------- --------------------------- ------------------------------------------------------
<S> <C> <C>
Weston B. Wetherell.......... Assistant Secretary Vice President, Associate General Counsel and Assis-
Date of Birth: 06/15/56 tant Secretary of VKAC, the Advisers and the Dis-
tributor. Officer of certain other subsidiaries of
VKAC. Assistant Secretary of each of the funds in the
Fund Complex and other investment companies advised by
the Advisers or the affiliates.
Steven M. Hill............... Assistant Treasurer Assistant Vice President of the Advisers. Assistant
Date of Birth: 10/16/64 Treasurer of each of the funds in the Fund Complex and
other investment companies advised by the Advisers or
the affiliates.
M. Robert Sullivan........... Assistant Controller Assistant Vice President of the Advisers. Assistant
Date of Birth: 03/30/33 Controller of each of the funds in the Fund Complex
and other investment companies advised by the Advisers
or the affiliates.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 65 operating funds in the Fund Complex. For purposes of the following
compensation and benefits discussion, the Fund Complex is divided into the
following three groups: the funds advised by Asset Management (the "AC Funds"),
the funds advised by Advisory Corp. excluding funds organized as series of the
Morgan Stanley Fund, Inc. (the "VK Funds") and the funds advised by Advisory
Corp. organized as series of the Morgan Stanley Fund, Inc. (the "MS Funds").
Each trustee/director who is not an affiliated person of VKAC, the Advisers, the
Distributor, ACCESS or Morgan Stanley (each a "Non-Affiliated Trustee") is
compensated by an annual retainer and meeting fees for services to the funds in
the Fund Complex. Each fund in the Fund Complex provides a deferred compensation
plan to its Non-Affiliated Trustees that allows trustees/directors to defer
receipt of their compensation and earn a return on such deferred amounts. Each
of the AC Funds and VK Funds provides a retirement plan to its Non-Affiliated
Trustees that provides Non-Affiliated Trustees with compensation after
retirement, provided that certain eligibility requirements are met as more fully
described below.

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

The compensation of each Non-Affiliated Trustee from each VK Fund includes
an annual retainer in an amount equal to $2,500 per calendar year, due in four
quarterly installments on the first business day of each calendar quarter. Each
Non-Affiliated Trustee receives a per meeting fee from each VK Fund in the
amount of $125 per regular quarterly meeting attended by the Non-Affiliated
Trustee, due on the date of such meeting, plus reasonable expenses incurred by
the Non-Affiliated Trustee in connection with his or her services as a trustee.
Each Non-Affiliated Trustee receives a per meeting fee from each VK Fund in the
amount of $125 per special meeting attended by the Non-Affiliated Trustee, due
on the date of such meeting,

B-16
<PAGE> 135

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.

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

The trustees/directors are currently in the process of reviewing and
seeking to standardize compensation and benefits across the Fund Complex.

The trustees/directors approved an aggregate compensation cap with respect
to funds in the Fund Complex of $84,000 per Non-Affiliated Trustee per year
(excluding any retirement benefits) for the period July 22, 1995 through
December 31, 1996, subject to the net assets and the number of funds in the Fund
Complex as of July 21, 1995 and certain other exceptions. For the calendar year
ended December 31, 1996, certain trustees/directors received aggregate
compensation from the funds in the Fund Complex over $84,000 due to compensation
received but not subject to the cap, including compensation from new funds added
to the Fund Complex after July 22, 1995 and certain special meetings in 1996. In
addition, each of Advisory Corp. or Asset Management, as the case may be, agreed
to reimburse each fund in the Fund Complex through December 31, 1996 for any
increase in the aggregate compensation over the aggregate compensation paid by
such fund in its 1994 fiscal year, provided that if a fund did not exist for the
entire 1994 fiscal year appropriate adjustments will be made.

Each Non-Affiliated Trustee 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.

Each AC Fund and VK Fund has adopted a retirement plan. 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. Asset
Management has reimbursed each AC Fund for the expenses related to the
retirement plan through December 31, 1996.

B-17
<PAGE> 136

Additional information regarding compensation and benefits for trustees is
set forth below. As indicated in the notes accompanying the table, the amounts
relate to either the Fund's most recently completed fiscal year or the Fund
Complex' most recently completed calendar year ended December 31, 1996.

COMPENSATION TABLE

<TABLE>
<CAPTION>
TOTAL
COMPENSATION
YEAR FIRST PENSION OR ESTIMATED MAXIMUM BEFORE DEFERRAL
APPOINTED OR AGGREGATE COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS FROM FUND
ELECTED TO THE BEFORE DEFERRAL FROM THE ACCRUED AS PART OF FROM THE FUND UPON COMPLEX PAID
NAME(1) BOARD FUND(2) EXPENSES(3) RETIREMENT(4) TO TRUSTEE(5)
------- -------------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan* 1991 $1,534 691 2,500 $104,875
Linda Hutton Heagy* 1995 $1,534 69 2,500 104,875
Dr. Roger Hilsman 1991 $ 764 1,452 1,500 103,750
R. Craig Kennedy* 1995 $1,534 45 2,500 104,875
Donald C. Miller 1995 $ 764 0 0 104,875
Jack E. Nelson* 1995 $1,284 314 2,500 97,875
Jerome L. Robinson* 1995 $1,534 0 0 101,625
Phillip B. Rooney* 1997 $ 260 0 2,500 0
Dr. Fernando Sisto* 1991 $1,534 1,661 2,500 104,875
Wayne W. Whalen* 1995 $1,534 218 2,500 104,875
William S. Woodside 1991 $ 764 3,176 1,500 104,875
</TABLE>

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

* Currently a member of the Board of Trustees. Mr. Phillip B. Rooney became a
member of the Board of Trustees effective April 14, 1997 and thus does not
have a full fiscal year of information to report.

(1) Persons not designated by an asterisk are not currently members of the Board
of Trustees, but were members of the Board of Trustees during the Fund's
most recently completed fiscal year. Messrs. Hilsman, Miller and Woodside
retired from the Board of Trustees on December 31, 1996. Messrs. DeMartini,
McDonnell and Powell, also trustees of the Fund during all or a portion of
the Fund's last fiscal year, are not included in the compensation table
because they are affiliated persons of the Advisers and are not eligible for
compensation or retirement benefits from the Fund.

(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral with respect to the Fund's fiscal year ended May 31, 1997. The
following trustees deferred compensation from the Fund during the fiscal
year ended May 31, 1997: Mr. Branagan, $902; Ms. Heagy, $930; Mr. Kennedy,
$260; Mr. Miller, $632; Mr. Nelson, $1,152; Mr. Robinson, $1,110; and Mr.
Whalen, $1,152. Amounts deferred are retained by the Fund and earn a rate of
return determined by reference to either the return on the common shares of
the Fund or other funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, each Fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The cumulative deferred
compensation (including interest) accrued with respect to each trustee from
the Fund as of May 31, 1997 is as follows: Mr. Branagan, $904; Ms. Heagy,
$1,748; Mr. Kennedy, $1,163; Mr. Miller, $1,355; Mr. Nelson, $1,937; Mr.
Robinson, $1,965; Mr. Sisto, $4,933; and Mr. Whalen, $2,075. The deferred
compensation plan is described above the Compensation Table.

(3) The amounts shown in this column represent the Retirement Benefits accrued
by the Fund during its fiscal year ended May 31, 1997. The retirement plan
is described above the Compensation Table.

(4) For Messrs. Hilsman, Miller and Woodside, this is the actual annual benefits
payable by the Fund in each year of the 10-year period since such trustee's
retirement. For the remaining trustees, this is the estimated maximum annual
benefits payable by the Fund in each year of the 10-year period commencing
in the year of such trustee's retirement from the Fund assuming: the trustee
has 10 or more years of service on the Board of Trustees (including years of
service prior to the adoption of the retirement plan) and retires at or
after attaining the age of 60. Trustees retiring prior to the age of 60 or
with fewer than 10 years of service for the Fund may receive reduced
retirement benefits from the Fund. The actual annual benefit may be

B-18
<PAGE> 137

less if the trustee is subject to the Fund Complex retirement benefit cap or if
the trustee is not fully vested at the time of retirement.

(5) The amounts shown in this column represent the aggregate compensation paid
by all 51 operating investment companies in the Fund Complex as of December
31, 1996 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. As
described in the narrative preceding the table, the Fund Complex has
increased in size since December 31, 1996. It is likely the aggregate
compensation for the calendar year ending December 31, 1997 will be higher
due to the increase in the size of the Fund Complex. As of the date of this
Statement of Additional Information, the trustee/directors are in the
process of reviewing and seeking to standardize compensation and benefits
across the Fund Complex. Certain trustees deferred all or a portion of their
aggregate compensation from the Fund Complex during the calendar year ended
December 31, 1996. 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 trustees' Fund Complex compensation cap covered the period
July 22, 1995 through December 31, 1996. For the calendar year ended
December 31, 1996, certain trustees received compensation over $84,000 in
the aggregate due to compensation received but not subject to the cap,
including compensation from new funds added to the Fund Complex after July
22, 1995 and certain special meetings in 1996. The Advisers and their
affiliates also serve as investment adviser for other investment companies;
however, with the exception of Messrs. McDonnell, Powell and Whalen, the
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 $243,375 during the
calendar year ended December 31, 1996.

As of September 15, 1997, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

LEGAL COUNSEL

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

INVESTMENT ADVISORY AGREEMENTS

The Trust and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Trust retains the
Adviser to manage the investment of its assets and to place orders for the
purchase and sale of its portfolio securities. The Adviser is responsible for
obtaining and evaluating economic, statistical and financial data and for
formulating and implementing investment programs in furtherance of the Fund's
investment objective. The Adviser also furnishes at no cost to the Fund (except
as noted herein) the services of sufficient executive and clerical personnel for
the Fund as are necessary to prepare registration statements, prospectuses,
shareholder reports, and notices and proxy solicitation material. In addition,
the Adviser furnishes at no cost to the Fund the services of a President of the
Fund, one or more Vice Presidents as needed, and a Secretary.

The Adviser has entered into a subadvisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser, subject to the overall review by the Adviser
and the Fund's trustees, is responsible for recommending the optimal
geographical equity allocation among various markets and currencies and is
responsible for providing advice with respect to specific investments in such
markets, including the Fund's investment in domestic securities. The Adviser and
Subadviser are hereinafter sometimes referred to as the "Adviser."

Under the Advisory Agreement, the Trust bears the cost of its accounting
services, which include maintaining its financial books and records and
calculating its daily net asset value. The costs of such accounting services
include the salaries and overhead expenses of a Treasurer or other principal
financial

B-19
<PAGE> 138

officer and the personnel operating under his direction. Charges are allocated
among the investment companies advised or subadvised by the Adviser. A portion
of these amounts were paid to the Adviser or its parent in reimbursement of
personnel, office space, facilities and equipment costs attributable to the
provision of accounting services to the Trust. The services provided by the
Adviser are at cost. The Trust also pays shareholder service agency fees,
distribution fees, service fees, custodian fees, legal and auditing fees, the
costs of reports to shareholders and all other ordinary 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, negligence or reckless disregard
of its obligations.

Under the Advisory Agreement, the Trust pays to the Adviser, as
compensation for the services rendered, facilities furnished, and expenses paid
by it, a fee payable monthly, computed at the annual rate of 1.00% of average
daily net assets of the Fund. For its services, the Subadviser receives from the
Adviser a fee at the annual rate of 50% of the compensation received by the
Adviser.

The average net asset value for purposes of computing the advisory fee is
determined by taking the average of all determinations of net asset value for
each business day during a given calendar month. Such fee is payable for each
calendar month as soon as practicable after the end of that month. The fee
payable to the Adviser is reduced by any commissions, tender solicitation and
other fees, brokerage or similar payments received by the Adviser or any other
direct or indirect majority-owned subsidiary of VK/AC Holding, Inc. in
connection with the purchase and sale of portfolio investments of the Trust,
less any direct expenses incurred by such subsidiary of VK/AC Holding, Inc. in
connection with obtaining such payments. The Adviser agrees to use its best
efforts to recapture tender solicitation fees and exchange offer fees for the
Trust's benefit and to advise the Trustees of the Trust of any other
commissions, fees, brokerage or similar payments which may be possible for the
Adviser or any direct or indirect majority-owned subsidiary of VK/AC Holding,
Inc. to receive in connection with the Fund's portfolio transactions or other
arrangements which may benefit the Fund.

The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Trust, calculated separately for each series, for any
fiscal year should exceed the most restrictive expense limitation applicable in
the states where the Trust'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 Trust monthly an amount sufficient to make up the deficiency, subject to
readjustment during the fiscal year. Ordinary business expenses include the
investment advisory fee and other operating costs paid by the Trust except (1)
interest and taxes, (2) brokerage commissions, (3) certain litigation and
indemnification expenses as described in the Advisory Agreement and (4) payments
made by the Fund pursuant to its distribution plans.

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 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 not more than 60 days' nor less than 30 days' written notice.

During the fiscal years ended May 31, 1995, 1996 and 1997 the Adviser
received $1,200,835, $1,605,816 and $2,342,104, respectively, in advisory fees
from the Fund. For such periods the Fund paid $28,800, $31,987 and $25,800,
respectively, for accounting services.

DISTRIBUTOR

B-20
<PAGE> 139

including the cost of supplemental sales literature and advertising. The
Distribution and Service Agreement is renewable from year to year if approved
(a) by the Fund's Trustees or by a vote of a majority of the Fund's outstanding
voting securities and (b) by the affirmative vote of a majority of the 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 60
days' written notice.

<TABLE>
<CAPTION>
AMOUNTS
TOTAL UNDERWRITING RETAINED
COMMISSIONS BY DISTRIBUTOR
------------------ --------------
<S> <C> <C>
Fiscal Year Ended May 31, 1997.............................. $656,636 $86,208
Fiscal Year Ended May 31, 1996.............................. $491,380 $34,742
Fiscal Year Ended May 31, 1995.............................. $399,444 $ 1,104
</TABLE>

DISTRIBUTION AND SERVICE PLANS

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

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.

For the fiscal year ended May 31, 1997, the Fund's aggregate expenses under
the Class B Plan were $1,046,812 or 1.00% of the Class B shares' average net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $786,179 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B shares of the Fund and $260,633
for fees paid to financial intermediaries for servicing Class B shareholders and
administering the Plans. For the fiscal year ended May 31, 1997, the Fund's
aggregate expenses under the Plans for Class C shares were $107,843 or 1.00% of
the Class C shares' average net assets. Such expenses were paid to reimburse the
Distributor for the following payments: $45,347 for commissions and transaction
fees paid to financial intermediaries in respect of sales of

B-21
<PAGE> 140

Class C shares of the Fund and $62,496 for fees paid to financial intermediaries
for servicing Class C shareholders and administering the Class C Plan.

TRANSFER AGENT

During the fiscal years ended May 31, 1995, 1996 and 1997, ACCESS,
shareholder service agent and dividend distributing agent for the Fund, received
fees aggregating $586,655, $852,280 and $1,045,500, respectively, for these
services. These services are provided at cost plus a profit.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser is responsible for decisions to buy and sell securities for the
Fund and for the placement of its portfolio business and the negotiation of the
commissions paid on such transactions. It is the policy of the Adviser to seek
the best security price available with respect to each transaction. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that a better price and execution can be
obtained by using a broker. Except to the extent that the Fund may pay higher
brokerage commissions for brokerage and research services (as described below)
on a portion of its transactions executed on securities exchanges, the Adviser
seeks the best security price at the most favorable commission rate. In
selecting broker/dealers and in negotiating commissions, the Adviser considers
the firm's reliability, the quality of its execution services on a continuing
basis and its financial condition. When more than one firm is believed to meet
these criteria, preference may be given to firms which also provide research
services to the Fund or the Adviser.

Consistent with the Rules of Fair Practice of the NASD and subject to
seeking best execution and such other policies as the Trustees may determine,
the Adviser may consider sales of shares of the Funds and of the other Van
Kampen American Capital mutual funds as a factor in the selection of firms to
execute portfolio transactions for the Funds.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an account
to pay a broker or dealer who supplies brokerage and research services, a
commission for effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for effecting the
transaction. Brokerage and research services 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).

Pursuant to provisions of the Advisory Agreement and the Sub-advisory
Agreement, the Fund's Trustees have authorized the Adviser to cause the Fund to
incur brokerage commissions in an amount higher than the lowest available rate
in return for research services provided to the Adviser. The Adviser is of the
opinion that the continued receipt of supplemental investment research services
from brokers is essential to its provision of high quality portfolio management
services to the Fund. The Adviser undertakes that such higher commissions will
not be paid by the Fund unless (a) the Adviser determines in good faith that the
amount is reasonable in relation to the services in terms of the particular
transaction or in terms of the Adviser's overall responsibilities with respect
to the accounts as to which they exercise investment discretion, (b) such
payment is made in compliance with the provisions of Section 28(e) and other
applicable state and federal laws, and (c) in the opinion of the Adviser, the
total commissions paid by the Fund are reasonable in relation to the expected
benefits to the Fund over the long term. The investment advisory fee paid by the
Fund under the Advisory Agreement is not reduced as a result of the Adviser's
receipt of research services.

B-22
<PAGE> 141

volume and nature of the trading activities of the accounts are not uniform, the
amount of commissions in excess of the lowest available rate paid by each
account for brokerage and research services will vary. However, in the opinion
of the Adviser, such costs to the Fund will not be disproportionate to the
benefits received by the Fund on a continuing basis.

The Adviser seeks to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by 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 is 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.

For the fiscal years ended May 31, 1995, 1996 and 1997, the Fund paid
$937,870, $666,564 and $1,020,461, respectively, in brokerage commissions on
portfolio transactions.

Effective October 31, 1996, Morgan Stanley Group Inc. became an affiliate
of the Adviser. Effective May 31, 1997, Dean Witter Discover & Co. became an
affiliate of the Adviser. For the fiscal year ended May 31, 1997, the Fund paid
Morgan Stanley Group Inc. or its affiliates $8,633 in brokerage commission
representing 1% of transactions with affiliates to total commissions.

DETERMINATION OF NET ASSET VALUE

The net asset value per share is determined as of the close of the New York
Stock Exchange (the "Exchange") (currently 4:00 p.m., New York Time) on each
business day on which the Exchange is open. The net asset value of Fund shares
is computed by dividing the value of all securities plus other assets, less
liabilities, by the number of shares outstanding, and adjusting to the nearest
cent per share.

Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the Exchange is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place on all business days in Japanese markets
on certain Saturdays and in various foreign markets on days which are not
business days in New York and on which the Fund's net asset value is not
calculated and on which the Fund does not effect sales, redemptions and
repurchases of its shares. There may be significant variations in the net asset
value of Fund shares on days when net asset value is not calculated and on which
shareholders cannot redeem on account of changes in prices of stocks traded in
foreign stock markets.

The Fund calculates net asset value per share, and therefore effects sales,
redemptions and repurchases of its shares, as of the close of the Exchange once
on each day on which the Exchange is open. Such calculation does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the
Trustees.

The net asset value of the Fund is computed by (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 last reported bid price,
using prices as of the close of trading on the Exchange, (ii) valuing unlisted
securities for which over-the-counter market quotations are readily available at
the most recent bid price as supplied by the National Association of Securities
Dealers Automated Quotations ("NASDAQ") or by broker/dealers, and (iii) valuing
any securities for which market quotations are not readily available and any
other assets at fair value as determined in good faith by the Trustees. Options
on stocks, options on stock indexes, and stock index futures contracts and
options thereon, which are traded on exchanges, are valued at their last sale or
settlement price as of the close of such exchanges, or, if no sales are
reported, at the mean between the last reported bid and asked prices. Debt
securities with a remaining maturity of 60 days or less are valued on an
amortized cost basis which approximates market value.

B-23
<PAGE> 142

The assets belonging to the Class A shares, the Class B shares and the
Class C shares will be invested together in a single portfolio. The net asset
value of each class will be determined separately by subtracting the expenses
and liabilities allocated to that class from the assets belonging to that class.

PURCHASE AND REDEMPTION OF SHARES

The following information supplements the section in the Fund's Prospectus
captioned "Purchase of Shares."

CLASS A SHARES -- REDUCED SALES CHARGES

THE DEALER MUST NOTIFY THE DISTRIBUTOR AT THE TIME AN ORDER IS PLACED FOR A
PURCHASE WHICH WOULD QUALIFY FOR THE REDUCED CHARGE ON THE BASIS OF PREVIOUS
PURCHASES. SIMILAR NOTIFICATION MUST BE MADE IN WRITING WHEN SUCH AN ORDER IS
PLACED BY MAIL. The reduced sales charge will not be applied if such
notification is not furnished at the time of the order. The reduced sales charge
will also not be applied should a review of the records of the Distributor or
ACCESS fail to confirm the representations concerning the investor's holdings.

LETTER OF INTENT

The Fund will shares totalling 5% of the dollar amount of the Letter of
Intent to be held by ACCESS in the name of the shareholder. The Letter of Intent
does not obligate the investor to purchase the indicated amount. In the event
the Letter of Intent goal is not achieved within the thirteen-month period, the
investor is required to pay the difference between sales charges otherwise
applicable to the purchases made during this period and sales charges actually
paid. Such payment may be made directly to the Distributor or, if not paid, the
Distributor will liquidate sufficient escrow shares to obtain such difference.
If the goal is exceeded in an amount which qualifies for a lower sales charge, a
price adjustment is made by refunding to the investor in shares of the Fund, the
amount of excess sales charges, if any, paid during the thirteen-month period.

REDEMPTION OF SHARES

Redemptions are not made on days during which 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) trading on the Exchange is
restricted; (c) 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.

CONTINGENT DEFERRED SALES CHARGE -- CLASS A

For purposes of the CDSC -- Class A, when shares of one fund are exchanged
for shares of another fund, the purchase date for the shares of the fund
exchanged into will be assumed to be the date on which shares were purchased in
the fund from which the exchange was made. If the exchanged shares themselves
are acquired through an exchange, the purchase date is assumed to carry over
from the date of the original election to purchase shares subject to a
CDSC -- Class A rather than a front-end load sales charge. In determining
whether a CDSC -- Class A is payable, it is assumed that shares held the longest
are the first to be redeemed.

B-24
<PAGE> 143

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC -- CLASS B
AND C")

As described in the Prospectus under "Purchase of Shares," redemptions of
Class B shares and Class C shares will be subject to a CDSC. The CDSC -- Class B
and C may be waived on redemptions of Class B shares and Class C shares in the
circumstances described below:

(a) Redemption Upon Disability or Death

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 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 disability or death, 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.

(b) 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 of Van Kampen American
Capital funds; in such event, as described below, the Fund will "tack" the
period for which the original shares were held onto 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), 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.

A shareholder may elect to participate in a systematic withdrawal plan
("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.

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.

B-25
<PAGE> 144

(d) Involuntary Redemptions of Shares in Accounts that Do Not Have the
Required Minimum Balance

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.

(e) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within
180 Days After Redemption

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.

(f) 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.

EXCHANGE PRIVILEGE

The following supplements the discussion of "Shareholder
Services -- Exchange Privilege" in the Prospectus:

By use of the exchange privilege, the investor authorizes ACCESS to act on
telephonic, telegraphic or written exchange instructions from any person
representing himself to be the investor or the agent of the investor and
believed by ACCESS to be genuine. Van Kampen American Capital and its
subsidiaries, including ACCESS, 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 American Capital, ACCESS nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. Van Kampen
American Capital, ACCESS and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed.

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 exchange 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 his 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 mutual 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.

B-26
<PAGE> 145

TAX STATUS OF THE FUND

The Trust and each of its series, including the Fund, will be treated as
separate corporations for federal income tax purposes. The Fund has qualified
and intends to continue to qualify each year and to elect to be treated as a
regulated investment company under the Code. If the Fund so qualifies and
distributes each year to its shareholders at least 90% of its net investment
income (including tax-exempt interest, taxable income and net short-term capital
gain, but not net capital gains, which are the excess of net long-term capital
gains over net short-term capital losses) in each year, it will not be required
to pay federal income taxes on any income distributed to shareholders. The Fund
intends to distribute at least the minimum amount of net investment income
necessary to satisfy the 90% distribution requirement. The Fund will not be
subject to federal income tax on any net capital gains distributed to
shareholders.

FUND PERFORMANCE

The Fund's average annual total return (computed in the manner described in
the Prospectus) for Class A shares of the Fund for (i) the one year period May
31, 1997 was 10.93%; (ii) the five year period ending May 31, 1997 was 10.21%;
and (iii) the 5 year, 9 1/2 month period since August 5, 1991, the commencement
of investment operations, through May 31, 1997 was 11.09%. The Fund's average
annual total return (computed in the manner described in this Prospectus) for
Class B shares of the Fund for (i) the one year period ending May 31, 1997 was
11.83%; (ii) the five year period ending May 31, 1997 was 10.45%; and (iii) the
5 year, 6 1/2 month period since November 15, 1991, the commencement of
distribution for Class B shares of the Fund, through May 31, 1997 was 10.75%.
The Fund's average annual total return for Class C shares of the Fund for (i)
the one year period ending May 31, 1997 was 15.82% and (ii) the 3 year, 11 1/2
month period since June 21, 1993, the commencement of distribution for Class C
shares of the Fund, through May 31, 1997 was 13.31%. 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 objectives and policies as well as the risks incurred in
the Fund's investment practices. Future results will be affected by changes in
the general level of prices of securities available for purchase and sale by the
Fund.

Total return is computed separately for Class A shares, Class B shares and
Class C shares.

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;
and (3) in reports or other communications to shareholders or in advertising
material, illustrate the benefits of compounding at various assumed rates of
return. Such illustrations may be in the form of charts or graphs and will not
be based on historical returns experienced by the Fund.

The Fund seeks to remain fully invested and diversified across many
industries to attempt to achieve consistent performance. From time to time
marketing materials may provide a portfolio manager update, an adviser update
and/or discuss general economic conditions and outlooks. The Fund's marketing
materials may also show the Fund's asset class diversification, top five sector
holdings and ten largest holdings. Materials may also mention how Van Kampen
American Capital believes the Fund compares relative to other Van Kampen
American Capital 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 that investors who bought mutual
fund shares and held such shares outperformed investors who bought and sold. The
Dalbar study conclusions were consistent regardless if shareholders purchased
their funds in direct or sales force distribution channels. The study showed
that investors working with a professional representative have tended over time
to earn higher returns than those who invested directly. The Fund will also be
marketed on the Internet.

OTHER INFORMATION

B-27
<PAGE> 146

certain of the Fund's investments in foreign securities. Any such sub-custodian
shall be utilized pursuant to an agreement between the Custodian and the foreign
sub-custodian that has been approved as required pursuant to Rule 17f-5 under
the 1940 Act. The Custodian and sub-custodians generally domestically, and
frequently abroad, do not actually hold certificates for the securities in their
custody, but instead have book records with domestic and foreign securities
depositories, which in turn have book records with the transfer agents of the
issuers of the securities.

SHAREHOLDER REPORTS -- Semiannual statements are furnished to shareholders, and
annually such statements are audited by the independent accountants.

INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 1201 Louisiana, Suite 2900,
Houston, Texas 77002, the independent accountants for the Fund, performs an
annual audit of the Fund's financial statements.

B-28
<PAGE> 147

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Van Kampen American Capital Global Equity Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen American Capital Global
Equity Fund (the "Fund"), a series of Van Kampen American Capital World
Portfolio Series Trust, at May 31, 1997, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at May 31, 1997 by correspondence with the custodian and brokers and
the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Houston, Texas
July 14, 1997

B-29

<PAGE> 148

Portfolio of Investments

May 31, 1997

<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 93.4%
Austria 0.1%
Scala ECE (b)...................................... 1,289 $188,395
Slovenske Energeticke Strojarne (b)................ 13,000 137,754
--------
326,149
--------
Bermuda 0.0%
Applied International Holdings (b)................. 20,000 1,600
--------
Canada 4.1%
Abitibi Price, Inc. (b)............................ 4,800 86,328
Agrium, Inc........................................ 6,100 82,779
Alcan Aluminum..................................... 9,700 347,507
Avenor, Inc........................................ 2,900 56,669
Bank of Montreal................................... 11,200 426,779
Bank of Nova Scotia................................ 9,900 410,201
Barrick Gold Corp.................................. 16,900 426,873
BCE, Inc........................................... 29,800 783,984
Bombardier, Inc., Class B.......................... 13,300 279,149
Cae, Inc........................................... 5,400 42,404
Cameco Corp........................................ 2,500 97,434
Canadian Imperial Bank............................. 8,500 205,164
Canadian Natural Resources (b)..................... 4,700 123,308
Canadian Occidental Petroleum...................... 6,200 140,226
Canadian Pacific................................... 14,800 393,110
Canadian Tire, Class A............................. 5,200 97,474
Cominco............................................ 3,700 103,098
Corel Corp (b)..................................... 3,000 17,696
Cott Corp.......................................... 2,000 18,311
Dofasco, Inc....................................... 4,000 73,098
Domtar, Inc........................................ 3,600 28,139
Echo Bay Mines..................................... 6,200 38,141
Gulf Canada Resource (b)........................... 9,700 87,754
Imasco............................................. 10,600 296,895
Imperial Oil....................................... 7,100 344,286
Inco............................................... 6,900 226,721

</TABLE>

B-30 See Notes to Financial Statements

<PAGE> 149

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>

=========================================================================================
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Canada (Continued)
IPL Energy, Inc............................................. 2,300 $ 72,744
Laidlaw, Inc., Class B Non Voting........................... 12,300 166,469
Loewen Group, Inc........................................... 2,600 85,807
Macmillan Bloedel........................................... 6,500 94,087
Magna International, Inc.................................... 3,200 171,383
Methanex Corp. (b).......................................... 7,800 70,565
Molson Companies, Class A................................... 3,300 56,724
Moore Corp.................................................. 5,100 113,686
Newbridge Networks Corp. (b)................................ 6,500 258,739
Noranda, Inc................................................ 10,700 238,518
Norcen Energy Resources..................................... 5,200 125,136
Northern Telecom............................................ 10,300 861,377
Nova Corp................................................... 21,800 180,654
Petro....................................................... 12,400 215,387
Placer Dome, Inc............................................ 9,400 171,101
Potash Corporation of Saskatchewan, Inc..................... 1,900 154,701
Power Corporation of Canada................................. 5,800 133,068
Provigo, Inc. (b)........................................... 5,200 28,038
Ranger Oil.................................................. 8,400 88,152
Renaissance Energy (b)...................................... 5,100 160,009
Repap Enterprises, Inc. (b)................................. 5,100 2,178
Rogers Communications, Inc., Class B (b).................... 8,700 50,058
Royal Bank of Canada........................................ 12,800 553,984
Seagram..................................................... 14,700 590,468
Talisman Energy, Inc. (b)................................... 5,200 169,921
Teck Corp., Class B Subordinated Voting..................... 4,700 104,089
Thomson Corp................................................ 25,700 571,029
Transcanada Pipelines....................................... 9,500 183,578
Westcoast Energy, Inc....................................... 4,900 88,836
Weston George............................................... 2,700 163,169
---------
1,157,183
---------
Czech Republic 0.0%
Prazske Pivovary............................................ 24,000 144,260
---------
</TABLE>

B-31 See Notes to Financial Statements

<PAGE> 150

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
France 5.0%
Accor................................................. 1,700 $ 235,514
Air Liquide........................................... 2,850 436,783
Alcatel Alsthom....................................... 5,900 638,572
AXA-UAP............................................... 12,200 729,938
BIC................................................... 1,450 213,435
Bouygues.............................................. 1,300 112,517
BQE National Paris.................................... 8,550 350,759
Canal Plus............................................ 950 160,894
Carrefour............................................. 1,500 984,484
Cie Bancaire.......................................... 1,100 121,723
Cie De St Gobain...................................... 3,400 469,262
Cie De Suez........................................... 5,650 288,048
Cie Fin Paribas....................................... 3,400 218,852
CSF Thomson........................................... 4,650 132,464
Danone................................................ 3,050 458,984
Eaux Cie Generale..................................... 4,350 534,842
Eaux Cie Generale Warrants, expiring 5/21/02 (b)...... 3,550 2,428
Elf Aquitaine......................................... 10,750 1,074,144
Erid Beghin Say....................................... 1,150 160,912
Essilor International................................. 425 107,748
Havas................................................. 2,600 175,146
L'Oreal............................................... 2,700 979,548
Lafarge............................................... 3,950 252,407
Legrand............................................... 1,200 193,052
LVMH (Moet Hennessy Louis Vuitton) (b)................ 3,400 823,122
Lyonnaise des Eaux.................................... 2,500 245,472
Michelin (CGDE), Class B.............................. 5,950 324,877
Pernod Ricard......................................... 2,650 126,429
Peugeot............................................... 2,300 227,427
Pin Printemps Redo.................................... 850 356,215
Promodes.............................................. 800 270,841
Sagem................................................. 125 62,775
Saint Louis........................................... 425 97,959
</TABLE>

B-32 See Notes to Financial Statements

<PAGE> 151

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
France (Continued)
Sanofi............................................... 4,200 $ 364,389
Schneider............................................ 6,000 288,124
Societe Generale..................................... 3,700 410,712
Sodexho Alliance..................................... 275 127,628
Total, Class B....................................... 9,450 864,060
Usinor Sacilor....................................... 10,350 155,216
-----------
13,777,702
-----------
Germany 4.3%
Adidas............................................... 1,400 147,036
AGIV (b)............................................. 1,350 24,803
Amb Aach & Mun Bet................................... 100 92,563
BASF................................................. 16,500 608,215
Bayerische........................................... 21,000 814,025
Bayerische Hypotheden-und-Wechsel-Bank............... 7,050 223,780
Bayerische Vereinsbank............................... 7,400 304,382
Beiersdorf, Class A.................................. 2,450 130,449
Bilfinger & Berger BAU............................... 1,400 54,473
Brau Und Brunnen (b)................................. 250 18,577
CKAG Colonia Konzern................................. 800 77,234
Continental.......................................... 2,800 63,615
Daimler Benz......................................... 14,300 1,100,257
Degussa.............................................. 2,500 121,482
Deutsche Telekom..................................... 60,000 1,330,525
Dresdner Bank........................................ 12,450 435,615
Heidelberg Zement (b)................................ 1,350 126,382
Hochtief............................................. 2,600 109,531
Karstadt............................................. 300 105,845
Klockner Humb Deut................................... 1,800 17,694
Linde................................................ 300 206,249
Lufthansa............................................ 10,800 171,943
Man.................................................. 400 114,446
Mannesmann........................................... 1,050 426,365
Merck KGaA........................................... 4,550 187,021
</TABLE>

B-33 See Notes to Financial Statements

<PAGE> 152

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Germany (Continued)
Metro................................................ 2,900 $ 317,217
Muenchener Rueckversicherungs - Gesellschaft......... 200 509,040
Preussag............................................. 500 131,648
RWE.................................................. 9,400 400,398
SAP.................................................. 1,700 303,177
Schering............................................. 2,050 205,828
Siemens.............................................. 16,000 901,808
Strabag (b).......................................... 100 8,484
Thyssen.............................................. 1,100 249,722
Veba................................................. 14,000 791,294
Viag................................................. 800 364,168
Volkswagen........................................... 800 516,763
-----------
11,712,054
-----------
Hong Kong 2.1%
Bank of East Asia (b)................................ 22,600 82,251
Cathay Pacific Air................................... 85,000 127,799
Cheung Kong Holdings................................. 64,000 654,578
China Light & Power Co............................... 53,500 267,897
Chinese Estates Holdings............................. 48,000 48,629
Giordano International............................... 18,000 10,802
Hang Lung Development Co............................. 36,000 68,994
Hang Seng Bank....................................... 55,600 667,329
Hong Kong & China Gas Co. (ADR)...................... 97,200 169,349
Hong Kong & Shang Hotels............................. 37,000 57,301
Hong Kong Aircraft................................... 5,600 17,092
Hong Kong Telecommunications......................... 314,000 694,986
Hopewell Holdings.................................... 125,000 69,772
HSBC Holdings........................................ 1,315 39,882
Hutchison Whampoa.................................... 97,000 807,447
Hysan Development.................................... 31,000 103,420
Johnson Electric Holdings (b)........................ 11,500 33,913
Miramar Hotel & Investment........................... 17,000 32,361
Oriental Press Group................................. 42,000 14,364
</TABLE>

B-34 See Notes to Financial Statements

<PAGE> 153

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
========================================================================================
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong (Continued)
Peregrine Investment......................................... 11,000 $ 19,591
Shangri-La Asia.............................................. 46,000 58,179
Shun Tak Holdings............................................ 48,000 31,593
Stelux Holdings International................................ 30,000 5,653
Sth China Morn Pst........................................... 54,000 51,920
Sun Hung Kai Properties...................................... 65,000 799,026
Swire Pacific, Class A....................................... 45,000 377,492
Television Broadcast......................................... 13,000 56,708
Wharf Holdings............................................... 63,000 282,132
Wing Lung Bank............................................... 5,280 30,323
Winsor Industrial............................................ 10,000 2,181
-----------
5,682,964
-----------
Hungary 0.1%
Tiszai Vegyi Kombinat Rt (GDR) (b)........................... 27,000 395,550
-----------
Italy 1.8%
Assic Generali............................................... 26,500 453,539
BCA Comm Italiana............................................ 42,000 82,664
BCO Ambros Veneto............................................ 16,000 39,423
Benetton Group............................................... 5,500 76,928
Burgo Cartiere............................................... 5,000 29,154
Credito Italiano............................................. 72,500 107,823
Edison....................................................... 19,000 90,041
ENI.......................................................... 229,000 1,141,993
Falck Acciaierie & Ferriere Lombarde......................... 5,000 19,254
Fiat......................................................... 97,000 318,000
Fiat Di Risp................................................. 22,000 38,561
Fiat Priv.................................................... 33,000 55,797
IMI.......................................................... 18,250 159,618
Impregilo (b)................................................ 10,000 7,283
Instituto Bancario San Paolo................................. 25,000 157,204
Instituto Nazionale delle Assicurazioni...................... 122,000 168,479
Italcementi.................................................. 7,000 40,712
Italcementi Di Risp.......................................... 4,500 11,088
</TABLE>

B-35 See Notes to Financial Statements

<PAGE> 154

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
========================================================================================
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Italy (Continued)
Italgas........................................................ 19,000 $ 58,476
Magneti Marelli................................................ 15,000 23,902
Mediaset....................................................... 34,500 148,429
Montedison (b)................................................. 85,000 51,919
Montedison Di Risp (b)......................................... 30,000 19,121
Olivetti & C. (b).............................................. 105,000 30,550
Parmalat Finanz (b)............................................ 45,000 64,136
Pirelli........................................................ 50,000 108,885
Ras............................................................ 8,500 64,711
Rinascente LA.................................................. 7,000 33,875
Sasib.......................................................... 5,000 16,879
Sirti.......................................................... 9,000 51,813
Snia BPD....................................................... 20,000 16,406
Societa Assicuratrice Industriale.............................. 4,000 28,092
Telecom Italia Di Risp......................................... 45,000 98,793
Telecom Italia Mob............................................. 190,000 557,290
Telecom Italia Mob Di Risp..................................... 45,000 78,610
Telecom Italia Ord............................................. 185,000 509,325
-----------
4,958,773
-----------
Japan 12.0%
Advantest...................................................... 2,000 136,024
Ajinomoto Co., Inc............................................. 28,000 281,322
Aoki Corp. (b)................................................. 13,000 15,629
Aoyama Trading Co.............................................. 2,100 65,281
Asahi Bank..................................................... 22,000 143,770
Asahi Breweries................................................ 15,000 204,809
Asahi Chemical Industry Co..................................... 45,000 250,408
Asahi Glass Co................................................. 43,000 417,261
Bank of Tokyo.................................................. 42,600 738,961
Bridgestone Corp............................................... 16,000 361,357
Canon, Inc..................................................... 19,000 481,322
Casio Computer Co.............................................. 9,000 70,794
Chiba Bank..................................................... 12,000 62,344
</TABLE>

B-36 See Notes to Financial Statements

<PAGE> 155
\
Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
========================================================================================
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Chiyoda Corp................................................ 2,000 $ 9,412
Chugai Pharm Co. (b)........................................ 16,000 135,749
Dai Nippon Printing......................................... 20,000 400,172
Daiei, Inc. (b)............................................. 18,000 117,475
Daikin Industries........................................... 15,000 145,556
Daiwa House Industries...................................... 15,000 176,471
Daiwa Securities............................................ 31,000 228,141
Denso Corp.................................................. 19,000 474,796
East Japan Railway.......................................... 90 444,397
Ebara Corp.................................................. 11,000 159,639
Fanuc....................................................... 6,500 231,644
Fuji Bank................................................... 26,000 334,908
Fuji Photo Film Co.......................................... 10,000 387,291
Fujitsu (b)................................................. 39,000 475,569
Furukawa Electric........................................... 17,000 100,730
Hankyu Corp................................................. 21,000 109,103
Hazama Corp................................................. 15,000 28,338
Hitachi..................................................... 76,000 809,274
Honda Motor Co.............................................. 20,000 587,377
Ind Bank Japan.............................................. 22,000 264,491
Ito Yokado Co............................................... 10,000 570,202
Japan Air Lines Co. (b)..................................... 53,000 224,835
Japan Energy Corp........................................... 38,000 95,286
Joyo Bank................................................... 8,000 39,158
Jusco Co.................................................... 8,000 269,987
Kajima Corp................................................. 31,000 173,302
Kansai Electric Power....................................... 20,300 381,769
Kao Corp.................................................... 28,000 379,906
Kawasaki Steel Corp......................................... 48,000 140,970
Kinki Nippon Railway........................................ 37,000 222,095
Kirin Brewery Co............................................ 31,000 306,140
Komatsu..................................................... 31,000 234,264
Kubota Corp................................................. 45,000 206,741
</TABLE>

B-37 See Notes to Financial Statements

<PAGE> 156

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
========================================================================================
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Kumagai Gumi Co............................................. 31,000 $ 50,580
Kyocera Corp................................................ 4,500 324,216
Kyowa Hakko Kogyo........................................... 15,000 106,655
Marubeni Corp............................................... 45,000 191,284
Marui Co.................................................... 7,000 130,442
Matsushita Electric Industries.............................. 45,000 846,286
Mitsubishi Chemical......................................... 45,000 136,797
Mitsubishi Corp............................................. 42,000 494,118
Mitsubishi Electric Corp.................................... 53,000 300,386
Mitsubishi Estate........................................... 33,000 450,580
Mitsubishi Heavy Industries................................. 83,000 597,286
Mitsubishi Materials Corp................................... 31,000 120,060
Mitsubishi Trust & Banking Corp............................. 13,000 186,432
Mitsui & Co................................................. 45,000 398,025
Mitsui Engineering & Ship Building Co. (b).................. 31,000 57,235
Mitsui Trust & Banking Co................................... 13,000 97,793
Mitsukoshi.................................................. 17,000 119,562
Murata Manufacturing Co..................................... 5,000 197,939
Mycal Corp.................................................. 10,000 144,268
NEC Corp.................................................... 31,000 431,258
NGK Insulators.............................................. 15,000 146,844
Nippon Express Co........................................... 19,000 147,660
Nippon Fire & Marine Insurance.............................. 15,000 71,232
Nippon Light Metal.......................................... 15,000 58,609
Nippon Meat Packer.......................................... 15,000 182,911
Nippon Oil Co............................................... 45,000 227,995
Nippon Steel Corp........................................... 170,000 497,810
Nippon Telegraph & Telephone Corp........................... 185 1,763,418
Nippon Yusen Kabushiki Kaisha............................... 45,000 185,487
Nissan Fire & Marine Insurance.............................. 2,350 11,039
Nissan Motor Co............................................. 58,000 384,508
NKK Corp.................................................... 89,000 175,019
Nomura Securities........................................... 39,000 462,173
</TABLE>

B-38 See Notes to Financial Statements

<PAGE> 157

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
========================================================================================
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Odakyu Electric Railway....................................... 18,000 $ 99,699
Oji Paper Co.................................................. 31,000 179,158
Osaka Gas Co.................................................. 67,000 176,058
Penta Ocean Construction...................................... 15,000 49,077
Pioneer Electronic............................................ 5,000 123,658
Rohm Co....................................................... 2,000 207,814
Sakura Bank................................................... 34,000 203,504
Sanyo Electric Co............................................. 45,000 189,738
Secom Co...................................................... 3,000 215,887
Sega Enterprises.............................................. 3,000 100,472
Sekisui House................................................. 15,000 146,844
Sharp Corp.................................................... 30,000 386,432
Shimano, Inc.................................................. 4,000 76,599
Shimizu Corp.................................................. 22,000 130,923
Shin Etsu Chemical Co......................................... 7,000 175,526
Shiseido Co................................................... 7,000 102,190
Shizuoka Bank................................................. 10,000 96,179
Showa Denko K.K. (b).......................................... 31,000 78,532
Softbank Corp................................................. 700 47,308
Sony Corp..................................................... 7,000 589,695
Sumitomo Bank................................................. 27,000 373,293
Sumitomo Chemical............................................. 61,000 252,486
Sumitomo Corp................................................. 31,000 274,195
Sumitomo Electric Industries.................................. 21,000 330,013
Sumitomo Forestry............................................. 6,000 65,436
Sumitomo Metal Industries..................................... 78,000 198,935
Sumitomo Metal Mining Co...................................... 15,000 104,465
Sumitomo Osaka Cement Co...................................... 16,000 48,227
Taisei Corp................................................... 31,000 132,838
Taisho Pharmacy Co............................................ 9,000 225,676
Takeda Chemical Industries.................................... 19,000 481,322
Teijin........................................................ 31,000 130,708
Tobu Railway Co............................................... 21,000 94,135
</TABLE>

B-39 See Notes to Financial Statements

<PAGE> 158

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Tohoku Electric Power................................ 10,900 $ 186,269
Tokai Bank........................................... 22,000 180,988
Tokio Marine & Fire Insurance Co..................... 45,000 529,412
Tokyo Dome Corp...................................... 3,000 45,084
Tokyo Electric Power................................. 28,300 539,511
Tokyo Electron....................................... 2,000 100,816
Tokyo Gas Co......................................... 61,000 155,577
Tokyu Corp........................................... 26,000 148,699
Toppan Printing Co................................... 21,000 288,536
Toray Industries, Inc................................ 45,000 306,054
Toto................................................. 15,000 168,742
Toyobo Co............................................ 31,000 78,798
Toyota Motor Corp.................................... 70,000 2,007,729
Ube Industries....................................... 31,000 87,849
Yamaichi Securities Co............................... 31,000 87,849
Yasuda Trust & Banking............................... 15,000 45,084
-----------
32,834,396
-----------
Netherlands 1.5%
ABN Amro Holdings.................................... 18,800 347,152
Ahold Koninklijke.................................... 2,300 174,549
Akzo Nobel........................................... 1,100 146,304
Elsevier............................................. 9,900 167,360
Getronics............................................ 1,200 40,884
Heineken............................................. 700 118,372
ING Groep NV......................................... 10,922 482,329
KLM Royal Dutch Air Lines............................ 1,300 37,529
Koninklijke KNP BT................................... 1,500 30,897
Koninklijke Nedlloyd................................. 400 9,800
OCE.................................................. 302 39,350
Philips Electronic................................... 4,800 262,408
Royal Dutch Petroleum Co............................. 7,300 1,409,119
Royal PTT (ADR)...................................... 6,400 223,709
</TABLE>

B-40 See Notes to Financial Statements
<PAGE> 159

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Netherlands (Continued)
Stork.................................................. 500 $ 22,107
Unilever............................................... 2,200 422,835
Wolters Kluwer......................................... 1,000 120,208
-----------
4,054,912
-----------
Singapore 3.0%
City Developments...................................... 85,000 790,394
Creative Technologies Corp. (b)........................ 9,000 166,748
Cycle & Carriage....................................... 25,000 253,443
DBS Land............................................... 16,000 55,932
Development Bank of Singapore.......................... 52,000 650,773
First Capital Corp..................................... 31,000 85,395
Fraser & Neave......................................... 32,000 255,051
Hai Sun Hup Group...................................... 60,000 42,369
Hotel Properties....................................... 50,000 85,646
Inchcape Berhad........................................ 21,000 77,816
Jurong Shipyard........................................ 12,000 54,115
Keppel Corp............................................ 77,000 355,310
Keppel Corp., Class A (b).............................. 4,750 21,918
Metro Holdings......................................... 12,000 38,593
Natsteel............................................... 36,000 94,637
Neptune Orient Lines................................... 92,000 82,976
Overseas Chinese Bank.................................. 75,000 933,371
Overseas Union Enterprise.............................. 16,000 76,627
Parkway Holdings....................................... 35,000 173,740
Robinson & Co.......................................... 6,000 30,203
Shangri-La Hotel....................................... 17,000 51,108
Singapore Airlines..................................... 95,000 810,320
Singapore Press Holdings............................... 22,000 438,370
Singapore Technologies Industrial Corp................. 78,000 217,045
Singapore Telecommunications........................... 654,000 1,179,697
Straits Trading Co..................................... 37,000 86,401
United Industrial Corp................................. 151,000 122,464
United Overseas Bank................................... 87,000 894,148
</TABLE>

B-41 See Notes to Financial Statements

<PAGE> 160

- --------------------------------------------------------------------------------
Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Singapore (Continued)
United Overseas Land..................................... 58,000 $ 90,834
------------
8,215,444
------------
Spain 2.1%
Acerinox................................................. 500 84,740
Aguas De Barcelona....................................... 1,700 68,677
Argentaria Corp.......................................... 5,120 255,008
Autopistas Cesa.......................................... 8,200 100,969
BCO Bilbao Vizcaya....................................... 9,100 644,604
BCO Central Hispan....................................... 6,600 212,984
BCO Santander............................................ 6,500 554,407
Corp Fin Alba............................................ 600 65,993
Corporacion Mapfre....................................... 1,100 58,896
Dragados Y Construction.................................. 2,300 44,549
Ebro Agricolas........................................... 2,000 38,323
Emp Nac Electricid (b)................................... 10,400 794,245
Empresa Nacl Celul....................................... 900 13,292
Ercros (b)............................................... 6,900 5,298
Fom Const Y Contra....................................... 600 66,782
Gas Natural SDG.......................................... 1,500 285,971
Iberdrola................................................ 37,700 462,905
Metrovacesa.............................................. 900 34,989
Portland Valderriv....................................... 300 20,794
Repsol................................................... 12,200 510,584
Tabacalera, Class A...................................... 1,500 76,162
Telefonica De Espana..................................... 38,000 1,096,154
Union Electrica Fenosa................................... 11,800 104,483
Uralita.................................................. 2,100 20,338
Vallehermoso............................................. 1,700 42,923
Viscofan Envoltura....................................... 900 18,179
Zardoya Otis............................................. 400 50,083
------------
5,732,332
------------
Sweden 2.0%
ABB, Class A............................................. 32,000 431,417
</TABLE>

B-42 See Notes to Financial Statements

<PAGE> 161

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Sweden (Continued)
AGA, Class A........................................... 2,700 $ 36,227
AGA, Class B........................................... 4,700 61,848
Astra, Class A......................................... 60,000 967,592
Atlas Copco, Class A................................... 7,400 198,576
Electrolux, Class B.................................... 2,900 172,851
Ericsson Telephonaktiebolaget LM, Class B (b).......... 36,800 1,291,361
Esselte, Class A....................................... 1,500 34,253
Granges (b)............................................ 1,450 18,052
Hennes & Mauritz, Class B.............................. 8,000 261,121
Securitas, Class B..................................... 3,600 89,638
Skand Enskilda Banking, Class A........................ 21,100 217,773
Skandia Foersaekrings.................................. 4,600 162,310
Skanska, Class B....................................... 4,900 197,234
SKF, Class B........................................... 4,800 110,847
Stora Kopparbergs, Class A............................. 12,200 180,217
Svenska Cellulosa, Class B............................. 7,500 157,234
Svenska Handelsbkn, Class A (b)........................ 8,200 222,159
Swedish Match.......................................... 18,800 61,121
Trelleborg, Class B.................................... 5,300 91,966
Volvo.................................................. 15,600 431,701
-----------
5,395,498
-----------
Switzerland 2.9%
ABB.................................................... 210 287,927
Adecco................................................. 420 157,752
Alusuisse Lonza Holdings............................... 130 122,529
Credit Suisse Group.................................... 4,300 539,625
Georg Fischer.......................................... 20 28,523
Holderbk Fn Glarus..................................... 160 140,300
Nestle................................................. 900 1,118,328
Novartis (b)........................................... 1,466 1,987,235
Roche Holdings Bearer.................................. 37 485,880
Roche Holdings Genusscheine............................ 158 1,403,304
Sairgroup (b).......................................... 80 81,446
</TABLE>

B-43 See Notes to Financial Statements

<PAGE> 162

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Switzerland (Continued)
Schw Bankgesellsch..................................... 480 $ 525,953
Schweiz Bankverein (b)................................. 1,730 415,278
SGS Holdings........................................... 40 88,534
SMH.................................................... 120 70,743
Sulzer................................................. 90 70,785
Ubs Schw Bkgesell (b).................................. 500 109,433
Valora Holdings........................................ 150 33,412
Zuerich Versicherun.................................... 1,080 396,498
-----------
8,063,485
-----------
Thailand 0.6%
Siam Cement Co......................................... 39,000 851,487
Telecomasia (b)........................................ 135,000 153,971
Thai Military Bank Public Co........................... 501,600 618,061
-----------
1,623,519
-----------
United Kingdom 7.8%
Abbey National......................................... 28,500 411,672
Arjo Wiggins Apple..................................... 14,200 38,560
Associated British Foods............................... 10,200 94,441
B.A.T Industries....................................... 63,100 565,144
Barclays............................................... 34,600 672,982
Bass................................................... 22,400 291,863
BG..................................................... 89,500 298,675
BICC................................................... 14,200 39,490
Blue Circle Industries................................. 26,400 181,725
BOC Group.............................................. 14,200 238,564
Boots Co............................................... 22,400 259,434
BPB.................................................... 14,200 80,257
British Aerospace...................................... 10,200 207,404
British Airways........................................ 24,400 283,396
British Petroleum...................................... 115,900 1,384,050
British Sky Broadcast.................................. 32,500 305,701
British Steel.......................................... 40,700 100,868
British Telecommunications............................. 118,000 855,128
</TABLE>

B-44 See Notes to Financial Statements

<PAGE> 163

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom (Continued)
BTR ................................................ 85,400 $ 278,008
Burmah Castrol ..................................... 6,100 105,775
Cable & Wireless ................................... 50,900 415,493
Cadbury Schweppes .................................. 22,400 200,805
Caradon ............................................ 14,670 51,116
Centrica (b) ....................................... 89,500 92,970
Coats Viyella ...................................... 18,300 36,223
Commercial Union ................................... 14,200 159,584
Courtaulds ......................................... 10,200 56,064
De Lousiana Rue .................................... 2,000 16,031
EMI Group .......................................... 10,200 195,557
General Electric ................................... 59,000 336,840
GKN ................................................ 12,200 211,150
Glaxo Wellcome ..................................... 65,100 1,301,361
Granada Group ...................................... 14,200 201,629
Grand Metropolitan ................................. 44,700 415,338
Great University Stores ............................ 24,400 257,451
Guardian Royal Exchange ............................ 16,300 74,661
Guinness ........................................... 44,800 417,000
Hanson ............................................. 12,200 63,066
Harrison & Crosfield ............................... 26,400 52,688
HSBC Holdings (ADR) ................................ 44,700 1,333,761
Imperial Chemical Industries ....................... 18,300 243,980
Ladbroke Group ..................................... 24,400 91,804
Lasmo .............................................. 16,300 65,328
Legal & General Group .............................. 24,400 176,424
Lloyds TSB Group ................................... 111,900 1,125,315
Lonrho ............................................. 16,300 36,130
Marks & Spencer .................................... 71,200 591,974
MEPC ............................................... 12,200 102,981
National Power ..................................... 28,500 257,819
North West Water (b) ............................... 14,200 162,372
P & O Finance (b) .................................. 16,300 169,786
</TABLE>

See Notes to Financial Statements

B-45

<PAGE> 164

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom (Continued)
Pilkington ......................................... 30,500 $ 62,367
Prudential Corp. ................................... 40,700 410,129
Rank Group ......................................... 18,300 128,726
Redland ............................................ 12,200 65,061
Reed International ................................. 26,600 261,592
Reuters Holdings ................................... 34,600 388,281
Rexam .............................................. 12,200 57,278
Rio Tinto .......................................... 24,400 419,107
RMC Group .......................................... 6,100 91,106
Royal Bank Scot Group .............................. 10,200 100,448
Royal Sun Alliance ................................. 28,500 214,927
Safeway ............................................ 18,300 108,070
Sainsbury J Finance ................................ 32,500 186,611
Schroders .......................................... 4,100 114,690
Scottish Power ..................................... 20,300 127,186
Sears .............................................. 40,700 51,433
Sedgwick Group ..................................... 12,200 24,947
Slough Estates ..................................... 10,200 52,894
Smithkline Beecham ................................. 50,900 875,117
Southern Electric .................................. 10,200 67,577
Tarmac ............................................. 28,500 58,977
Taylor Woodrow ..................................... 16,300 55,297
Tesco .............................................. 38,600 236,790
Thames Water ....................................... 14,200 159,526
Thorn .............................................. 10,200 25,529
TI Group ........................................... 10,200 95,276
Unilever ........................................... 14,200 379,797
Vodafone Group ..................................... 67,100 298,564
Zeneca Group ....................................... 18,300 555,915
------------
21,279,056
------------
United States 44.0%
Abbott Laboratories, Inc. (a) ...................... 18,600 1,171,800
AirTouch Communications, Inc. (b) .................. 18,300 510,113
</TABLE>

See Notes to Financial Statements

B-46

<PAGE> 165

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Aluminum Company of America ........................ 8,200 $ 603,725
American Express Co. (a) ........................... 17,300 1,202,350
American Home Products Corp. ....................... 14,600 1,113,250
American International Group, Inc. (a) ............. 15,700 2,125,387
Amoco Corp. (a) .................................... 13,400 1,197,625
AMR Corp. (b) ...................................... 8,200 814,875
Applied Materials, Inc. (b) ........................ 5,400 352,350
AT&T Corp. (a) ..................................... 41,800 1,541,375
Atlantic Richfield Co. ............................. 4,300 625,650
Automatic Data Processing, Inc. .................... 8,200 402,825
BancOne Corp. ...................................... 16,400 709,300
BankAmerica Corp. (a) .............................. 15,500 1,811,562
Bankers Trust New York Corp. ....................... 2,500 211,563
Bell Atlantic Corp. (a) ............................ 15,500 1,085,000
BellSouth Corp. .................................... 17,900 812,213
Boeing Co. (a) ..................................... 9,700 1,020,925
Bristol-Myers Squibb Co. ........................... 13,000 953,875
Campbell Soup Co. .................................. 6,100 280,600
Caterpillar, Inc. .................................. 8,200 800,525
Chevron Corp. (a) .................................. 18,100 1,267,000
Chrysler Corp. ..................................... 13,800 438,150
Chubb Corp. ........................................ 8,200 500,200
CIGNA Corp. ........................................ 3,500 608,125
Cisco Systems, Inc. (b) ............................ 11,500 779,125
Citicorp (a) ....................................... 13,300 1,521,187
Coca Cola Co. ...................................... 63,100 4,306,575
Columbia / HCA Healthcare Corp. .................... 18,100 662,913
Consolidated Edison Co. ............................ 16,400 477,650
Cooper Industries, Inc. ............................ 8,200 418,200
Corning, Inc. ...................................... 8,200 413,075
CSX Corp. .......................................... 5,900 312,700
Deere & Co. ........................................ 4,100 209,613
Dow Chemical Co. ................................... 12,100 1,008,837
</TABLE>

See Notes to Financial Statements

B-47

<PAGE> 166

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
DSC Communications Corp. (b) ....................... 3,900 $ 99,694
Du Pont (E. I.) de Nemours & Co. ................... 22,600 2,460,575
Duke Power Co. ..................................... 16,400 738,000
Dun & Bradstreet Corp. ............................. 6,200 161,975
Eastman Kodak Co. .................................. 16,400 1,359,150
Edison International ............................... 8,300 194,013
Electronic Data Systems Corp. ...................... 13,700 512,038
Enron Corp. ........................................ 11,300 460,475
Exxon Corp. ........................................ 62,400 3,697,200
Federal National Mortgage Association .............. 27,900 1,217,137
First Data Corp. ................................... 11,600 464,000
Fleet Financial Group, Inc. ........................ 7,700 470,663
FPL Group, Inc. .................................... 16,400 762,600
Gannett, Inc. ...................................... 6,200 573,500
General Electric Co. ............................... 79,800 4,817,925
General Motors Corp. ............................... 26,500 1,517,125
General Reinsurance Corp. (b) ...................... 2,700 473,175
Gillette Co. ....................................... 11,500 1,022,062
Goodyear Tire & Rubber Co. ......................... 8,200 479,700
H & R Block, Inc. .................................. 3,500 115,500
Harrahs Entertainment, Inc. (b) .................... 1,500 27,938
Heinz, H. J. & Co. ................................. 15,600 670,800
Hewlett Packard Co. ................................ 25,500 1,313,250
Home Depot, Inc. ................................... 15,500 976,500
Intel Corp. ........................................ 15,400 2,333,100
International Business Machines Corp. .............. 31,600 2,733,400
International Paper Co. ............................ 12,300 590,400
JC Penney, Inc. .................................... 9,900 509,850
Johnson & Johnson, Inc. ............................ 33,300 1,993,837
JP Morgan & Co., Inc. .............................. 8,200 881,500
Kmart Corp. (b) .................................... 3,500 49,000
Korea Fund, Inc. ................................... 262,500 3,609,375
Latin American Discovery Fund, Inc. ................ 157,300 2,929,712
</TABLE>

See Notes to Financial Statements

B-48

<PAGE> 167

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Lilly Eli & Co. (b) ................................ 12,600 $ 1,171,800
Limited, Inc. ...................................... 6,100 123,525
Lucent Technologies, Inc. .......................... 15,700 998,912
McDonalds Corp. .................................... 20,500 1,030,125
Merck & Co., Inc. .................................. 29,900 2,687,262
Microsoft Corp. (b) ................................ 27,300 3,385,200
Minnesota Mining & Manufacturing Co. ............... 14,000 1,284,500
Mobil Corp. ........................................ 12,500 1,748,437
Monsanto Co. ....................................... 5,300 233,200
Morgan Stanley Asia Pacific Fund, Inc. ............. 300,000 3,150,000
Morgan Stanley India Investment Fund (b) ........... 174,100 1,958,625
Motorola, Inc. ..................................... 16,300 1,081,912
NationsBank Corp. .................................. 16,400 965,550
Norfolk Southern Corp. ............................. 6,300 611,888
Norwest Corp. ...................................... 17,900 957,650
Novell, Inc. (b) ................................... 10,100 79,538
Nucor Corp. ........................................ 3,700 218,300
Oracle Systems Corp. (b) ........................... 21,900 1,021,087
PepsiCo, Inc. ...................................... 42,600 1,565,550
Pfizer, Inc. ....................................... 15,300 1,573,987
PG&E Corp. ......................................... 24,200 559,625
Philip Morris Cos., Inc. ........................... 48,900 2,151,600
PPG Industries, Inc. ............................... 5,400 313,875
Procter & Gamble Co. ............................... 20,900 2,881,587
Public Service Enterprise Group .................... 16,300 403,425
Rockwell International Corp. ....................... 10,100 651,450
Salomon, Inc. ...................................... 5,400 289,575
SBC Communications, Inc. ........................... 18,600 1,088,100
Schering Plough Corp. .............................. 12,500 1,134,375
Sears Roebuck & Co. ................................ 15,400 756,525
Southern Co. ....................................... 25,300 537,625
Sprint Corp. ....................................... 15,300 747,788
SunTrust Banks, Inc. ............................... 8,200 437,675
</TABLE>

See Notes to Financial Statements

B-49

<PAGE> 168

Portfolio of Investments (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Tele-Communications International, Inc., Class A (b)..... 25,700 $ 388,713
Texas Instruments, Inc................................... 7,300 656,088
Texas Utilities Co....................................... 16,400 563,750
Time Warner, Inc......................................... 16,500 767,250
Toys R Us, Inc. (b)...................................... 9,900 308,138
Travelers Group, Inc..................................... 11,666 640,172
Union Pacific Corp....................................... 7,900 535,225
Viacom, Inc., Class B (b)................................ 9,500 282,031
Wal-Mart Stores, Inc..................................... 58,300 1,734,425
Walt Disney Co........................................... 17,900 1,465,562
Warner-Lambert Co........................................ 4,200 423,150
Waste Management, Inc.................................... 14,600 463,550
Wells Fargo & Co......................................... 2,300 606,050
Westinghouse Electric Corp............................... 22,000 445,500
Weyerhaeuser Co.......................................... 8,300 413,963
Xerox Corp............................................... 10,000 677,500
------------
120,656,747
------------
Total Common Stocks..................................... 256,011,624
------------
Preferred Stocks 0.2%
France 0.0%
Casino Guichard Perrach.................................. 3,400 153,143
Germany 0.2%
RWE...................................................... 6,400 222,433
SAP, Non Voting (ADR).................................... 1,150 209,262
------------
431,695
------------
Total Preferred Stocks.................................. 584,838
------------
Total Long-Term Investments 93.6% (Cost $230,596,409).... 256,596,462
------------
</TABLE>

B-50 See Notes to Financial Statements

<PAGE> 169

(a) Assets segregated as collateral for open futures and forward transactions.
(b) Non-income producing security as this security currently does not declare
dividends.
ADR - American Depository Receipt
GDR - Global Depository Receipt

B-51 See Notes to Financial Statements

<PAGE> 170

Statement of Assets and Liabilities
May 31, 1997
<TABLE>
<CAPTION>
===================================================================================================
<S> <C>
Assets:
Long-Term Investments, at Market Value (Cost $230,596,409).......................... $256,596,462
Repurchase Agreements (Cost $10,223,000)............................................ 10,223,000
Foreign Currency, at Market Value (Cost $1,545,888)................................. 1,550,824
Cash................................................................................ 241
Receivables:
Securities Sold................................................................... 6,366,453
Dividends......................................................................... 687,506
Fund Shares Sold.................................................................. 446,015
Variation Margin on Futures....................................................... 145,656
Interest.......................................................................... 3,258
Forward Currency Contracts.......................................................... 1,097,685
Other............................................................................... 16
------------
Total Assets...................................................................... 277,117,116
------------
Liabilities:
Payables:
Securities Purchased.............................................................. 1,823,802
Fund Shares Repurchased........................................................... 523,314
Distributor and Affiliates........................................................ 240,562
Investment Advisory Fee........................................................... 225,539
Accrued Expenses.................................................................... 200,451
Deferred Compensation and Retirement Plans.......................................... 39,531
------------
Total Liabilities................................................................. 3,053,199
------------
Net Assets.......................................................................... $274,063,917
============
Net Assets Consist of:
Capital............................................................................. $209,367,174
Net Unrealized Appreciation on Securities........................................... 26,931,817
Accumulated Net Realized Gain on Securities......................................... 38,644,391
Accumulated Distributions in Excess of Net Investment Income........................ (879,465)
------------
Net Assets.......................................................................... $274,063,917
============
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share
(Based on net assets of $136,924,605 and 8,645,220
shares of beneficial interest issued and outstanding............................ $ 15.84
Maximum sales charge (5.75%* of offering price)................................... .97
------------
Maximum offering price to public.................................................. $ 16.81
============
Class B Shares:
Net asset value and offering price per share (Based on net assets of $124,096,728
and 8,101,269 shares of beneficial interest issued and outstanding)............. $ 15.32
============
Class C Shares:
Net asset value and offering price per share (Based on net assets of $13,042,584
and 843,377 shares of beneficial interest issued and outstanding)............... $ 15.46
============
</TABLE>

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

See Notes to Financial Statements
B-52

<PAGE> 171

Statement of Operations

For the Year Ended May 31, 1997
<TABLE>
<CAPTION>
======================================================================================
<S> <C>
Investment Income:
Dividends (Net of foreign withholding taxes of $283,517)................. $ 3,102,509
Interest (Net of foreign withholding taxes of $132)...................... 732,388
-----------
Total Income............................................................ 3,834,897
-----------
Expenses:
Investment Advisory Fee.................................................. 2,342,104
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C
of $296,505, $1,048,239 and $107,844, respectively)..................... 1,452,588
Shareholder Services..................................................... 1,224,045
Custody.................................................................. 425,755
Legal.................................................................... 18,378
Trustees Fees and Expenses............................................... 11,611
Amortization of Organizational Expenses.................................. 1,964
Other.................................................................... 319,443
-----------
Total Expenses.......................................................... 5,795,888
Less Expenses Reimbursed................................................ 8,800
-----------
Net Expenses............................................................ 5,787,088
-----------
Net Investment Loss..................................................... $(1,952,191)
===========
Realized and Unrealized Gain/Loss on Securities:
Realized Gain/Loss on Securities:
Investments............................................................. $39,309,793
Futures................................................................. 108,610
Foreign Currency Transactions........................................... 2,694,435
-----------
Net Realized Gain on Securities.......................................... 42,112,838
-----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period................................................. 27,741,970
-----------
End of the Period:
Investments............................................................ 26,000,053
Futures................................................................ (167,954)
Forward Currency Contracts............................................. 1,097,685
Foreign Currency Translation........................................... 2,033
-----------
26,931,817
-----------
Net Unrealized Depreciation on Securities During the Period.............. (810,153)
-----------
Net Realized and Unrealized Gain on Securities........................... $41,302,685
===========
Net Increase in Net Assets from Operations............................... $39,350,494
===========
</TABLE>
B-53 See Notes to Financial Statements

<PAGE> 172

Statement of Changes in Net Assets

For the Years Ended May 31, 1997 and 1996
<TABLE>
<CAPTION>
==============================================================================================
Year Ended Year Ended
May 31, 1997 May 31, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Loss........................................... $ (1,952,191) $ (1,152,058)
Net Realized Gain on Securities............................... 42,112,838 14,354,171
Net Unrealized Appreciation/Depreciation on Securities
During the Period............................................ (810,153) 18,388,865
------------- -------------
Change in Net Assets from Operations.......................... 39,350,494 31,590,978
------------- -------------
Distributions in Excess of Net Investment Income*............. (1,377,948) -0-
Distributions from Net Realized Gain on Securities*........... (6,599,826) (3,883,160)
------------- -------------
Total Distributions........................................... (7,977,774) (3,883,160)
------------- -------------
Net Change in Net Assets from Investment Activities........... 31,372,720 27,707,818
------------- -------------
From Capital Transactions:
Proceeds from Shares Sold..................................... 127,851,283 97,189,154
Net Asset Value of Shares Issued Through Dividend Reinvestment 7,550,550 3,650,871
Cost of Shares Repurchased.................................... (101,392,502) (51,230,990)
------------- -------------
Net Change in Net Assets from Capital Transactions............ 34,009,331 49,609,035
------------- -------------
Total Increase in Net Assets.................................. 65,382,051 77,316,853
Net Assets:
Beginning of the Period....................................... 208,681,866 131,365,013
------------- -------------
End of the Period (Including accumulated distributions in
excess of net investment income of $879,465 and
$297,886, respectively)...................................... $ 274,063,917 $208,681,866
============= =============
</TABLE>

<TABLE>
<CAPTION>
Year Ended Year Ended
*Distributions by Class May 31, 1997 May 31, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Distributions in Excess of Net Investment Income:
Class A Shares............................................... $ (1,133,880) $ -0-
Class B Shares............................................... (221,577) -0-
Class C Shares............................................... (22,491) -0-
------------- -------------
$ (1,377,948) $ -0-
============= =============
Distributions from Net Realized Gain on Securities:
Class A Shares............................................... $ (3,319,275) $ (1,775,643)
Class B Shares............................................... (2,976,985) (1,920,148)
Class C Shares............................................... (303,566) (187,369)
------------- -------------
$ (6,599,826) $ (3,883,160)
============= =============
</TABLE>
See Notes to Financial Statements
B-54

<PAGE> 173

Financial Highlights

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
================================================================================
<TABLE>
<CAPTION>
Year Ended May 31,
--------------------------------------------------
Class A Shares 1997 1996(a) 1995(a) 1994 1993(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period................. $ 13.98 $11.79 $11.67 $ 10.76 $10.44
------- ------ ------ ------- ------
Net Investment Loss.................................... (.064) (.04) (.04) (.06) (.055)
Net Realized and Unrealized Gain on
Securities............................................ 2.460 2.561 .42 1.0125 .7775
------- ------ ------ ------- ------
Total from Investment Operations......................... 2.396 2.521 .38 .9525 .7225
------- ------ ------ ------- ------
Less:
Distributions in Excess of Net Investment Income....... .137 -0- -0- -0- -0-
Distributions from and in excess of Net
Realized Gain on Securities........................... .401 .331 .26 .0425 .4025
------- ------ ------ ------- ------
Total Distributions...................................... .538 .331 .26 .0425 .4025
------- ------ ------ ------- ------
Net Asset Value, End of the Period....................... $15.838 $13.98 $11.79 $ 11.67 $10.76
======= ====== ====== ======= ======
Total Return (b)......................................... 17.67% 21.85% 3.36% 9.17% 7.13%
Net Assets at End of the Period (In millions)............ $ 136.9 $106.7 $ 60.1 $ 41.8 $ 12.7
Ratio of Expenses to Average Net Assets (c).............. 2.09% 2.22% 2.29% 2.46% 2.93%
Ratio of Net Investment Loss to Average Net
Assets (c)............................................. (.46%) (.30%) (.35%) (.46%) (.57%)
Portfolio Turnover....................................... 144% 94% 120% 116% 120%
Average Commission Rate per Equity Share
Traded (d)............................................. $ .0206 $.0199 -- -- --
</TABLE>

(a) Based on average month-end 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) For the year ended May 31, 1993, the Ratios of Expenses and Net Investment
Loss to Average Net Assets would have been 3.28% and (.92%), respectively,
had VKAC not reimbursed certain expenses of the Fund. The impact on the
Ratios due to VKAC's reimbursement of certain expenses for other periods
presented was less than 0.01%.

B-55 See Notes to Financial Statements

<PAGE> 174

Financial Highlights (Continued)

Distributions in Excess of Net Investment Income........... .030 -0- -0- -0- -0-
Distributions from and in Excess of Net
Realized Gain on Securities.............................. .401 .331 .26 .0425 .4025
------- ------ ------ ------ ------
Total Distributions.......................................... .431 .331 .26 .0425 .4025
------- ------ ------ ------ ------
Net Asset Value, End of the Period........................... $15.318 $13.53 $11.50 $11.48 $10.67
======= ====== ====== ====== ======
Total Return (b)............................................. 16.83% 20.90% 2.62% 8.21% 6.15%
Net Assets at End of the Period (In millions)................ $124.1 $ 92.8 $ 64.7 $ 48.8 $ 6.9
Ratio of Expenses to Average Net Assets (c).................. 2.86% 2.99% 3.05% 3.21% 3.88%
Ratio of Net Investment Loss to Average Net
Assets (c)................................................. (1.22%) (1.11%) (1.11%) (1.19%) (1.41%)
Portfolio Turnover........................................... 144% 94% 120% 116% 120%
Average Commission Rate per Equity Share
Traded (d)................................................. $ .0206 $.0199 -- -- --
</TABLE>

(a) Based on average month-end 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) For the year ended May 31, 1993, the Ratios of Expenses and Net Investment
Loss to Average Net Assets would have been 4.50% and (2.02%), respectively,
had VKAC not reimbursed certain expenses of the Fund. The impact on the
Ratios due to VKAC's reimbursement of certain expenses for the other
periods presented was less than 0.01%.

B-56 See Notes to Financial Statements

<PAGE> 175

Financial Highlights (Continued)
<TABLE>
<CAPTION>
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.

=========================================================================================================
June 21, 1993
Year Ended May 31, (Commencement
-------------------------------- of Distribution)
Class C Shares 1997 1996(a) 1995(a) to May 31, 1994(a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................................... $ 13.66 $ 11.61 $ 11.59 $ 10.29
------- ------- ------- --------
Net Investment Loss.......................... (.137) (.14) (.13) (.13)
Net Realized and Unrealized
Gain on Securities......................... 2.372 2.521 .41 1.4725
------- ------- ------- --------
Total from Investment Operations............... 2.235 2.381 .28 1.3425
------- ------- ------- --------
Less:
Distributions in Excess of Net
Investment Income.......................... .030 -0- -0- -0-
Distributions from and in Excess of
Net Realized Gain on Securities............ .401 .331 .26 .0425
------- ------- ------- --------
Total Distributions............................ .431 .331 .26 .0425
------- ------- ------- --------
Net Asset Value, End of the Period............. $15.464 $ 13.66 $ 11.61 $ 11.59
======= ======= ======= ========
Total Return (b)............................... 16.82% 20.87% 2.60% 13.06%*
Net Assets at End of the Period
(In millions)................................ $ 13.0 $ 9.2 $ 6.6 $ 5.1
Ratio of Expenses to Average
Net Assets (c)............................... 2.87% 3.00% 3.05% 3.21%
Ratio of Net Investment Loss
to Average Net Assets (c).................... (1.23%) (1.10%) (1.13%) (1.15%)
Portfolio Turnover............................. 144% 94% 120% 116%
Average Commission Rate per
Equity Share Traded (d)...................... $ .0206 $ .0199 -- --
</TABLE>

*Non-Annualized

(a) Based on average month-end 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 impact on the Ratios of Expenses and Net Investment Loss to Average Net
Assets due to VKAC's reimbursement of certain expenses was less than 0.01%.

B-57 See Notes to Financial Statements

<PAGE> 176

- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
May 31, 1997
================================================================================

1. Significant Accounting Policies
Van Kampen American Capital Global Equity Fund (the "Fund") is organized as a
series of Van Kampen American Capital World Portfolio Series 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 long-term growth of capital by
investing in an internationally diversified portfolio of equity securities.
Investments in foreign securities involve certain risks not ordinarily
associated with investments in securities of domestic issuers, including
fluctuations in foreign exchange rates, future political and economic
developments, and the possible imposition of exchange controls or other foreign
governmental laws or restrictions. The Fund commenced investment operations on
August 5, 1991. The distribution of the Fund's Class B and Class C shares
commenced on November 15, 1991 and June 21, 1993, respectively.

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

A. Security Valuation--Investments in securities listed on a securities
exchange are valued at 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 last bid price. Fixed income
investments are stated at value using market quotations. 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 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 American Capital Asset Management, Inc. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securi-

B-58

<PAGE> 177

- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
May 31, 1997
================================================================================

ties 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. Investment Income--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Original issue discount is
amortized over the life of each applicable security. Premiums on debt
securities are not amortized. Market discounts are recognized at the time of
sale as realized gains for book purposes and ordinary income for tax purposes.

D. Currency Translation--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated into
U.S. dollars based on quoted exchange rates as of noon Eastern Time. Purchases
and sales of portfolio securities are translated at the rate of exchange
prevailing when such securities were acquired or sold. Income and expenses are
translated at rates prevailing when accrued. Gains and losses on the sale of
securities are not segregated for financial reporting purposes between amounts
arising from changes in exchange rates and amounts arising from changes in the
market prices of securities. Realized gain and loss on foreign currency
includes the net realized amount from the sale of currency and the amount
realized between trade date and settlement date on security transactions.

E. Organizational Expenses--The Fund has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred
in connection with the Fund's organization in the amount of approximately
$75,000. These costs were amortized over the 60 month period ended September
30, 1996.

F. 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 May 31, 1997, for federal income tax purposes, cost of long- and short-
term investments is $242,822,509; the aggregate gross unrealized appreciation
is $31,431,024 and the aggregate gross unrealized depreciation is $4,953,516,
resulting in net unrealized appreciation on investments, futures, forward
currency contracts and foreign currency of $26,477,508.

G. Distribution of Income and Gains--The Fund declares and pays dividends
annually from net investment income and from net realized gains on securities,
if any. Net investment income for federal income tax purposes includes gains
and losses realized on transactions in foreign cur-

B-59

<PAGE> 178

rencies. These realized gains and losses are included as net realized gains or
losses for financial reporting 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, the following permanent differences between book
and tax basis reporting for the 1997 fiscal year have been identified and
appropriately reclassified as follows:
Accumulated Undistributed Net Investment Income.... $ 2,748,560(a)(b)(c)
Accumulated Net Realized Gain/Loss on Securities... $(2,679,453)(a)(b)
Capital $ (69,107)(c)

(a) Represents $2,694,435 of realized gains and losses on transactions in
foreign currencies which are included as ordinary income for federal
income tax purposes. These realized gains and losses are included in net
realized gain/loss on securities for financial reporting purposes.

(b) Represents $14,982 of capital gains tax paid on a foreign equity security.
This item is recognized as an expense for federal income tax purposes but
as a component of realized loss for book purposes.

(c) Represents $69,107 of expenses recognized for financial reporting
purposes, but which are not deductible for federal income tax purposes.

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.
Investment advisory fees are calculated monthly, based on the average daily net
assets of the Fund at the annual rate of 1.00%. On April 1, 1997, the Adviser
entered into a subadvisory agreement with Morgan Stanley Asset Management Inc.
(the "Subadviser") to provide advisory services to the Fund and the Adviser
with respect to the Fund's investments. Prior to April 1, 1997, the Fund's
Subadviser was John Govett & Co., Ltd. The Adviser pays 50% of its investment
advisory fee to the Subadviser.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom
(Illinois), counsel to the Fund, of which a trustee of the Fund is an affiliated
person.
For the year ended May 31, 1997, the Fund recognized expenses of
approximately $25,800 representing VKAC's cost of providing accounting services
to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended May
31, 1997, the Fund recognized expenses of approximately $1,045,500,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Additionally, for the year ended May 31, 1997, the Fund paid VKAC
approximately $70,200 related to the direct cost of consolidating the VKAC
open-end fund complex. Payment was contingent upon the realization by the Fund
of cost efficiencies in shareholder services resulting from the consolidation.

B-60

<PAGE> 179

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================

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

The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. 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 equal to $2,500. The Adviser reimbursed
the fund for these Plan expenses for the calendar year 1996.

For the year ended May 31, 1997, the Fund paid brokerage commissions to
Morgan Stanley Group Inc. of $8,633.

At the end of the period, the Fund owned the following Morgan Stanley
Funds which were managed by the Subadviser:
<TABLE>
<CAPTION>
Transactions During the Period
------------------------------
% of Cost of Proceeds
Net Assets Purchases of Sales
======================================================================================================
<S> <C> <C> <C>
Latin America Discovery Fund, Inc................................ 1.07% $2,468,695 $0
Morgan Stanley Asia Pacific Fund, Inc............................ 1.15% $2,965,000 $0
Morgan Stanley India Investment Fund............................. 0.71% $1,849,666 $0
</TABLE>
At May 31, 1997, VKAC owned 53,680 Class A shares of the Fund.

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 May 31, 1997, capital aggregated $103,173,521, $95,878,421 and
$10,315,232 for Classes A, B and C, respectively. For the year ended May 31,
1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
======================================================================
Sales:
<S> <C> <C>
Class A................................... 6,134,539 $ 89,228,576
Class B................................... 2,431,724 34,006,661
Class C................................... 326,525 4,616,046
--------- ------------
Total Sales.................................... 8,892,788 $127,851,283
========= ============
Dividend Reinvestment:
Class A................................... 304,883 $ 4,257,239
Class B................................... 221,179 2,997,101
Class C................................... 21,652 296,210
--------- ------------
Total Dividend Reinvestment.................... 547,714 $ 7,550,550
========= ============
</TABLE>

B-61

<PAGE> 180

Class A.................... (5,426,393) $ (79,299,631)
Class B.................... (1,408,797) (19,584,581)
Class C.................... (176,672) (2,508,290)
---------- -------------
Total Repurchases............... (7,011,862) $(101,392,502)
========== =============
</TABLE>

At May 31, 1996, capital aggregated $89,022,332, $78,490,170 and
$7,914,448 for Classes A, B and C, respectively. For the year ended May 31,
1996, transactions were as follows:

<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................... 4,966,925 $ 63,861,473
Class B.................... 2,370,872 29,925,908
Class C.................... 268,622 3,401,773
--------- -------------
Total Sales..................... 7,606,419 $ 97,189,154
========= =============
Dividend Reinvestment:
Class A.................... 136,185 $ 1,683,743
Class B.................... 150,464 1,807,274
Class C.................... 13,189 159,854
--------- -------------
Total Dividend Reinvestment..... 299,838 $ 3,650,871
========= =============
Repurchases:
Class A.................... (2,565,199) $ (32,888,196)
Class B.................... (1,288,844) (16,089,389)
Class C.................... (181,673) (2,253,405)
--------- -------------
Total Repurchases............... (4,035,716) $ (51,230,990)
========= =============
</TABLE>

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

B-62

<PAGE> 181

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================
<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 year ended May 31, 1997, VKAC, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$87,000 and CDSC on the redeemed shares of approximately $174,500. Sales
charges do not represent expenses of the Fund.

4. Investment Transactions
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $338,593,160 and
$315,447,959, 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, manage the portfolio's effective yield, foreign currency
exposure, 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 on securities.
Upon disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures or forward contract. In this
instance, the recognition of gain or loss is postponed until the disposal of the
security underlying the futures or forward contract.

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

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

Upon entering into future 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

B-63

<PAGE> 182

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================
the futures contract is open, payments are received from or made to the broker
based upon changes in the value of the contract (the variation margin).

Transactions in futures contracts for the year ended May 31, 1997, were as
follows:
<TABLE>
<CAPTION>
Contracts
===============================================================================
<S> <C>
Outstanding at May 31, 1996........................................... 0
Futures Opened........................................................ 50
Futures Closed........................................................ (25)
----
Outstanding at May 31, 1997........................................... 25
====
</TABLE>
The futures contracts outstanding as of May 31, 1997, and the description
and unrealized depreciation are as follows:

<TABLE>
<CAPTION>
Unrealized
Contracts Depreciation
===============================================================================
<S> <C> <C>
Long June 1997 CAC 40 Index Future Contracts
(Current Notional Value of $513,400 per contract).... 25 $167,954
==== ========
</TABLE>

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

At May 31, 1997, the Fund has outstanding forward currency contracts as
follows:
<TABLE>
<CAPTION>
Unrealized
Original Current Appreciation/
Description Value Value Depreciation
================================================================================
<S> <C> <C> <C>
Long Contracts
British Pound Sterling,
2,667,912 expiring 07/16/97...........$ 4,354,032 $ 4,359,896 $ 5,864
German Mark,
5,700,500 expiring 07/30/97........... 3,310,203 3,349,994 39,791
Japanese Yen,
1,816,065,372 expiring
07/18/97-01/26/98..................... 14,909,244 16,033,345 1,124,101
</TABLE>

B-64

<PAGE> 183

Notes to Financial Statements (Continued)

May 31, 1997
===============================================================================
<TABLE>
<CAPTION>
Unrealized
Original Current Appreciation/
Description Value Value Depreciation

=================================================================================
Long Contracts (Continued)
<S> <C> <C> <C>
Swiss Franc,
2,783,100 expiring 08/18/97......... $ 2,000,000 $ 1,985,189 $ (14,811)
Short Contracts
British Pound Sterling,
2,667,912 expiring 07/16/97......... 4,000,000 4,359,896 (359,896)
German Mark,
11,401,560 expiring 07/30/97........ 6,900,000 6,700,316 199,684
French Franc,
45,948,432 expiring 09/15/97........ 8,108,356 8,009,107 99,249
Japanese Yen,
2,740,235,772 expiring
07/18/97-01/26/98................... 24,141,822 24,082,060 59,762
Netherlands Guilder,
3,454,320 expiring 08/18/97......... 1,820,267 1,806,622 13,645
Spanish Peseta,
375,238,689 expiring 06/13/97....... 2,624,636 2,595,994 28,642
Swiss Franc,
7,721,085 expiring 08/18/97......... 5,409,115 5,507,461 (98,346)
----------
$1,097,685
==========
</TABLE>

6. Distribution and Service Plans

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

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these
fees for the year ended May 31, 1997, are payments to VKAC of approximately
$908,900.

B-65

<PAGE> 184

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND

Van Kampen American Global Government Securities Fund (the "Fund") is a
separate, non-diversified series of Van Kampen American Capital World Portfolio
Series Trust (the "Trust"), an open-end management investment company. 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 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 American Capital Distributors, Inc. at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or (800) 421-5666.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information......................................... B-2
Investment Policies and Techniques.......................... B-2
Options, Futures Contracts and Related Options.............. B-3
Repurchase Agreements....................................... B-11
Loans of Portfolio Securities............................... B-11
Investment Restrictions..................................... B-11
Trustees and Officers....................................... B-14
Legal Counsel............................................... B-21
Investment Advisory Agreements.............................. B-22
Distributor................................................. B-23
Distribution and Service Plans.............................. B-23
Transfer Agent.............................................. B-24
Portfolio Transactions and Brokerage........................ B-24
Determination of Net Asset Value............................ B-25
Purchase and Redemption of Shares........................... B-26
Exchange Privilege.......................................... B-28
Tax Status of the Fund...................................... B-29
Fund Performance............................................ B-29
Other Information........................................... B-30
Report of Independent Accountants........................... B-31
Financial Statements........................................ B-32
Notes to Financial Statements............................... B-39
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 28, 1997.

B-1
<PAGE> 185

GENERAL INFORMATION

Van Kampen American Capital World Portfolio Series Trust (the "Trust"),
formerly known as American Capital World Portfolio Series was originally
incorporated in Maryland on May 25, 1990. The Trust was reorganized under the
laws of the State of Delaware as a business trust and adopted its current name
as of August 31, 1995. The Trust is currently comprised of two series: Van
Kampen American Capital Global Government Securities Fund (the "Fund") and Van
Kampen American Capital Global Equity Fund.

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

As of September 15, 1997, no one person was known to own beneficially or to
hold of record 5% or more of the outstanding shares of any class of the Fund
except for those listed below:

<TABLE>
<CAPTION>
AMOUNT OF
OWNERSHIP AT
NAME AND ADDRESS SEPTEMBER 15, CLASS
OF HOLDER 1997 OF SHARES PERCENT OWNERSHIP
---------------- ------------- --------- -----------------
<S> <C> <C> <C>
Van Kampen American Capital Trust 669,133 A 21.43%
Company 1,335,886 B 18.49%
2800 Post Oak Blvd. 37,588 C 5.51%
Houston, TX 77056
AM Council on Education Inc. 63,627 C 9.33%
One DuPont Circle
Washington, DC 20036
MLPF&S For The Sole Benefit of 402,414 B 5.57%
its Customers 41,416 C 6.07%
Attn: Fund Administration
4800 Deer Lake Dr. E. 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>

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

INVESTMENT POLICIES AND TECHNIQUES

The Fund's primary investment objective is to seek to provide a high level
of current income. The Fund's secondary investment objectives are capital
appreciation and protection of principal. The Fund seeks to achieve its
investment objectives by investing primarily in an international portfolio of
high quality foreign and U.S. Government bonds and by managing the maturity
structure and currency exposure of its portfolio.

B-2
<PAGE> 186

DESCRIPTION OF BOND RATINGS

Moody's Investors Service, Inc. ("Moody's") rates the long-term debt
securities issued by various entities from "Aaa" to "C". High quality ratings
are as follows:

Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or 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 -- High quality by all standards. They are rated lower than the
best bond because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude,
or there may be other elements present which make the long-term risks
appear somewhat greater.

Standard & Poor's Ratings Group ("S&P") rates the long-term debt securities
of various entities in categories ranging from "AAA" to "D" according to
quality. High quality ratings are as follows:

AAA -- Highest rating. Capacity to pay interest and repay principal
is extremely strong.

AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.

COMMERCIAL PAPER RATINGS

Moody's employs the designations "Prime-1," "Prime-2" and "Prime-3" to
indicate commercial paper having the highest capacity for timely repayment.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory 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, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

S&P ratings of commercial paper are graded into four categories ranging
from "A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+) sign designation.
A-2 -- Capacity for timely payments on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".

OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS

WRITING CALL AND PUT OPTIONS

B-3
<PAGE> 187

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

Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously written by the Fund. The Fund would realize a
gain (loss) if the premium plus commission paid in the closing purchase
transaction is less (greater) than the premium it received on the sale of the
option. The Fund would also realize a gain if an option it has written lapses
unexercised.

The Fund could write options that are listed on an exchange as well as
options which are privately negotiated in over-the-counter transactions. The
Fund could close out its position as a writer of an option only if a liquid
secondary market exists for options of that series, but there is no assurance
that such a market will exist, particularly in the case of over-the-counter
options, since they can be closed out only with the other party to the
transaction. Alternatively, the Fund could purchase an offsetting option, which
would not close out its position as a writer, but would provide an asset of
equal value to its obligation under the option written. If the Fund is not able
to enter into a closing purchase transaction or to purchase an offsetting option
with respect to an option it has written, it will be required to maintain the
securities subject to the call or the collateral underlying the put until a
closing purchase transaction can be entered into (or the option is exercised or
expires), even though it might not be advantageous to do so.

The exercise price of call options may be below ("in-the-money"), equal to
("at-the-money"), or above ("out-of-the-money") the current market value of the
underlying securities or futures contracts at the time the options are written.
The converse applies to put options.

PURCHASING CALL AND PUT OPTIONS

B-4
<PAGE> 188

The Fund may be purchased either listed or over-the-counter options.

FUTURES CONTRACTS

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

The Fund may enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or contracts based on
financial indices including any index of U.S. Government Securities, Foreign
Government Securities or corporate debt securities. U.S. futures contracts have
been designed by exchanges which have been designated "contracts markets" by the
CFTC, and must be executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market. Futures contracts trade
on a number of exchange markets, and, through their clearing corporations, the
exchanges guarantee performance of the contracts as between the clearing members
of the exchange. The Fund may enter into futures contracts which are based on
debt securities that are backed by the full faith and credit of the U.S.
Government, such as long-term U.S. Treasury Bonds, Treasury Notes, Government
National Mortgage Association modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. The Fund may also enter into futures
contracts which are based on bonds issued by entities other than the U.S.
Government.

Initial and Variation Margin. In contrast to the purchase or sale of a
security, no price is paid or received upon the purchase or sale or a futures
contract. Initially, the Fund is required to deposit with its Custodian in an
account in the broker's name an amount of cash or liquid securities equal to a
percentage (which may range upward from 5%) of the contract amount. This amount
is known as initial margin. The nature of initial margin in futures transactions
is different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transaction. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract, which is returned to the
Fund upon termination of the futures contract and satisfaction of its
contractual obligations. Subsequent payments to and from the broker, called
variation margin, are made on a daily basis as the price of the underlying
securities or index fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as marking to market.

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

B-5
<PAGE> 189

be terminated by offsetting sales. The Fund may sell futures contracts in
anticipation of or in a general market or market sector decline that may
adversely affect the market value of the Fund's securities ("defensive hedge").
To the extent that the Fund's portfolio of securities changes in value in
correlation with the underlying security or index, the sale of futures contracts
substantially reduces the risk to the Fund of a market decline and, by so doing,
provides an alternative to the liquidation of securities positions in the Fund
with attendant transaction costs.

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

There may be an imperfect correlation (or no correlation) between movements
in the price of the futures contracts and of the securities being hedged. The
risk of imperfect correlation increases as the composition of the securities
being hedged diverges from the securities, currency or index, upon which the
futures contract is based. If the price of the futures contract moves less than
the price of the securities being hedged, the hedge will not be fully effective.
To compensate for the imperfect correlation, the Fund could buy or sell futures
contracts in a greater (lesser) dollar amount than the dollar amount of
securities being hedged if the historical volatility of the securities being
hedged is greater (lesser) than the historical volatility of the securities,
currency or index, underlying the futures contract. It is also possible that the
value of futures contracts held by the Fund could decline at the same time as
portfolio securities being hedged; if this occurred, the Fund would lose money
on the futures contract in addition to suffering a decline in value in the
portfolio securities being hedged.

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

Successful use of futures is also subject to the Adviser's ability to
correctly predict the direction of movements in the market. For example, if the
Fund hedges against a rise in interest rates, and interest rates instead fall,
the Fund will lose part or all of the benefit of the increase in value of its
securities holdings

B-6
<PAGE> 190

because it will have offsetting losses in futures contracts. In such cases, if
the Fund has insufficient cash, it may have to sell portfolio securities at a
time when it is disadvantageous to do so in order to meet the daily variation
margin.

Although the Fund intends to enter into futures contracts only if there is
an active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time. Most U.S. futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. It is possible that futures contract prices would move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
traders to substantial losses. In such event, and in the event of adverse price
movements, the Fund would be required to make daily cash payments of variation
margin. In such circumstances, an increase in the value of the portion of the
portfolio being hedged, if any, may partially or completely offset losses on the
futures contract. However, as described in the Prospectus, there is no guarantee
that the price of the securities being hedged will, in fact, correlate with the
price movements in a futures contract and thus provide an offset to losses on
the futures contract.

The Fund will not enter into a futures contract or related option (except
for closing transactions) for other than for 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 Fund's fundamental investment
restrictions or certain state securities laws to which the Fund may be subject
may further restrict the Fund's ability to engage in transactions in futures
contracts and related options.

OPTIONS ON FUTURES CONTRACTS

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

RISKS OF TRANSACTIONS IN OPTIONS ON FUTURES CONTRACTS

B-7
<PAGE> 191

ADDITIONAL RISKS OF OPTIONS AND FUTURES TRANSACTIONS

FORWARD COMMITMENTS

Relative to a Forward Commitment purchase, the Fund maintains a segregated
account (which is marked to market daily) of cash or liquid securities (which
may have maturities which are longer than the term of the Forward Commitment)
with the Fund's custodian in an aggregate amount equal to the amount of its
commitment as long as the obligation to purchase continues. Since the market
value of both the securities or currency subject to the Forward Commitment and
the securities or currency held in the segregated account may fluctuate, the use
of Forward Commitments may magnify the impact of interest rate changes on the
Fund's net asset value.

A Forward Commitment sale is covered if the Fund owns or has the right to
acquire the underlying securities or currency subject to the Forward Commitment.
A Forward Commitment sale is for cross-hedging purposes if it is not covered,
but is designed to provide a hedge against a decline in value of a security or
currency which the Fund owns or has the right to acquire. In either
circumstance, the Fund maintains in a segregated account (which is marked to
market daily) either the security or currency covered by the Forward Commitment
or cash or liquid securities (which may have maturities which are longer than
the term of the Forward Commitment) with the Fund's custodian in an aggregate
amount equal to the amount of its commitment as long as the obligation to sell
continues. By entering into a Forward Commitment sale transaction, the Fund
forgoes or reduces the potential for both gain and loss in the holding which is
being hedged by the Forward Commitment sale.

RISK FACTORS APPLICABLE TO OPTIONS ON U.S. GOVERNMENT SECURITIES

Treasury Bonds and Notes. Because trading interest in options written on
Treasury bonds and notes tends to center on the most recently auctioned issues,
the exchanges will not continue indefinitely to introduce options with new
expirations to replace expiring options on particular issues. Instead, the
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run their course, with the possible addition of a
limited number of new expirations as the original ones expire. Options trading
on each issue of bonds or notes will thus be phased out as new options are
listed on more recent issues, and options representing a full range of
expirations will not ordinarily be available for every issue on which options
are traded.

Treasury Bills. Because the deliverable Treasury bill changes from week to
week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Fund holds a long position in Treasury
bills with a principal amount of the securities deliverable upon exercise of the
option, the position may be hedged from a risk standpoint by the writing of a
call option. For so long as the call option is outstanding, the Fund will hold
the Treasury bills in a segregated account with its Custodian so that it will be
treated as being covered.

Mortgage-Related Securities. The following risk factors will be applicable
to options on mortgage-related securities. Currently such options are only
traded over-the-counter. Since the remaining principal balance of a
mortgage-related security declines each month as a result of mortgage payments,
the Fund as a writer of a mortgage-related call holding mortgage-related
securities as "cover" to satisfy its delivery obligation in the event of
exercise may find that the mortgage-related securities it holds no longer have a
sufficient remaining principal balance for this purpose.

B-8
<PAGE> 192

OPTIONS ON FOREIGN CURRENCIES

The Fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that in which forward contracts or futures
contracts on foreign currencies will be utilized. For example, a decline in the
dollar value of a foreign currency in which portfolio dollar value of a foreign
currency in which portfolio securities are denominated will reduce the dollar
value of such securities, even if their value in the foreign currency remains
constant. In order to protect against such diminutions in the value of portfolio
securities, the Fund may purchase put options on the foreign currency. If the
value of the currency does decline, the Fund will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.

The Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where the Fund anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forego all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.

The Fund intends to write covered call options on foreign currencies. A
call option written on a foreign currency by the Fund is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by its Custodian) upon conversion or exchange of other foreign currency held in
its portfolio. A call option is also covered if the Fund has a call on the same
foreign currency and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the exercise price
of the call written or (b) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash or liquid securities
in a segregated account with its Custodian.

The value of foreign currency option is dependent upon the value of the
underlying foreign currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or both
currencies and has no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the interbank
market (conducted directly between currency traders, usually large commercial
banks, and their customers) involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million for the underlying foreign currencies at
prices that are less favorable than for round lots.

B-9
<PAGE> 193

The Fund also intends to write call options on foreign currencies that are
not covered for cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is not covered, but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the currency
underlying the option due to an adverse change in the exchange rate. In such
circumstances, the Fund collateralizes the option by maintaining in a segregated
account with the Fund's Custodian, cash or liquid securities in an amount not
less than the value of the underlying foreign currency in U.S. dollars marked to
market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS AND OPTIONS
ON FOREIGN CURRENCIES

Unlike transactions entered into by the Fund in futures contracts, options
on foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) by the Securities and Exchange Commission ("SEC"). To the contrary,
such instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. Similarly, options on
currencies may be traded over-the-counter. In an over-the-counter trading
environment, many of the protections afforded to exchange participants will not
be available. For example, there are no daily price fluctuation limits, and
adverse market movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, the option writer and a trader of forward contracts could
lose amounts substantially in excess of their initial investments, due to the
margin and collateral requirements associated with such positions.

Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting the Fund
to liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions, on exercise.

B-10
<PAGE> 194

In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political 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
nonbusiness 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) lesser trading volume.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with domestic or foreign
banks or broker-dealers deemed to be creditworthy by the Adviser under
guidelines approved by the Board of Trustees. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a debt security and the seller agrees to repurchase the obligation at a
future time and set price, usually not more than seven days from the date of
purchase, thereby determining the yield during the purchaser's holding period.
Repurchase agreements are fully collateralized by the underlying debt securities
and are considered to be loans under the Investment Company Act of 1940, as
amended ("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 securities unless the seller defaults under its repurchase
obligation. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and loss 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. See "Investment
Practices -- Repurchase Agreements" in the Prospectus for further information.

LOANS OF PORTFOLIO SECURITIES

The Fund may lend portfolio securities to unaffiliated brokers, dealers and
financial institutions provided that cash or liquid securities equal in value to
100% of the market value of the securities loaned is deposited by the borrower
with the Fund and is marked to market daily. While such securities are on loan,
the borrower is required to pay the Fund any income accruing thereon.
Furthermore, the Fund may invest the cash collateral in portfolio securities
thereby increasing the return to the Fund as well as increasing the market risk
to the Fund. The Fund will not lend its portfolio securities if such loans are
not permitted by the laws or regulations of any state in which its shares are
qualified for sale. However, should the Fund believe that lending securities is
in the best interests of its shareholders, it would consider withdrawing it
shares from sale in any such state.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions which may not be changed
without approval by the vote of a majority of its outstanding voting shares,
which is defined by the 1940 Act as the lesser of (i) 67% or more of the voting
securities present at the 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 outstanding voting

B-11
<PAGE> 195

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. Engage in the underwriting of securities of other issuers, except that
the Fund may sell an investment position even though it may be deemed
to be an underwriter under the federal securities laws.

2. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would then be invested in a
single industry except that, if the value of securities owned by the
Fund with remaining maturities of less than 13 months exceeds 35% of
the value of the Fund's total assets, the Fund will invest at least 25%
of its assets in securities issued by banks. Although this policy is
not applicable to securities issued by government or political
subdivisions because such issues are not members of any industry, the
Fund does not intend to invest more than 25% of its total assets in the
securities issued or guaranteed by any government (except U.S.
Government, its agencies or instrumentalities).

3. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of
its net assets, or pledge more than 10% of its net assets in connection
with permissible borrowings or purchase additional securities when
money borrowed exceeds five percent of its net assets. Margin deposits
or payments in connection with the writing of options, or in connection
with the purchase or sale of forward contracts, futures, foreign
currency futures and related options, are not deemed to be a pledge or
other encumbrance.

4. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend
securities in an amount exceeding 15% of the total assets of the Fund.
The purchase of a portion of an issue of securities described under (i)
above distributed publicly, whether or not the purchase is made on the
original issuance, is not considered the making of a loan.

5. Make short sales of securities, unless at the time of the sale it owns
or has the right to acquire an equal amount of such securities;
provided that this prohibition does not apply to the writing of options
or the sale of forward contracts, futures, foreign currency futures or
related options.

6. Purchase securities on margin but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with forward contracts, futures,
foreign currency futures or related options is not considered the
purchase of a security on margin.

7. Buy or sell real estate or interests in real estate including real
estate limited partnerships, provided that the foregoing prohibition
does not apply to a purchase and sale of publicly traded (i) securities
which are secured by real estate, (ii) securities representing
interests in real estate, and (iii) securities of companies principally
engaged in investing or dealing in real estate.

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

9. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related
options including foreign currency futures contracts and related
options and forward contracts.

10. Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (i) making
and collateralizing any permitted borrowings, (ii) making any permitted
loans of its portfolio securities or (iii) entering into repurchase
agreements, utilizing options, futures contracts, options on futures
contracts, forward contracts, forward commitments and

B-12
<PAGE> 196

other investment strategies and instruments that would be considered
"senior securities" but for the maintenance by the Fund of a segregated
account with its custodian or some other form of "cover".

11. Write, purchase or sell puts, calls or combinations thereof, except
that the Fund may (a) write covered or fully collateralized call
options, write secured put options, and enter into closing or
offsetting purchase transactions with respect to such options, (b)
purchase and sell options to the extent that the premiums paid for all
such options owned at any time do not exceed ten percent of its total
assets and (c) engage in transactions in interest rate futures
contracts and related options provided that such transactions are
entered into for bona fide hedging purposes (or that the underlying
commodity value of the Fund's long positions do not exceed the sum of
certain identified liquid investments as specified in CFTC
regulations), provided further that the aggregate initial margin and
premiums do not exceed 5% of the fair market value of the Fund's total
assets, and provided further that the Fund may not enter into net
aggregate long and short futures contracts or related options if more
than 50% of the Fund's total assets would be so invested.

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

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

3. The Fund may not invest in securities of any company if any officer or
trustee of the Trust or of the Adviser owns more than 1/2 of 1% of the
outstanding securities of such company, and such officers and trustees
who own more than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.

6. The Fund may not purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets (taken at current value) would
be invested in securities that are illiquid by virtue of the absence of
a readily available market. This policy includes repurchase agreements
maturing in more than seven days and over-the-counter options held by
the Fund and that portion of assets used to cover such options. This
policy does not apply to restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1993 Act")
which the Trustees or the Adviser under Board approved guidelines, may
determine are liquid nor does it apply to other securities for which,
notwithstanding legal or contractual restrictions on resale, a liquid
market exists. Also excluded from this limitation on restricted
securities are securities purchased by the Fund issued by other
investment companies to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated by
the SEC under the 1940 Act, as amended from time to time, or (iii) an
exemption or other relief from the provisions of the 1940 Act.

B-13
<PAGE> 197

TRUSTEES AND OFFICERS

TRUSTEES

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

</TABLE>

B-14
<PAGE> 198

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President, Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President, Nelson Ivest Brokerage Services Inc.,
Date of Birth: 02/13/36 a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors
Protection Corp. ("SIPC"). Trustee/Director of each of
the funds in the Fund Complex.
Jerome L. Robinson........................ President, Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director, Pacesetter Software, a software
Date of Birth: 10/10/22 programming company specializing in white collar
productivity. Director, Panasia Bank. Trustee/Director of
each of the funds in the Fund Complex.
Phillip B. Rooney......................... Vice Chairman and Director of The Servicemaster Company,
One ServiceMaster Way a business and consumer services company. Director of
Downers Grove, IL 60515 Illinois Tool Works, Inc., a manufacturing company; the
Date of Birth: 07/08/44 Urban Shopping Centers Inc., a retail mall management
company; and Stone Container Corp., a paper manufacturing
company. Trustee, University of Notre Dame. Formerly,
President and Chief Executive Officer, Waste Management
Inc., an environmental services company, and prior to
that President and Chief Operating Officer, Waste
Management Inc. Trustee/Director of each of the funds in
the Fund Complex.
Fernando Sisto............................ Professor Emeritus and, prior to 1995, Dean of the
155 Hickory Lane Graduate School, Stevens Institute of Technology.
Closter, NJ 07624 Director, Dynalysis of Princeton, a firm engaged in
Date of Birth: 08/02/24 engineering research. Trustee/Director of each of the
funds in the Fund Complex.
Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom (Illinois), legal counsel to the funds in the Fund
Chicago, IL 60606 Complex, open-end funds advised by Van Kampen American
Date of Birth: 08/22/39 Capital Management, Inc. and closed-end funds advised by
Advisory Corp. Trustee/Director of each of the funds in
the Fund Complex, open-end funds advised by Van Kampen
American Capital Management, Inc. and closed-end funds
advised by Advisory Corp.
</TABLE>

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

B-15
<PAGE> 199

OFFICERS

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
Dennis J. McDonnell......... President President and a Director of VKAC.
Date of Birth: 05/20/42 President, Chief Operating Officer and a
Director of the Advisers. Director or
officer of certain other subsidiaries of
VKAC. Prior to November 1996, Executive
Vice President and a Director of VKAC
Holding. President of each of the funds in
the Fund Complex. President, Chairman of
the Board and Trustee of other investment
companies advised by the Advisers or their
affiliates.

B-16
<PAGE> 200
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
Don G. Powell Chairman, President, Chief Executive
2800 Post Oak Blvd. Officer and a Director of VKAC. Chairman,
Houston, TX 77056 Chief Executive Officer and a Director of
Date of Birth: 10/19/39 the Advisers and the Distributor. Chairman
and a Director of ACCESS. Director or
officer of certain other subsidiaries of
VKAC. Chairman of the Board of Governors
and the Executive Committee of the
Investment Company Institute. Prior to
November, 1996, President, Chief Executive
Officer and a Director of VKAC Holding.
President, Chief Executive Officer and a
Trustee/Director of certain investment
companies advised by Asset Management and
prior to July 1996, President, Chief
Executive Officer and a Trustee of the
funds in the Fund Complex and closed-end
investment companies advised by Advisory
Corp.

Paul R. Wolkenberg.......... Vice President Executive Vice President of the VKAC, the
Date of Birth: 11/10/44 Advisers and the Distributor. President,
Chief Executive Officer and a Director of
ACCESS. Director or officer of certain
other subsidiaries of VKAC. Vice President
of each of the funds in the Fund Complex
and certain other investment companies
advised by the Advisers or their
affiliates.

B-17
<PAGE> 201

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------- ----------------- ---------------------
<S> <C> <C>
Nicholas Dalmaso............. Assistant Secretary Vice President and Assistant Secretary of VKAC. Vice
Date of Birth: 03/01/65 President and Assistant Secretary of the Advisers and
the Distributor. Officer of certain other subsidiaries
of VKAC. Assistant Secretary of each of the funds in
the Fund Complex and other investment companies
advised by the Advisers or the affiliates.
Huey P. Falgout, Jr.......... Assistant Secretary Assistant Vice President and Senior Attorney of VKAC.
Date of Birth: 11/15/63 Assistant Vice President and Assistant Secretary of
the Advisers, the Distributor and ACCESS. Officer of
certain other subsidiaries of VKAC. Assistant
Secretary of each of the funds in the Fund Complex and
other investment companies advised by the Advisers or
the affiliates.
Scott E. Martin.............. Assistant Secretary Senior Vice President, Deputy General Counsel and
Date of Birth: 08/20/56 Assistant Secretary of VKAC. Senior Vice President,
Deputy General Counsel and Secretary of the Advisers,
the Distributor and ACCESS. Officer of certain other
subsidiaries of VKAC. Prior to November 1996, Senior
Vice President, Deputy General Counsel and Assistant
Secretary of VKAC Holding. Assistant Secretary of each
of the funds in the Fund Complex and other investment
companies advised by the Advisers or the affiliates.
Weston B. Wetherell.......... Assistant Secretary Vice President, Associate General Counsel and
Date of Birth: 06/15/56 Assistant Secretary of VKAC, the Advisers and the
Distributor. Officer of certain other subsidiaries of
VKAC. Assistant Secretary of each of the funds in the
Fund Complex and other investment companies advised by
the Advisers or the affiliates.
Steven M. Hill............... Assistant Treasurer Assistant Vice President of the Advisers. Assistant
Date of Birth: 10/16/64 Treasurer of each of the funds in the Fund Complex and
other investment companies advised by the Advisers or
the affiliates.
M. Robert Sullivan........... Assistant Controller Assistant Vice President of the Advisers. Assistant
Date of Birth: 03/30/33 Controller of each of the funds in the Fund Complex
and other investment companies advised by the Advisers
or the affiliates.
</TABLE>

B-18
<PAGE> 202

Non-Affiliated Trustees that provides Non-Affiliated Trustees with compensation
after retirement, provided that certain eligibility requirements are met as more
fully described below.

The trustees/directors are currently in the process of reviewing and
seeking to standardize compensation and benefits across the Fund Complex.

B-19
<PAGE> 203

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.

Each AC Fund and VK Fund has adopted a retirement plan. 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 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. Asset Management has
reimbursed each AC Fund for the expenses related to the retirement plan through
December 31, 1996.

COMPENSATION TABLE

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

B-20
<PAGE> 204

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 from the Fund as of May 31,
1997 is as follows: Mr. Branagan, $904; Mr. Gaughan, $0; Ms. Heagy, $1,659;
Mr. Kennedy, $1,085; Mr. Miller, $1,344; Mr. Nelson, $1,922; Mr. Robinson,
$1,878; Mr. Sisto, $4,741; and Mr. Whalen, $2,060. The deferred compensation
plan is described above the Compensation Table.

(3) The amounts shown in this column represent the Retirement Benefits accrued
by the Fund during its fiscal year ended May 31, 1997. The retirement plan
is described above the Compensation Table.

(5) The amounts shown in this column represent the aggregate compensation paid
by all 51 operating investment companies in the Fund Complex as of December
31, 1996 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. As
described in the narrative preceding the table, the Fund Complex has
increased in size since December 31, 1996. It is likely the aggregate
compensation for the calendar year ending December 31, 1997 will be higher
due to the increase in the size of the Fund Complex. As of the date of this
Statement of Additional Information, the trustees/ directors are in the
process of reviewing and seeking to standardize compensation and benefits
across the Fund Complex. Certain trustees deferred all or a portion of their
aggregate compensation from the Fund Complex during the calendar year ended
December 31, 1996. 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 trustees' Fund Complex compensation cap covered the period
July 22, 1995 through December 31, 1996. For the calendar year ended
December 31, 1996, certain trustees received compensation over $84,000 in
the aggregate due to compensation received but not subject to the cap,
including compensation from new funds added to the Fund Complex after July
22, 1995 and certain special meetings in 1996. The Advisers and their
affiliates also serve as investment adviser for other investment companies;
however, with the exception of Messrs. McDonnell, Powell and Whalen, the
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 $243,375 during the
calendar year ended December 31, 1996.

As of September 15, 1997, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

LEGAL COUNSEL

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

B-21
<PAGE> 205

INVESTMENT ADVISORY AGREEMENTS

The Trust and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Trust retains the
Adviser to manage the investment of its assets place orders for the purchase and
sale of its portfolio securities. The Adviser is responsible for obtaining and
evaluating economic, statistical and financial data and for formulating and
implementing investment programs in furtherance of the Fund's investment
objectives. The Adviser also furnishes at no cost to the Fund (except as noted
herein) the services of sufficient executive and clerical personnel for the
shareholder reports, and notices and proxy solicitation materials. In addition,
the Adviser furnishes at no cost to the Fund the services of a President of the
Fund, one or more Vice Presidents as needed, and a Secretary.

The Adviser has entered into a subadvisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser, subject to overall supervision by the
Adviser and the Trustees, is responsible for recommending an optimal asset
allocation and currency exposure of the Fund's assets of among various markets
and for recommending particular securities in such markets. The Adviser and
Subadviser are hereinafter sometimes referred to as the "Adviser."

Under the Advisory Agreement, the Trust bears the cost of its accounting
services, which includes maintaining its financial books and records and
calculating its daily net asset value. The costs of such accounting services
include the salaries and overhead expenses of the Trust's Treasurer or other
principal financial officer and the personnel operating under his direction.
Charges are allocated among the investment companies advised or subadvised by
the Adviser. A portion of these amounts were paid to the Adviser or its parent
in reimbursement of personnel, office space, facilities and equipment costs
attributable to the provision of accounting services to the Trust. The services
provided by the Adviser are at cost. The Trust also pays shareholder service
agency fees, distribution fees, custodian fees, legal and auditing fees, the
costs of reports to shareholders and all other ordinary 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, negligence or reckless disregard
of its obligations.

Under the Advisory Agreement, the Trust pays to the Adviser as compensation
for the services rendered, facilities furnished, and expenses paid by it a fee
payable monthly computed at the annual rate of .75% of average daily net assets
of the Fund. For its services, the Subadviser receives from the Adviser a fee at
the annual rate of 50% of the compensation received by the Adviser.

The average net asset value for purposes of computing the advisory fee is
determined by taking the average of all determinations of the net asset value
for each business day during a given calendar month. Such fee is payable for
each calendar month as soon as practicable after the end of that month. The fee
payable to the Adviser will be reduced by any commissions, tender solicitation
and other fees, brokerage or similar payments received by the Adviser or any
other direct or indirect majority-owned subsidiary of VK/AC Holding, Inc. in
connection with the purchase and sale of portfolio investments of the Trust less
any direct expenses incurred by such subsidiary of VK/AC Holding, Inc. in
connection with obtaining such payments. The Adviser agrees to use its best
efforts to recapture tender solicitation fees and exchange offer fees for the
Trust's benefit, and to advise the Trustees of the Trust of any other
commissions, fees, brokerage or similar payments which may be possible for the
Adviser or any direct or indirect majority-owned subsidiary of VK/AC Holding,
Inc. to receive in connection with the Fund's portfolio transactions or other
arrangements which may benefit the Fund.

The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Trust for any fiscal year should exceed the most
restrictive expense limitation applicable in the states where the Trust's shares
are qualified for sale, the compensation due the Adviser will be reduced by the
amount of such excess and that, if the amount of such excess exceeds the
Adviser's monthly compensation, the Adviser will pay the Trust an amount
sufficient to make up the deficiency, subject to readjustment during the Trust's
fiscal year. Ordinary business expenses include the investment advisory fee and
other operating costs paid by the Trust except (1) interest and taxes, (2)
brokerage commissions, (3) certain litigation and indemnification expenses as
described in the Advisory Agreement and (4) payments made by the Fund pursuant
to its distribution plans.

B-22
<PAGE> 206

The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Trustees or (ii) by 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 years ended May 31, 1995, 1996 and 1997 the Adviser
received $1,568,102, $1,254,494 and $918,419, respectively, in advisory fees
from the Fund. For such periods the Fund paid $28,800, $31,987 and $25,800,
respectively, for accounting services.

Pursuant to the Advisory Agreement, the Trust has agreed to indemnify the
Adviser against any taxes imposed by the United Kingdom on the Trust for its
investment related activities as contemplated in each Agreement. The Adviser may
not be indemnified, however, with respect to any liabilities incurred by such
party's 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 or to the Trust.

DISTRIBUTOR

The Distributor acts as the principal underwriter of the Trust'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. 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 Funds as may be sold to the public. The Distributor is not
obligated to sell any stated number of shares. The Distributor bears the cost of
printing (but not typesetting) prospectuses used in connection with this
offering and certain other costs, including the cost of supplemental sales
literature and advertising. The Distribution and Service Agreement is renewable
from year to year if approved (a) by the Fund's Trustees or by a vote of a
majority of the Fund's outstanding voting securities and (b) by the affirmative
vote of a majority of the 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 60 days' written notice.

<TABLE>
<CAPTION>
AMOUNTS
TOTAL UNDERWRITING RETAINED
COMMISSIONS BY DISTRIBUTOR
------------------ --------------
<S> <C> <C>
Fiscal Year Ended May 31, 1997.............................. $ 23,871 $ -0-
Fiscal Year Ended May 31, 1996.............................. $178,914 $100,311
Fiscal Year Ended May 31, 1995.............................. $148,018 $ 16,151
</TABLE>

DISTRIBUTION AND SERVICE PLANS

B-23
<PAGE> 207

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 either class of shares without approval by a vote of a majority of
the outstanding voting shares of such class, and all material amendments to
either of the Plans must be approved by the Trustees and also by the
disinterested Trustees. Each of the Plans may be terminated with respect to
either class of shares at any time by a vote of a majority of the disinterested
Trustees or by a vote of a majority of the outstanding voting shares of such
class.

For the fiscal year ended May 31, 1997, the Fund's aggregate expenses under
the Plans for Class A shares were $79,247 or 0.25%, of the Class A shares'
average daily net assets. For the fiscal year ended May 31, 1997, the Fund's
aggregate expenses under the Class B Plan were $803,246 or 1.00% of the Class B
shares' average net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $586,056 for commissions and transaction fees paid
to financial intermediaries in respect of sales of Class B shares of the Fund
and $217,190 for fees paid to financial intermediaries for servicing Class B
shareholders and administering the Plans. For the fiscal year ended May 31,
1997, the Fund's aggregate expenses under the Plans for Class C shares were
$77,869 or 1.00% of the Class C shares' average net assets. Such expenses were
paid to reimburse the Distributor for the following payments: $4,391 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C shares of the Fund and $69,088 for fees paid to financial
intermediaries for servicing Class C shareholders and administering the Class C
Plan.

TRANSFER AGENT

During the fiscal year ended May 31, 1995, 1996 and 1997, ACCESS,
shareholder service agent and dividend disbursing agent for the Fund, received
fees aggregating $399,072, $357,968 and $282,776, respectively, for these
services. These services are provided at cost plus a profit.

PORTFOLIO TRANSACTIONS AND BROKERAGE

B-24
<PAGE> 208

another broker or dealer would have charged for effecting the transaction.
Brokerage and research services 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).

Pursuant to provisions of the Advisory Agreement and the Sub-advisory
Agreement, the Trustees have authorized the Adviser to cause the Fund to incur
brokerage commissions in an amount higher than the lowest available rate in
return for research services provided to the Adviser. The Adviser is of the
opinion that the continued receipt of supplemental investment research services
from brokers is essential to its provision of high quality portfolio management
services to the Fund. The Adviser undertakes that such higher commissions will
not be paid by the Fund unless (a) the Adviser determines in good faith that the
amount is reasonable in relation to the services in terms of the particular
transaction or in terms of the Adviser's overall responsibilities with respect
to the accounts they exercise investment discretion, (b) such payment is made in
compliance with the provisions of Section 28(e) and other applicable state and
federal laws, and (c) in the opinion of the Adviser, the total commissions paid
by the Fund are reasonable in relation to the expected benefits to the Fund over
the long term. The investment advisory fee paid by the Fund under the Advisory
Agreement is not reduced as a result of the Adviser's receipt of research
services.

The Adviser places portfolio transactions for other advisory accounts,
including other investment companies. Research services furnished by firms
through which the Fund effects its securities transactions may be used by the
Adviser in servicing all of their accounts; not all of such services may be used
by the Adviser in connection with the Fund. In the opinion of the Adviser, the
benefits from research services to each of the accounts (including the Fund)
managed by the Adviser cannot be measured separately. Because the volume and
nature of the trading activities of the accounts are not uniform, the amount of
commissions in excess of the lowest available rate paid by each account for
brokerage and research services will vary. However, in the opinion of the
Adviser, such costs to the Fund will not be disproportionate to the benefits
received by the Fund on a continuing basis.

The Adviser's brokerage practices are monitored on a quarterly basis by the
Brokerage Review Committee comprised of Trustees are not interested persons (as
defined in the 1940 Act) of the Adviser. Brokerage commissions paid by the Fund
on portfolio transactions For the fiscal years ended May 31, 1995, 1996 and 1997
the Fund paid $2,425, $0 and $0, in brokerage commissions on portfolio
transactions.

Effective October 31, 1996 Morgan Stanley Group Inc. became an affiliate of
the Adviser. Effective May 31, 1997, Dean Witter Discover & Co. became an
affiliate of the Adviser. For the fiscal year ended May 31, 1997, the Fund paid
Morgan Stanley Group Inc. or its affiliates $0 in brokerage commission
representing 0% of transactions with affiliates to total commissions.

DETERMINATION OF NET ASSET VALUE

The net asset value per share is determined as of the close of the New York
Stock Exchange (the "Exchange") (currently 4:00 p.m., New York time) on each
business day on which the Exchange is open. The net asset value of Fund shares
is computed by dividing the value of all securities plus other assets, less
liabilities, by the number of shares outstanding, and adjusting to the nearest
cent per share.

B-25
<PAGE> 209

PURCHASE AND REDEMPTION OF SHARES

The following information supplements the section in the Fund's Prospectus
captioned "Purchase of Shares."

CLASS A SHARES--REDUCED SALES CHARGES

LETTER OF INTENT

The Fund will escrow shares totalling 5% of the dollar amount of the Letter
of Intent to be held by ACCESS in the name of the shareholder. The Letter of
Intent does not obligate the investor to purchase the indicated amount. In the
event the Letter of Intent goal is not achieved within the thirteen-month
period, the investor is required to pay the difference between sales charges
otherwise applicable to the purchases made during this period and sales charges
actually paid. Such payment may be made directly to the Distributor or, if not
paid, the Distributor will liquidate sufficient escrow shares to obtain such
difference. If the goal is exceeded in an amount which qualifies for a lower
sales charge, a price adjustment is made by refunding to the investor in shares
of the Fund, the amount of excess sales charges, if any, paid during the
thirteen-month period.

CHECK WRITING PRIVILEGE

To establish the check writing privilege for Class A shares, a shareholder
must complete the appropriate section of the application and the Authorization
for Redemption form and return both documents to ACCESS before checks will be
issued. All signatures on the authorization card must be guaranteed if any of
the signatures are persons not referenced in the account registration or if more
than 30 days have elapsed since the shareholder service agent established the
account on its records. Moreover, if the shareholder is a corporation,
partnership, trust, fiduciary, executor or administrator, the appropriate
documents appointing authorized signers (corporate resolutions, partnerships or
trust agreements) must accompany the authorization card. The

B-26
<PAGE> 210

documents must be certified in original form, and the certificates must be dated
within 60 days of their receipt by ACCESS.

The privilege does not carry over the accounts established through
exchanges or transfer. It must be requested separately for each fund account.

CONTINGENT DEFERRED SALES CHARGE -- CLASS A

WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC -- CLASS B
AND C")

As described in the Prospectus under "Purchase of Shares," redemptions of
Class B and Class C shares will be subject to a CDSC. The CDSC -- Class B and C
may be waived on redemptions of Class B shares and Class C shares in the
circumstances described below:

(a) Redemption Upon Disability or Death

In cases of disability or death, the CDSC -- Class B and C will be waived
where the descendent 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 or 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.

(b) 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 may be waived upon the tax-free rollover or transfer of assets
to another Retirement Plan invested in one or more of Van Kampen American
Capital 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), 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 may 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.

B-27
<PAGE> 211

(d) Involuntary Redemptions of Shares in Accounts That Do Not Have the
Required Minimum Balance

(e) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within
180 Days After Redemption

A shareholder who has redeemed 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.

(f) 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.

REDEMPTION OF SHARES

EXCHANGE PRIVILEGE

The following supplements the discussion of "Shareholder
Services -- Exchange Privilege" in the Prospectus:

B-28
<PAGE> 212

communications, and providing written confirmation of instructions communicated
by telephone. If reasonable procedures are employed, neither Van Kampen American
Capital, ACCESS, nor the Fund will be liable for following telephone
instructions which it reasonably believes to be genuine. Van Kampen American
Capital, ACCESS and the Fund may be liable for any losses due to unauthorized or
fraudulent instructions if reasonable procedures are not followed.

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 his 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 mutual 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.

TAX STATUS OF THE FUND

FUND PERFORMANCE

The Fund's average annual total return (computed in the manner described in
the Prospectus) for Class A shares of the Fund for (i) the one year period ended
May 31, 1997 was (2.17%); (ii) the five year period ended May 31, 1997 was
3.62%; and (iii) the five year and six and one-half month period since November
15, 1991, the commencement of investment operations, through May 31, 1997 was
3.37%. The average annual total return (computed in the manner described in the
Prospectus) for Class B shares of the Fund for (i) the one year period ending
May 31, 1997 was (1.85%); (ii) the five year period ended May 31, 1997 was
3.65%; and (iii) the five year and six and one-half month period since November
15, 1991, the commencement of distribution for Class B shares of the Fund,
through May 31, 1997 was 3.58%. The average annual total return (computed in the
manner described in the Prospectus) for Class C shares of the Fund for (i) the
one year period ending May 31, 1997 was 0.92%; (ii) the four year and one and
one-half month period since April 12, 1993, the commencement of distribution for
Class C shares of the Fund, through May 31, 1997 was 3.14%. 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 by
the Fund's investment practices.

The annualized current yield for Class A shares, Class B shares and Class C
shares of the Fund for the 30-day period ended May 31, 1997, was 4.01%, 3.31%
and 3.36%, respectively. The yield for Class A shares,

B-29
<PAGE> 213

Class B shares and Class C shares is not fixed and will fluctuate in response to
prevailing interest rates and the market value of portfolio securities, and as a
function of the type of securities owned by the Fund, portfolio maturity and the
Fund's expenses.

Yield and total return are computed separately for Class A shares, Class B
shares and Class C shares.

From time to time, in reports or other communications, or in advertising or
sales material, the Fund may, illustrate in graph or chart form, or otherwise,
total returns of international stock markets as compared with the performance of
the United States market.

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, such as duration, maturity, coupon, NAV, rating breakdown, AMT
exposure and number of issues in the portfolio. Materials may also mention how
Van Kampen American Capital believes the Fund compares relative to other Van
Kampen American Capital funds. Materials may also discuss the Dalbar Financial
Services study from 1984 to 1994 which studied investor cash flow into and out
of all types of mutual funds. The ten year study found that investors who bought
mutual fund shares and held such shares outperformed investors who bought and
sold. The Dalbar study conclusions were consistent regardless of if shareholders
purchased their funds in direct or sales force distribution channels. The study
showed that investors working with a professional representative have tended
over time to earn higher returns than those who invested directly. The Fund will
also be marketed on the Internet.

OTHER INFORMATION

CUSTODY OF ASSETS -- State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 serves as Custodian for the Trust. It is also
anticipated that foreign sub-custodians will be used for certain of the Fund's
investments in foreign securities. Any such sub-custodian shall be utilized
pursuant to an agreement between the Custodian and foreign sub-custodian that
has been approved as required pursuant to Rule 17F-5 under the 1940 Act. The
Custodian and sub-custodians generally domestically, and frequently abroad, do
not actually hold certificates for the securities in their custody, but instead
have book records with domestic and foreign securities depositories, which in
turn have book records with the transfer agents of the issuers of the
securities.

SHAREHOLDER REPORTS -- Semiannual statements are furnished to shareholders, and
annually such statements are audited by the independent accountants.

INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 1201 Louisiana, Houston, Texas
77002, the independent accountants for the Fund, performs an annual audit of the
Fund's financial statements.

B-30
<PAGE> 214

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Van Kampen American Capital Global Government Securities Fund

In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Van Kampen American
Capital Global Government Securities Fund (the "Fund''), a series of Van Kampen
American Capital World Portfolio Series Trust, at May 31, 1997, and the results
of its operations, the changes in its net assets and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements'') are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 1997 by correspondence with the custodian
and brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.

PRICE WATERHOUSE LLP

Houston, Texas
July 14, 1997

B-31

<PAGE> 215

<TABLE>
<CAPTION>
Portfolio of Investments
May 31, 1997
- ------------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Government & Government Agency Obligations 43.9%
$ 2,111 Government National Mortgage Association
Pools................................. 8.000% 11/15/00 to 12/15/25 $ 2,147,701

6,650 U.S. Treasury Bonds (a)............... 8.125 08/15/19 7,478,124

19,800 U.S. Treasury Notes (a)............... 5.625 11/30/98 19,679,418

2,000 U.S. Treasury Notes (a)............... 6.250 10/31/01 1,981,560

7,200 U.S. Treasury Notes (a)............... 7.250 05/15/04 7,457,616
----------
Total Long-Term Investments
(Cost $38,490,820)............................................................ 38,744,419
----------
Short-Term Investments 55.2%

United States Government & Government
Agency Obligations 54.8%
4,500 Federal Farm Credit Bank Discount Note
(yielding 4.531%, 06/02/97 maturity)..................................... 4,499,311

17,000 Federal Home Loan Mortgage Corp. Discount Note
(yielding 5.472%, 06/16/97 maturity)..................................... 16,961,325

27,000 Federal National Mortgage Association Discount Note
(yielding 5.409%, 06/27/97 maturity)..................................... 26,895,480
----------
Total United States Government & Government
Agency Obligations....................................................... 48,356,116
----------
Commercial Paper 0.4%
326 State Street Bank and Trust
(yielding 5.000%, 06/02/97 maturity...................................... 326,000
----------
Total Short-Term Investments
(Cost $48,682,116)............................................................ 48,682,116
----------
Foreign Currency, Various Denominations 0.0%
(Cost $2,654)................................................................. 2,591

Other Assets in Excess of Liabilities 0.9%........................................ 774,232
----------
Net Assets 100.0%................................................................. $88,203,358
===========
</TABLE>

(a) Assets segregated as collateral for forward commitments.

B-32 See Notes to Financial Statements

<PAGE> 216

Statement of Assets and Liabilities

May 31, 1997
<TABLE>
<CAPTION>
===================================================================================
Assets:
<S> <C>
Long-Term Investments, at Market Value (Cost $38,490,820).......... $ 38,744,419
Short-Term Investments (Cost $48,682,116).......................... 48,682,116
Foreign Currency, at Market Value (Cost $2,654).................... 2,591
Cash............................................................... 383
Receivables:
Interest...................................................... 700,787
Fund Shares Sold.............................................. 14,452
Forward Currency Contracts and Forward Commitments................. 812,923
Other.............................................................. 99
-------------
Total Assets.................................................. 88,957,770
-------------
Liabilities:
Payables:
Fund Shares Repurchased....................................... 271,782
Income Distributions.......................................... 215,830
Distributor and Affiliates.................................... 84,131
Investment Advisory Fee....................................... 55,536
Accrued Expenses................................................... 88,526
Deferred Compensation and Retirement Plans......................... 38,607
-------------
Total Liabilities............................................. 754,412
-------------
Net Assets......................................................... $ 88,203,358
=============
Net Assets Consist of:
Capital............................................................ $ 125,541,347
Net Unrealized Appreciation on Securities.......................... 1,613,248
Accumulated Undistributed Net Investment Income.................... 94,388
Accumulated Net Realized Loss on Securities........................ (39,045,625)
-------------
Net Assets......................................................... $ 88,203,358
=============
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share
(Based on net assets of $25,658,438 and 3,374,330
shares of beneficial interest issued and outstanding)......... $ 7.60
Maximum sales charge (4.75%* of offering price)............... .38
-------------
Maximum offering price to public.............................. $ 7.98
=============
Class B Shares:
Net asset value and offering price per share
(Based on net assets of $56,889,670 and 7,441,320
shares of beneficial interest issued and outstanding)......... $ 7.65
=============
Class C Shares:
Net asset value and offering price per share
(Based on net assets of $5,655,250 and 745,566 shares
of beneficial interest issued and outstanding)................ $ 7.59
=============
* On sales of $100,000 or more, the sales charge will be reduced.
</TABLE>

B-33

See Notes to Financial Statements

<PAGE> 217

Statement of Operations

For the Year Ended May 31, 1997
===============================================================================
<TABLE>
<CAPTION>

<S> <C>
Investment Income:
Interest (Net of foreign withholding taxes of $44,850)........... $10,014,924
-----------
Expenses:
Distribution (12b-1) and Service Fees (Attributed to Classes A,
B and C of $79,247, $829,340 and $78,230, respectively)........ 986,817
Investment Advisory Fee.......................................... 918,419
Shareholder Services............................................. 358,976
Custody.......................................................... 102,996
Legal............................................................ 14,630
Trustees Fees and Expenses....................................... 9,642
Amortization of Organizational Costs............................. 1,070
Other............................................................ 226,831
-----------
Total Expenses.............................................. 2,619,381
Less Expenses Reimbursed 8,800
-----------
Net Expenses................................................ 2,610,581
-----------
Net Investment Income............................................ $ 7,404,343
===========
Realized and Unrealized Gain/Loss on Securities:
Realized Gain/Loss on Securities:
Investments.................................................... $(3,492,131)
Forward Commitments............................................ (6,405,574)
Foreign Currency Transactions.................................. 417,353
-----------
Net Realized Loss on Securities.................................. (9,480,352)
-----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period........................................ (3,506,613)
-----------
End of the Period:
Investments................................................. 253,599
Forward Commitments......................................... 1,360,144
Foreign Currency Translation................................ (495)
-----------
1,613,248
-----------
Net Unrealized Appreciation on Securities During the Period...... 5,119,861
-----------
Net Realized and Unrealized Loss on Securities................... $(4,360,491)
===========
Net Increase in Net Assets from Operations....................... $ 3,043,852
===========
</TABLE>

B-34 See Notes to Financial Statements

<PAGE> 218

Statement of Changes in Net Assets

For the Years Ended May 31, 1997 and 1996
===============================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 1997 May 31, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income............................. $ 7,404,343 $ 10,207,114
Net Realized Gain/Loss on Securities.............. (9,480,352) 543,929
Net Unrealized Appreciation/Depreciation on
Securities During the Period.................... 5,119,861 (6,367,840)
------------ ------------
Change in Net Assets from Operations.............. 3,043,852 4,383,203
------------ ------------
Distributions from Net Investment Income:.........
Class A Shares.................................. (2,102,906) (2,860,078)
Class B Shares.................................. (4,816,433) (6,497,549)
Class C Shares.................................. (459,054) (822,565)
------------ ------------
Total Distributions............................... (7,378,393) (10,180,192)
------------ ------------
Net Change in Net Assets from
Investment Activities........................... (4,334,541) (5,796,989)
------------ ------------
From Capital Transactions:
Proceeds from Shares Sold......................... 8,442,389 22,142,711
Net Asset Value of Shares Issued
Through Dividend Reinvestment................... 4,489,376 5,934,913
Cost of Shares Repurchased........................ (63,966,605) (68,487,512)
------------ ------------
Net Change in Net Assets from
Capital Transactions............................ (51,034,840) (40,409,888)
------------ ------------
Total Decrease in Net Assets...................... (55,369,381) 46,206,877)
Net Assets:
Beginning of the Period........................... 143,572,739 189,779,616
------------ ------------
End of the Period
(Including accumulated undistributed net
investment income of $94,388 and $(355,254),
respectively)................................... $ 88,203,358 $143,572,739
============ ============
</TABLE>

B-35 See Notes to Financial Statements

<PAGE> 219

<TABLE>
Financial Highlights

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
===================================================================================================
<CAPTION>
Year Ended May 31,
Class A Shares 1997(a) 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period.......... $ 7.92 $ 8.24 $ 8.26 $ 9.01 $ 9.07

Net Investment Income........................... .526 .56 .60 .78 .845

Net Realized and Unrealized Loss on Securities.. (.310) (.328) (.016) (.5715) (.123)
------ ------ ------ ------- ------
Total from Investment Operations.................. .216 .232 .584 .2085 .722
------ ------ ------ ------- ------
Less:
Distributions from Net Investment Income........ .532 .552 .604 .726 .782
Distributions from and in Excess of
Net Realized Gain on Securities................. --0-- --0-- --0-- .2325 --0--
------ ------ ------ ------- ------
Total Distributions............................... .532 .552 .604 .9585 .782
------ ------ ------ ------- ------
Net Asset Value, End of the Period................ $7.604 $ 7.92 $ 8.24 $ 8.26 $ 9.01
====== ====== ====== ======= ======

Total Return (b).................................. 2.65% 2.81% 7.52% 1.89% 8.47%

Net Assets at End of the Period (In millions)..... $ 25.7 $ 36.4 $ 47.9 $ 62.8 $ 36.1

Ratio of Expenses to Average Net Assets (c)....... 1.57% 1.51% 1.42% 1.45% 1.52%

Ratio of Net Investment Income to
Average Net Assets (c).......................... 6.58% 6.66% 7.18% 8.12% 9.33%

Portfolio Turnover................................ 161% 239% 209% 236% 301%
</TABLE>

(a) Based on average month-end 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 impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.

See Notes to Financial Statements

B-36

<PAGE> 220

Financial Highlights (Continued)

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
========================================================================================================
Year Ended May 31,
--------------------------------------------------
Class B Shares 1997(a) 1996 1995 1994 1993(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period............. $ 7.96 $ 8.28 $ 8.30 $ 9.04 $ 9.09
------ ------ ------ ------- ------
Net Investment Income........................... .477 .49 .53 .69 .78
Net Realized and Unrealized Loss on Securities.. (.320) (.318) (.006) (.5435) (.12)
------ ------ ------ ------- ------
Total from Investment Operations..................... .157 .172 .524 .1465 .66
------ ------ ------ ------- ------
Less:
Distributions from Net Investment Income........ .472 .492 .544 .654 .71
Distributions from and in Excess of
Net Realized Gain on Securities................. -0- -0- -0- .2325 -0-
------ ------ ------ ------- ------
Total Distributions.................................. .472 .492 .544 .8865 .71
------ ------ ------ ------- ------
Net Asset Value, End of the Period................... $7.645 $ 7.96 $ 8.28 $ 8.30 $ 9.04
====== ====== ====== ======= ======
Total Return (b)..................................... 2.00% 2.06% 6.69% 1.07% 7.95%
Net Assets at End of the Period (In millions)........ $ 56.9 $ 97.7 $123.4 $ 147.5 $ 56.7
Ratio of Expenses to Average Net Assets (c).......... 2.33% 2.27% 2.18% 2.22% 2.19%
Ratio of Net Investment Income to
Average Net Assets (c).......................... 5.86% 5.91% 6.41% 7.30% 8.66%
Portfolio Turnover................................... 161% 239% 209% 236% 301%
</TABLE>

(a) Based on average month-end 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 impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.

B-37 See Notes to Financial Statements

<PAGE> 221
Financial Highlights (Continued)

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

<TABLE>
<CAPTION>
==================================================================================================================
April 12, 1993
(Commencement
Year Ended May 31, of Distribution)
-------------------------------------------- to May 31,
Class C Shares 1997(a) 1996 1995 1994 1993(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period...... $ 7.91 $ 8.22 $ 8.25 $ 8.99 $ 9.00
------ ------ ------ ------ -------
Net Investment Income.................... .471 .46 .51 .63 .095

Net Realized and Unrealized
Gain/Loss on Securities................. (.324) (.278) .004 (.4835) .011
------ ------ ------ ------ -------
Total from Investment Operations.............. .147 .182 .514 .1465 .106
------ ------ ------ ------ -------
Less:
Distributions from Net Investment
Income.................................. .472 .492 .544 .654 .116

Distributions from and in Excess of Net
Realized Gain on Securities............. --0-- --0-- --0-- .2325 --0--
------ ------ ------ ------ -------
Total Distributions........................... .472 .492 .544 .8865 .116
------ ------ ------ ------ -------
Net Asset Value, End of the Period............ $7.585 $ 7.91 $ 8.22 $ 8.25 $ 8.99
====== ====== ====== ====== =======
Total Return (b).............................. 1.88% 2.20% 6.60% 1.19% 8.78%*

Net Assets at End of
the Period (In millions)................. $ 5.6 $ 9.5 $ 18.5 $ 23.5 $ 1.4

Ratio of Expenses to
Average Net Assets (c)................... 2.33% 2.27% 2.18% 2.22% 2.63%

Ratio of Net Investment Income to
Average Net Assets (c)................... 5.84% 5.91% 6.42% 7.13% 10.06%

Portfolio Turnover............................ 161% 239% 209% 236% 301%
</TABLE>

(a) Based on average month-end 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 impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.

* Non-Annualized

B-38 See Notes to Financial Statements

<PAGE> 222

Notes to Financial Statements

May 31, 1997
================================================================================

1. Significant Accounting Policies

Van Kampen American Capital Global Government Securities Fund (the "Fund") is
organized as a series of Van Kampen American Capital World Portfolio Series
Trust, a Delaware business trust, and is registered as a non-diversified open-
end management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek total return through a
managed balance of foreign and domestic debt securities. Investments in foreign
securities involve certain risks not ordinarily associated with investments in
securities of domestic issuers, including fluctuations in foreign exchange
rates, future political and economic developments, and the possible imposition
of exchange controls or other foreign governmental laws or restrictions. The
Fund commenced investment operations on November 15, 1991. The distribution of
the Fund's Class C shares commenced on April 12, 1993.

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

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

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

The Fund may 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 American Capital Asset Management Inc. (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 entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.

B-39

<PAGE> 223

Notes to Financial Statements (Continued)

May 31, 1997
===============================================================================

C. Investment Income--Interest income is recorded on an accrual basis. The
Fund accounts for discounts and premiums on the same basis as is used for
federal income tax reporting. Accordingly, original issue discounts on debt
securities purchased are amortized over the life of the security. Premiums on
debt securities are not amortized. Market discounts are recognized at the time
of sale as realized gains for book purposes and ordinary income for tax
purposes.

D. Currency Translation--Assets and liabilities denominated in
foreign currencies and commitments under forward currency contracts are
translated into U.S. dollars based on quoted exchange rates as of noon Eastern
Time. Purchases and sales of portfolio securities are translated at the rate of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates prevailing when accrued. Gains and losses on
the sale of securities are not segregated for financial reporting purposes
between amounts arising from changes in exchange rates and amounts arising from
changes in the market prices of securities. Realized gain and loss on foreign
currency includes the net realized amount from the sale of currency and the
amount realized between trade date and settlement date on security
transactions.

E. Organizational Costs--The Fund reimbursed Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Fund's organization in the amount of $13,000.
These costs were amortized on a straight line basis over the 60 month period
ended November, 1996.

At May 31, 1997, for federal income tax purposes, cost is $87,175,590, the
aggregate gross unrealized appreciation is $2,711,974, and the aggregate gross
unrealized depreciation is $1,422,433, resulting in net unrealized appreciation
on investments, foreign currency contracts, forward commitments and foreign
currencies of $1,289,541.

The Fund intends to utilize provisions of the federal income tax laws
which allow it to carry a realized capital loss forward for eight years
following the year of the loss and offset such losses against any future
realized capital gains. At May 31, 1997, the Fund had an accumulated capital
loss carryforward for tax purposes of $32,183,105, which will expire between
May 31, 2003 and May 31, 2005. Net realized gains or losses may differ for
financial and tax reporting purposes primarily as a result of post October 31
losses which are not recognized for tax purposes until the first day of the
following fiscal year.

B-40

<PAGE> 224

Notes to Financial Statements (Continued)

May 31, 1997
===============================================================================

G. Distribution of Income and Gains--The Fund declares daily and pays
monthly dividends from net investment income. Net investment income for federal
income tax purposes includes gains and losses realized on transactions in
foreign currencies. These realized gains and losses are included as net
realized gains or losses for financial reporting purposes. Net realized gains
on securities, if any, are distributed annually.

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 1997 fiscal year have been identified and appropriately
reclassified. Permanent book and tax basis differences relating to the
recognition of net realized losses on paydowns of mortgage pool obligations
totaling $14,720 and net realized gains on foreign currency transactions of
$408,170 were reclassified from accumulated net realized gain/loss on
securities to accumulated undistributed net investment income. Additional
permanent differences relating to the recognition of certain expenses which are
not deductible for tax purposes totaling $30,242 were reclassified from
accumulated undistributed net investment income to capital.

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. Investment advisory fees are calculated monthly, based on the average
daily net assets of the Fund at the annual rate of .75%. On April 1, 1997, the
Adviser entered into a subadvisory agreement with Morgan Stanley Asset
Management, Inc. (the "Subadviser''), to provide advisory services to the Fund
and the Adviser with respect to the Fund's investments. Prior to April 1, 1997,
the Fund's Subadviser was John Govett & Co., Ltd. The Adviser pays 50% of its
investment advisory fee to the Subadviser.

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

For the year ended May 31, 1997, the Fund recognized expenses of
approximately $25,800 representing VKAC's cost of providing accounting services
to the Fund. These services are provided by VKAC at cost.

ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended May
31, 1997, the Fund recognized expenses of approximately $282,800, representing
ACCESS' cost of providing transfer agency and shareholder services plus a
profit.

Additionally, for the year ended May 31, 1997, the Fund paid VKAC
approximately $20,500 related to the direct cost of consolidating the VKAC
open- end fund complex. Payment was contingent upon the realization by the Fund
of cost efficiencies in shareholder services resulting from the consolidation.

B-41

<PAGE> 225

Notes to Financial Statements (Continued)

May 31, 1997
===============================================================================

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

The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. 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 equal to $2,500. The Adviser reimbursed
the Fund for these plan expenses through December 31, 1996.

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 May 31, 1997, capital aggregated $36,467,276, $79,889,687 and
$9,184,384 for Classes A, B and C, respectively. For the year ended May 31,
1997, transactions were as follows:

<TABLE>
<CAPTION>
Shares Value
=========================================================
<S> <C> <C>
Sales:
Class A..................... 415,170 $ 3,285,624
Class B..................... 612,589 4,868,118
Class C..................... 36,431 288,647
---------- ------------
Total Sales................... 1,064,190 $ 8,442,389
========== ============

Dividend Reinvestment:
Class A..................... 169,671 $ 1,338,753
Class B..................... 365,738 2,907,050
Class C..................... 30,907 243,573
---------- ------------
Total Dividend Reinvestment... 566,316 $ 4,489,376
========== ============

Repurchases:
Class A..................... (1,805,879) $(14,262,345)
Class B..................... (5,798,718) (45,573,947)
Class C..................... (523,469) (4,130,313)
---------- ------------
Total Repurchases............. (8,128,066) $(63,966,605)
========== ============
</TABLE>

B-42

<PAGE> 226

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================

At May 31, 1996, capital aggregated $46,113,074, $117,708,944 and
$12,784,411 for Classes A, B and C, respectively. For the year ended May 31,
1996, transactions were as follows:

<TABLE>
<CAPTION>
Shares Value
========================================================
<S> <C> <C>
Sales:
Class A.................... 863,668 $ 7,095,429
Class B.................... 1,568,183 12,820,664
Class C.................... 271,697 2,226,618
---------- ------------
Total Sales.................. 2,703,548 $ 22,142,711
========== ============
Dividend Reinvestment:
Class A.................... 215,647 $ 1,763,615
Class B.................... 450,331 3,699,958
Class C.................... 57,724 471,340
---------- ------------
Total Dividend Reinvestment.. 723,702 $ 5,934,913
========== ============
Repurchases:
Class A.................... (2,290,621) $(18,784,532)
Class B.................... (4,655,689) (38,363,849)
Class C.................... (1,382,547) (11,339,131)
---------- ------------
Total Repurchases............ (8,328,857) $(68,487,512)
========== ============
</TABLE>

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

<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
----------------------
Year of Redemption Class B Class C
- -----------------------------------------------------------
<S> <C> <C>
First............................... 4.00% 1.00%
Second.............................. 4.00% None
Third............................... 3.00% None
Fourth.............................. 2.50% None
Fifth............................... 1.50% None
Sixth and Thereafter................ None None
</TABLE>

B-43

<PAGE> 227

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================

For the year ended May 31, 1997, VKAC, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$2,300 and CDSC on the redeemed shares of approximately $352,000. Sales charges
do not represent expenses of the Fund.

4. Investment Transactions

During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments and forward commitments, were
$179,181,719 and $279,272,321, 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, manage the portfolio's effective yield, foreign currency
exposure, 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 on securities.
Upon disposition, a realized gain or loss is recognized accordingly, except
when taking delivery of a security underlying a forward commitment. In this
instance, the recognition of gain or loss is postponed until the disposal of
the security underlying the forward commitment.

A. Forward Purchase Commitments--The Fund trades certain securities
under the terms of forward purchase commitments, whereby the settlement occurs
at a specific future date. Forward purchase commitments are privately
negotiated transactions between the Fund and dealers. While forward purchase
commitments are outstanding, the Fund maintains sufficient collateral of cash
or securities in a segregated account with its custodian. The forward purchase
commitments are marked to market on a daily basis with changes in value
reflected as a component of unrealized appreciation/depreciation on forward
commitments.

The following forward purchase commitments were outstanding at May 31,
1997:

<TABLE>
<CAPTION>
Par Amount
in Local Unrealized
Currency Settlement Current Appreciation/
(000) Description Date Value Depreciaition
===========================================================================================
<S> <C> <C> <C> <C>
2,100-AU$ Australia (Commonwealth of),
9.000%, 09/15/04 maturity............. 07/10/97 $1,748,224 $ 68,394
2,200-CA$ Canada (Government of),
7.500%, 03/01/01 maturity............. 07/10/97 1,691,038 528,817
850-CA$ Canada (Government of),
9.750%, 06/01/21 maturity............. 07/10/97 805,078 31,792
</TABLE>

B-44

<PAGE> 228

Notes to Financial Statements (Continued)

May 31, 1997
===============================================================================
<TABLE>
<CAPTION>

Par Amount
in Local Unrealized
Currency Settlement Current Appreciation/
(000) Description Date Value Depreciation
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Forward Purchase Commitments (Continued)
9,700-DKK Denmark (Kingdom of),
8,000%, 05/15/03 maturity................ 07/10/97 $1,655,230 $35,707
4,900-DKK Denmark (Kingdom of),
8.000%, 03/15/06 maturity................ 08/28/97 823,786 (3,583)
1,400-DEM Germany (Federal Republic of),
8.375%, 05/21/01 maturity................ 08/18/97 924,869 (4,451)
1,600-DEM Germany (Federal Republic of),
6.250%, 01/04/24 maturity................ 07/03/97 880,476 11,715
5,000-DEM Germany (Federal Republic of),
7.000%, 01/13/00 maturity................ 07/03/97 3,137,595 14,313
5,000-DEM Germany (Treuhandanstalt),
7.500%, 09/09/04 maturity................ 07/03/97 3,255,413 37,345
1,000-DEM Germany (Treuhandanstalt),
7.500%, 09/09/04 maturity................ 08/18/97 648,388 (7,162)
8,800-DEM Germany Unity (Federal Republic),
8.000%, 01/21/02 maturity................ 07/03/97 5,800,932 50,658
500-IEP Ireland (Republic of),
8.000%, 08/18/06 maturity................ 08/18/97 816,904 (11,100)
2,400,000-ITL Italy (Republic of),
9.500%, 02/01/06 maturity................ 07/03/97 1,600,080 62,004
5,300,000-ITL Italy (Republic of),
10.500%, 07/15/00 maturity............... 07/03/97 3,444,939 62,023
250,000-JPY Japan (Government of),
3.100%, 09/20/06 maturity................ 08/28/97 2,206,941 (11,295)
375,000-JPY Japan (Government of),
3.400%, 03/22/04 maturity................ 07/10/97 3,417,147 (55,243)
85,000-JPY Japan (Government of),
3.400%, 03/22/04 maturity................ 08/15/97 772,411 2,412
320,000-JPY Japan (Government of),
5.500%, 03/20/02 maturity................ 07/10/97 3,177,166 (45,190)
110,000-JPY Japan (Government of),
6.400%, 03/20/00 maturity................ 07/10/97 1,069,029 (10,435)
21,000-SEK Sweden (Kingdom of),
6.000%, 02/09/05 maturity................ 07/10/97 2,567,297 57,169
25,000-SEK Sweden (Kingdom of),
13.000%, 06/15/01 maturity............... 07/10/97 4,002,819 35,692
1,500-GBP United Kingdom (Conversion),
9.000%, 07/12/11 maturity................ 07/03/97 2,808,753 120,487
</TABLE>

B-45

<PAGE> 229

Notes to Financial Statements (Continued)

May 31, 1997
<TABLE>
<CAPTION>
====================================================================================================
Par Amount
in Local Unrealized
Currency Settlement Current Appreciation/
(000) Description Date Value Depreciation
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Forward Purchase Commitments (Continued)
1,050-GBP United Kingdom,
7.000%, 11/06/01 maturity............ 07/03/97 $ 1,710,319 $ 24,867
375-GBP United Kingdom,
7.750%, 09/08/06 maturity............ 07/03/97 631,958 19,674
----------- ----------
$49,596,792 $1,014,610
=========== ==========
</TABLE>

B. Closed but Unsettled Forward Commitments--In certain situations,
the Fund has entered into offsetting transactions for outstanding forward
commitments prior to settlement of the obligation. In doing so, the Fund
realizes a gain or loss on the transaction at the time the forward commitment is
closed. However, settlement of both the purchase and sale is still scheduled to
occur in the denominated foreign currency at a future date. The net difference
in the amount of foreign currency on the trade is marked to market daily with
any fluctuation included as a component of unrealized gain/loss on forward
contracts.

The following closed but unsettled forward transactions were outstanding
at May 31, 1997:

<TABLE>
<CAPTION>
Unrealized
Gain/Loss
on Net US$ Net
Local Currency Currency Receivable
Description/Currency Receivable Payable Difference (Payable)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canada (Government of) -- Canadian Dollar
(700,000 par, 7.500%, 03/01/01)............ 747,542 529,779 $ 1,688 $ 157,605
Germany (Treuhandanstalt) -- Mark
(16,000,000 par, 6.750%, 05/13/04)......... 17,074,200 17,503,726 (99,159) (251,317)
German Unity (Federal) -- Mark
(2,000,000 par, 8.000%, 01/21/02).......... 1,343,375 2,305,200 31,424 (562,767)
United Kingdom -- Pound
(1,525,000 par, 7.750%, 09/08/06).......... 1,621,986 1,559,311 15,054 102,529
(550,000 par, 7.000%, 11/06/01)............ 558,352 545,805 4,068 20,525
Ireland (Republic of) -- Punt
(1,200,000 par, 6.250%, 04/01/99).......... 1,227,807 1,223,607 67,055 6,334
-------- ---------
$ 20,130 $(527,091)
======== =========
</TABLE>

B-46

<PAGE> 230

Notes to Financial Statements (Continued)

May 31, 1997
================================================================================

C. Forward Currency Contracts--A forward currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Upon the settlement of the contract, a realized gain
or loss is recognized and is included as a component of realized gain/loss on
forward contracts.

The following forward currency contracts were outstanding as of May 31,
1997:

<TABLE>
<CAPTION>
Unrealized
Current Appreciation/
Depreciation Value Depreciation
- --------------------------------------------------------------------------------
<S> <C> <C>
Long Contracts
Australian Dollar,
1,800,000 expiring 07/31/97..................... $ 1,371,626 $(25,174)
1,500,000 expiring 08/22/97..................... 1,143,246 (21,504)
Canadian Dollar,
4,200,000 expiring 07/11/97..................... 3,048,769 3,084
German Mark,
16,750,000 expiring 06/20/97.................... 9,814,428 (120,329)
7,550,000 expiring 07/11/97..................... 4,430,502 (132,535)
1,806,322 expiring 07/17/97..................... 1,060,470 4,820
817,860 expiring 08/29/97....................... 481,644 (443)
4,246,785 expiring 08/29/97..................... 2,500,965 (2,298)
5,100,000 expiring 09/05/97..................... 3,004,956 (9,941)
Danish Krone,
14,500,000 expiring 06/20/97.................... 2,230,182 (20,637)
Spanish Peseta,
830,000,000 expiring 08/29/97................... 5,748,881 (67,924)
British Pound Sterling,
3,800,000 expiring 07/11/97..................... 6,210,693 (61,967)
150,000 expiring 07/11/97....................... 245,159 (1,066)
1,000,000 expiring 07/11/97..................... 1,634,393 12,393
Italian Lira,
9,400,000,000 expiring 07/11/97................. 5,539,560 (94,817)
Japanese Yen,
1,300,000,000 expiring 06/20/97................. 11,196,057 575,142
300,000,000 expiring 07/11/97................... 2,591,649 83,288
50,000,000 expiring 07/11/97.................... 431,941 20,249
95,000,000 expiring 08/22/97.................... 825,749 9,878
Netherlands Guilder,
23,300,000 expiring 06/20/97.................... 12,135,758 (179,252)
Swedish Krona,
10,780,000 expiring 08/29/97.................... 1,395,639 (27,088)
----------- ---------
Total Long Contracts............................ 77,042,267 (56,121)
----------- ---------
</TABLE>

B-47

<PAGE> 231

Notes to Financial Statements (Continued)

May 31, 1997
<TABLE>
<CAPTION>
================================================================================
Unrealized
Current Appreciation/
Description Value Depreciation
================================================================================
<S> <C> <C>
Forward Currency Contracts (Continued)
Short Contracts
Canadian Dollar,
400,000 expiring 07/11/97 ................. $ 290,359 $ (2,693)
German Mark,
1,600,000 expiring 06/20/97 ............... 937,498 21,735
350,000 expiring 06/20/97 ................. 205,078 (1,376)
3,500,000 expiring 08/29/97 ............... 2,061,177 18,443
Danish Krone,
3,100,000 expiring 06/20/97 ............... 476,798 13,414
1,200,000 expiring 06/20/97 ............... 184,567 4,098
Spanish Peseta,
360,000,000 expiring 08/29/97 ............. 2,493,491 9,772
British Pound Sterling,
300,000 expiring 07/11/97 ................. 490,318 (3,298)
300,000 expiring 08/29/97 ................. 489,794 (7,707)
800,000 expiring 08/29/97 ................. 1,306,118 (9,478)
Italian Lira,
1,800,000,000 expiring 07/17/97 ........... 1,060,552 (4,902)
Japanese Yen,
450,000,000 expiring 06/20/97 ............. 3,875,558 (4,923)
20,000,000 expiring 06/20/97 .............. 172,247 (12,681)
240,000,000 expiring 08/22/97 ............. 2,086,103 (8,181)
Netherlands Guilder,
23,300,000 expiring 06/20/97 .............. 12,135,758 372,294
----------- ---------
Total Short Contracts ..................... $28,265,416 384,517
----------- ---------
Cross Currency Contracts
Long 2,408,188 German Marks, Short 2,000,000
Swiss Franks, expiring 08/29/97 ............................ (2,992)
---------
$ 325,404
=========
</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% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the
year ended May 31, 1997, are payments to VKAC of approximately $595,600.

B-48

<PAGE> 232

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements for each of the following:

Van Kampen American Capital Global Equity Fund

Van Kampen American Capital Global Government Securities Fund

Included in the Prospectus:
Financial Highlights

Included in the Statement of Additional Information:
Report of Independent Accountants
Financial Statements
Notes to Financial Statements

(b) Exhibits

<TABLE>
<C> <S>
(1)(a) First Amended and Restated Agreement and Declaration of
Trust(7)
(b) Certificate of Amendment(7)
(c) Amended and Restated Certificate of Designation for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(2) Amended and Restated Bylaws(7)
(4) Share Certificate for:
(a) Van Kampen American Capital Global Equity Fund(7)
(i) Class A Shares
(ii) Class B Shares
(iii) Class C Shares
(b) Van Kampen American Capital Global Government Securities
Fund(7)
(i) Class A Shares
(ii) Class B Shares
(iii) Class C Shares
(5)(a) Investment Advisory Agreement for between Van Kampen
American Capital World Portfolio Series Trust and Van
Kampen American Capital Asset Management, Inc.+
(b) Investment Sub-Advisory Agreement between Van Kampen
American Capital Asset
Management, Inc. and Morgan Stanley Asset Management, Inc.
for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(6)(a) Distribution and Service Agreement for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(b) Form of Dealer Agreement(7)
(c) Form of Broker Agreement(7)
(d) Form of Bank Agreement(7)
(8)(a) Custodian Contract+
(b) Transfer Agency and Service Agreement+
(9)(a) Data Access Services Agreement(6)
(b) Fund Accounting Agreement+
(10) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois) for:
(i) Van Kampen American Capital Global Equity Fund(7)
(ii) Van Kampen American Capital Global Government
Securities Fund(7)
</TABLE>

C-1
<PAGE> 233

<TABLE>
<S> <C>
(11) Consents of Price Waterhouse LLP for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(13) Investment Letter(2)
(14)(a) Individual Retirement Account Brochure with Application(4)
(b) 403(b)(7) Custodial Account(3)
(c) ORP 403(b)(7) Custodial Account(3)
(d) Retirement Plans for the Small Business-Forms Package and
Plan Documents(5)
(e) Prototype Profit Sharing/Money Purchase Plan and Trust(1)
(f) Prototype 401(k) Plan and Trust(1)
(g) Salary Reduction Simplified Employee Pension Plan(4)
(15)(a) Plan of Distribution Pursuant to Rule 12b-1 for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(b) Form of Shareholder Assistance Agreement+
(c) Form of Administrative Service Agreement+
(d) Service Plan for:
(i) Van Kampen American Capital Global Equity Fund(7)
(ii) Van Kampen American Capital Global Government
Securities Fund(7)
(16) Computation Measure for Performance Information for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government
Securities Fund+
(17)(a) List of Certain Investment Companies in Response to Item
29(a)+
(b) List of Officers and Directors of Van Kampen American
Capital Distributors, Inc. in
Response to Item 29(b)+
(18) Amended Multiple Class Plan+
(24) Power of Attorney+
(27) Financial Data Schedules+
</TABLE>

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

(1) Incorporated herein by reference to Post Effective Amendment No. 61 to Van
Kampen American Capital Growth and Income Fund's Registration Statement on
Form N-1A, File No. 2-21657, filed on March 27, 1991.

(2) Incorporated herein by reference to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, File No. 33-37879, filed
on July 19, 1991.

(3) Incorporated herein by reference to Post-Effective Amendment No. 30 to Van
Kampen American Capital Reserve Fund's Registration Statement on Form N-1A,
File No. 2-50870, filed on September 24, 1992.

(4) Incorporated herein by reference to Post-Effective Amendment No. 31 to Van
Kampen American Capital Reserve Fund's Registration Statement on Form N-1A,
File No. 2-50870, filed on September 24, 1993.

(5) Incorporated herein by reference to Post-Effective Amendment No. 18 to Van
Kampen American Capital Government Securities Fund's Registration Statement
on Form N-1A, File No. 2-90482, filed on February 25, 1994.

(6) Incorporated herein by reference to Post-Effective Amendment No. 1 to Van
Kampen American Capital Utilities Income Fund's Registration Statement on
Form N-1A, File No. 33-68452, filed on May 19, 1994.

(7) Incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A, File No. 33-37879, filed
on September 27, 1996.

+ Filed herewith

C-2
<PAGE> 234

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

See the Statement of Additional Information.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

AS OF SEPTEMBER 15, 1997

<TABLE>
<CAPTION>
(2)
NUMBER OF RECORD
HOLDERS
(1) -----------------------------
TITLE OF CLASS CLASS A CLASS B CLASS C
-------------- ------- ------- -------
<S> <C> <C> <C>
Van Kampen American Capital Global Equity Fund
Shares of Beneficial Interest, par value $0.01
per share 26,491 17,721 3,049
Van Kampen American Capital Global Government
Securities Fund
Shares of Beneficial Interest, par value $0.01
per share 2,813 4,764 688
</TABLE>

ITEM 27. INDEMNIFICATION.

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

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

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

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

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "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

C-3
<PAGE> 235

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

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

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

ITEM 29. PRINCIPAL UNDERWRITERS.

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

(b) Van Kampen American Capital Distributors, Inc. is an affiliated person
of an affiliated person of Registrant and is the only principal underwriter for
Registrant. The name, principal business address and positions and offices with
Van Kampen American Capital Distributors, Inc. of each of the directors and
officers thereof are set forth in Exhibit 17(b). 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 Registrant.

ITEM 30. LOCATION OF BOOKS AND RECORDS.

All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, ACCESS Investor Services, Inc. 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and
Trust Company, 1776 Heritage Drive, North Quincy, MA; (ii) by the Adviser, will
be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181; and (iii) by the Distributor, the principal underwriter, will be
maintained at its offices located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.

ITEM 31. MANAGEMENT SERVICES.

Not applicable.

ITEM 32. UNDERTAKINGS.

Registrant hereby undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

Registrant hereby undertakes, if requested to do so by the holders of at
least 10% of the Registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees and to assist in communications with other shareholders as required
by Section 16(c) of the Investment Company Act of 1940.

C-4
<PAGE> 236

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, VAN KAMPEN AMERICAN CAPITAL
WORLD PORTFOLIO SERIES TRUST, hereby 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 and has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Oakbrook Terrace and State
of Illinois, on the 26th day of September, 1997.

VAN KAMPEN AMERICAN CAPITAL
WORLD PORTFOLIO SERIES TRUST

By: /s/ RONALD A. NYBERG

------------------------------------
Ronald A. Nyberg, Vice President and
Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this Registration Statement has been signed on September 26, 1997 by the
following persons in the capacities indicated:

Principal Executive Officer:

<TABLE>
<C> <S>
/s/ DENNIS J. MCDONNELL* President
- -----------------------------------------------------
(Dennis J. McDonnell)
Principal Financial Officer:
/s/ EDWARD C. WOOD III* Vice President and Chief Financial
- ----------------------------------------------------- Officer
(Edward C. Wood III)
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- -----------------------------------------------------
(J. Miles Branagan)
/s/ RICHARD M. DeMARTINI* Trustee
- -----------------------------------------------------
(Richard M. DeMartini)
/s/ LINDA H. HEAGY* Trustee
- -----------------------------------------------------
(Linda H. Heagy)
/s/ R. CRAIG KENNEDY* Trustee
- -----------------------------------------------------
(R. Craig Kennedy)
/s/ JACK E. NELSON* Trustee
- -----------------------------------------------------
(Jack E. Nelson)
/s/ JEROME L. ROBINSON* Trustee
- -----------------------------------------------------
(Jerome L. Robinson)
/s/ PHILLIP B. ROONEY* Trustee
- -----------------------------------------------------
(Phillip B. Rooney)
/s/ FERNANDO SISTO* Trustee
- -----------------------------------------------------
(Fernando Sisto)
/s/ WAYNE W. WHALEN* Trustee
- -----------------------------------------------------
(Wayne W. Whalen)
</TABLE>

* Signed by Ronald A. Nyberg pursuant to a power-of attorney.

<TABLE>
<C> <C>
/s/ RONALD A. NYBERG September 26, 1997
- -----------------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>

<PAGE> 237

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

INDEX TO EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 14 TO FORM N-1A

AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

ON SEPTEMBER 26, 1997

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
</TABLE>

(1)(c) Amended and Restated Certificate of Designation for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(5)(a) Investment Advisory Agreement between Van Kampen American
Capital World Portfolio Series Trust and Van Kampen American
Capital Asset Management, Inc.
Investment Sub-Advisory Agreement between Van Kampen
(b) American Capital Asset Management, Inc. and Morgan Stanley
Asset Management, Inc. for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(6)(a) Distribution and Service Agreement for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(8)(a) Custodian Contract
(b) Transfer Agency and Service Agreement
(9)(b) Fund Accounting Agreement
(11) Consents of Price Waterhouse LLP for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(15)(a) Plan of Distribution Pursuant to Rule 12b-1 for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(b) Form of Shareholder Assistance Agreement
(c) Form of Administrative Service Agreement
(16) Computation Measure for Performance Information for:
(i) Van Kampen American Capital Global Equity Fund
(ii) Van Kampen American Capital Global Government
Securities Fund
(17)(a) List of Certain Investment Companies in Response to Item
29(a)
List of Officers and Directors of Van Kampen American
(b) Capital Distributors, Inc. in Response to Item 29(a)
(18) Amended Multi-Class Plan
(24) Power of Attorney
(27) Financial Data Schedules

<PAGE> 1

EXHIBIT 1(c)(i)

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

Amended and Restated Certificate of Designation
of
Van Kampen American Capital Global Equity Fund

>The undersigned, being the Secretary of Van Kampen American Capital World
Portfolio Series 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
First Amended and Restated Agreement and Declaration of Trust ("Declaration"),
and by the affirmative vote of a Majority of the Trustees does hereby establish
and designate as a Series of the Trust the Van Kampen American Capital Global
Equity Fund (the "Fund") with following the rights, preferences and
characteristics:

1. Shares. The beneficial interest in the Fund shall be divided into
Shares having a nominal or par value of $0.01 per Share, of which an unlimited
number may be issued, which Shares shall represent interests only in the Fund.
The Trustees shall have the authority from time to time to authorize separate
Series of Shares for the Trust as they deem necessary or desirable.

2. Classes of Shares. The Shares of the Fund shall be initially divided
into three classes--Class A, Class B and Class C. The Trustees shall have the
authority from time to time to authorize additional Classes of Shares of the
Fund.

3. Sales Charges. Each Class A, Class B and Class C Share shall be
subject to such sales charges, if any, as may be established from time to time
by the Trustees in accordance with the Investment Company Act of 1940 (the "1940
Act") and applicable rules and regulations of the National Association of
Securities Dealers, Inc., all as set forth in the Fund's prospectus.

4. Conversion. Each Class B 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.

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

<PAGE> 2

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.

December 12, 1996

/s/ Ronald A. Nyberg
--------------------
Ronald A. Nyberg
Secretary

<PAGE> 1
EXHIBIT 1(c)(ii)

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

Amended and Restated Certificate of Designation
of
Van Kampen American Capital Global Government Securities Fund

The undersigned, being the Secretary of Van Kampen American Capital World
Portfolio Series 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
First Amended and Restated Agreement and Declaration of Trust ("Declaration"),
and by the affirmative vote of a Majority of the Trustees does hereby establish
and designate as a Series of the Trust the Van Kampen American Capital Global
Government Securities Fund (the "Fund") with following the rights, preferences
and characteristics:

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

<PAGE> 2

other proper purpose affecting only holders of shares of such Class at any time
by a Majority of the Trustees.

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.

December 12, 1996

/s/ Ronald A. Nyberg
--------------------

Ronald A. Nyberg
Secretary

<PAGE> 1
EXHIBIT 5(a)

INVESTMENT ADVISORY AGREEMENT

AGREEMENT (herein so called) made this May 31, 1997, by and between VAN KAMPEN
AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST, a Delaware business trust
(hereinafter referred to as the "FUND"), and VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the
"ADVISER").

The FUND and the ADVISER agree as follows:

(1) APPOINTMENT

a. The FUND hereby appoints the ADVISER to act as investmentadviser to the
FUND's Van Kampen American Capital Global Equity Fund ("Global Equity") and Van
Kampen American Capital Global Government Securities Fund ("Global Government")
(collectively, the "Portfolios"), for the period and on the terms set forth in
this Agreement. The ADVISER accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.

b. In the event that the FUND establishes one or more portfolios other than
the Portfolios with respect to which it desires to retain the ADVISER to act
as investment adviser hereunder, it shall notify the ADVISER in writing. If
the ADVISER is willing to render such services it shall notify the FUND in
writing whereupon such portfolio shall become a Portfolio hereunder and the
compensatioin payable by such new portfolio to the ADVISER will be as agreed in
writing at the time.

(2) SUBADVISERS

It is understood that the ADVISER, subject to the prior approval of the
FUND's Trustees, will from time to time employ or associate itself with such
person or persons as the ADVISER may believe to be particularly fitted to
assist it in the performance of this Agreement, provided, however, that the
compensation of such person or persons shall be paid by the ADVISER and that
the ADVISER shall be as fully responsible to the FUND for the acts and
omissions of any subadviser as it is for its own acts and omissions. Without
limiting the generality of the foregoing, it is agreed that subadvisory
services to the Portfolio may be provided by Morgan Stanley Asset Management
Inc. pursuant to a subadvisory agreement with the ADVISER ("SUBADVISORY
AGREEMENT").

(3) SERVICES RENDERED AND EXPENSES PAID BY ADVISER

The ADVISER, subject to the overall policies, control, direction, supervision
and review of the FUND's Trustees and in conformity with applicable laws, the
FUND's Agreement and Declaration of Trust ("Declaration of Trust"), By-laws,
registration statements, prospectus and stated investment objectives, policies
and restrictions of each Portfolio, shall:

a. manage the investment and reinvestment of the FUND's assets
including, by way of illustration, the evaluation of pertinent economic,
statistical, financial and other data, determination of the industries and
companies to be represented in the FUND's Portfolios, and formulation and
implementation of investment programs;

b. place all orders for the purchase and sale of portfolio investments
for the account of each Portfolio of the Fund with brokers or dealers selected
by the ADVISER;

c. conduct and manage the day-to-day operations of the FUND including,
by way of illustration, the preparation of registration statements, reports,
and amendments thereto, and the furnishing of

<PAGE> 2

routine legal services except for services provided by outside counsel
to the FUND selected by the Trustees; and

d. pay the compensation of each FUND trustee and Fund officer who is
an affiliated person of the ADVISER, except the compensation of the FUND's
Treasurer and related expenses as provided below.

In performing the services described in paragraph b. above, the ADVISER shall
use its best efforts to obtain for the FUND and each Portfolio the most
favorable price and execution available and shall maintain records adequate to
demonstrate compliance with this requirement. Subject to prior authorization
by the FUND's Trustees of appropriate policies and procedures, the ADVISER may,
to the extent authorized by law, cause the FUND to pay a broker or dealer that
provides brokerage and research services to the ADVISER an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction. To the extent authorized by law, the ADVISER shall not be deemed
to have acted unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of such action.

Except as otherwise agreed, or as otherwise provided herein, the FUND shall
pay, or arrange for others to pay, all its expenses other than those expressly
stated to be payable by the ADVISER hereunder, which expenses payable by the
FUND shall include (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase and sale of portfolio investments; (iii)
compensation of its trustees and officers other than those who are affiliated
persons of the ADVISER; (iv) compensation of its Treasurer, compensation of
personnel working under the Treasurer's direction, and expenses of office
space, facilities, and equipment used by the Treasurer and such personnel in
the performance of their normal duties for the FUND which consist of
maintenance of the accounts, books and other documents which constitute the
record forming the basis for the FUND's financial statements, preparation of
such financial statements and other FUND documents and reports of a financial
nature required by federal and state laws, and participation in the production
of the FUND's registration statement, prospectuses, proxy solicitation
materials and reports to shareholders; (v) fees of outside counsel to and of
independent accountants of the FUND selected by the Trustees; (vi) custodian,
registrar and transfer agent fees and expenses; (vii) expenses related to the
repurchase or redemption of its shares including expenses related to a program
of periodic repurchases or redemptions; (viii) expenses related to the issuance
of its shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and related expenses of registering and qualifying the FUND
and its shares for distribution under state and federal securities laws; (x)
expenses of printing and mailing of registration statements, prospectuses,
reports, notices and proxy solicitation materials of the FUND; (xi) all other
expenses incidental to holding meetings of the FUND's shareholders including
proxy solicitations therefor; (xii) expenses for servicing shareholder
accounts; (xiii) insurance premiums for fidelity coverage and errors and
omissions insurance; (xiv) dues for the FUND's membership in trade associations
approved by the Trustees; and (xv) such nonrecurring expenses as may arise,
including those associated with actions, suits or proceedings to which the FUND
is a party and the legal obligation which the FUND may have to indemnify its
officers and trustees with respect thereto. To the extent that any of the
foregoing expenses are allocated between the FUND and any other party, such
allocations shall be pursuant to methods approved by the Trustees.

<PAGE> 3

For a period of one year commencing on the effective date of this Agreement,
the ADVISER and the FUND agree that the retention of (i) the chief executive
officer, president, chief financial officer and secretary of the ADVISER and
(ii) each director, officer and employee of the ADVISER or any of its
Affiliates (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) who serves as an officer of the FUND (each person referred to in
(i) or (ii) hereinafter being referred to as an "Essential Person"), in his or
her current capacities, is in the best interest of the FUND and the FUND's
shareholders. In connection with the ADVISER's acceptance of employment
hereunder, the ADVISER hereby agrees and covenants for itself and on behalf of
its Affiliates that neither the ADVISER nor any of its Affiliates shall make
any material or significant personnel changes or replace or seek to replace any
Essential Person or cause to be replaced any Essential Person, in each case
without first informing the Board of Trustees of the FUND in a timely manner.
In addition, neither the ADVISER nor any Affiliate of the ADVISER shall change
or seek to change or cause to be changed, in any material respect, the duties
and responsibilities of any Essential Person, in each case without first
informing the Board of Trustees of the FUND in a timely manner.

(4) RESTRICTION ON THE ADVISER'S POWERS

The ADVISER shall not commit any Portfolio to any extent beyond the amount of
the cash and securities placed by such Portfolio under the control of the
ADVISER.

In carrying out its duties hereunder the ADVISER shall comply with all
reasonable instructions of the Portfolio in connection therewith. Such
instructions may be given by the Trustees or by any other person authorized by
a resolution of the Trustees provided a certified copy of such resolution has
been supplied to the ADVISER.

All securities, cash, and other assets of each Portfolio shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Board as custoidan and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the 1940 Act) is aproved by
the Board as sub-custodians.

Persons authorized by resolution of the Trustees shall have the right to
inspect and copy contracts, notes, vouchers, and copies of entries in books or
electronic recording media relating to the Portfolio's transactions at the
registered office of the ADVISER at any time during normal business hours.

(5) ROLE OF ADVISER

The ADVISER, and any person controlled by or under common control with the
ADVISER, shall be free to render similar services to others and engage in other
activities, so long as the services rendered to the FUND are not impaired.

Except as otherwise required by the Investment Company Act of 1940 (the "1940
Act"), any of the shareholders, trustees, officers and employees of the FUND
may be a shareholder, trustee, director, officer or employee of, or be
otherwise interested in, the ADVISER, and in any person controlled by or under
common control with the ADVISER, and the ADVISER, and any person controlled by
or under common control with the ADVISER, may have an interest in the FUND.

Except as otherwise agreed, in the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the ADVISER, neither the ADVISER nor any subadviser shall be subject to
liability to the FUND, or to any shareholder of the FUND, for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.

<PAGE> 4

(6) COMPENSATION PAYABLE TO THE ADVISER

The FUND shall pay to the ADVISER, as compensation for the services rendered
and expenses paid by the ADVISER, with respect to the Global Equity, a monthly
fee computed at 1.00%, per annum, of the Portfolio's average daily net assets
and with respect to Global Government, a monthly fee computed at .75%, per
annum of the Portfolio's average daily net assets.

For purposes of these calculations, assets of each Portfolio shall be
considered separately in calculating the investment advisory fee. Average
daily net assets of these Portfolios shall be determined by taking the average
of the net assets for each business day during a given calendar month,
calculated in the manner provided in the FUND's Declaration of Trust. Such fee
shall be payable for each calendar month as soon as practicable after the end
of that month.

The fees payable to the ADVISER by the FUND pursuant to this Section 6 shall
be reduced by any commissions, tender solicitation and other fees, brokerage or
similar payments received by the ADVISER, or any other direct or indirect
majority owned subsidiary of VK/AC Holding, Inc., in connection with the
purchase and sale of portfolio investments of the FUND, less any direct
expenses incurred by such person, in connection with obtaining such
commissions, fees, brokerage or similar payments. The ADVISER shall use its
best efforts to recapture all available tender offer solicitation fees and
exchange offer fees in connection with the FUND's portfolio transactions and
shall advise the Trustees of any other commissions, fees, brokerage or similar
payments which may be possible for the ADVISER or any other direct or indirect
majority owned subsidiary of VK/AC Holding, Inc. to receive in connection with
FUND's portfolio transactions or other arrangements which may benefit the FUND.

In the event that the ordinary business expenses of the FUND, calculated
separately for each Portfolio, for any fiscal year should exceed the most
restrictive expense limitation applicable in the states where the FUND's shares
are qualified for sale, the compensation due the ADVISER for such fiscal year
shall be reduced by the amount of such excess. The Adviser's compensation
shall be so reduced by a reduction or a refund thereof, at the time such
compensation is payable after the end of each calendar month during such fiscal
year of the FUND, and if such amount should exceed such monthly compensation,
the ADVISER shall pay the FUND an amount sufficient to make up the deficiency,
subject to readjustment during the FUND's fiscal year. For purposes of this
paragraph, all ordinary business expenses of the FUND shall include the
investment advisory fee and other operating expenses paid by the FUND except
(i) for interest and taxes; (ii) brokerage commissions; (iii) as a result of
litigation in connection with a suit involving a claim for recovery by the
FUND; (iv) as a result of litigation involving a defense against a liability
asserted against the FUND, provided that, if the ADVISER made the decision or
took the actions which resulted in such claim, it acted in good faith without
negligence or misconduct; (v) any indemnification paid by the FUND to its
officers and trustees and the ADVISER in accordance with applicable state and
federal laws as a result of such litigation; and (vi) amounts paid to Van
Kampen American Capital Distributors, Inc., the distributor of the FUND's
shares, in connection with a distribution plan adopted by the FUND's Trustees
pursuant to Rule 12b-1 under the Investment Company Act of 1940.

If the ADVISER shall serve for less than the whole of any month, the
foregoing compensation shall be prorated.

(7) BOOKS AND RECORDS

In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
ADVISER hereby agrees that all records which it maintains for the FUND are the
property of the FUND and further agrees to surrender promptly to the FUND any
of such records upon the FUND's request. The ADVISER further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the Act.

<PAGE> 5

(8) DURATION OF AGREEMENT

This Agreement will become effective with respect to the Portfolios on the
date hereof, and with respect to any additional Portfolios, on the date of
receipt by the FUND of notice from the ADVISER in accordance with Section 1(b)
hereof that the ADVISER is willing to serve as investment adviser with respect
to such Portfolio, provided that this Agreement (as supplemented by the terms
specified in any notice and agreement pursuant to Section 1(b) hereof) shall
have been approved by the shareholders of each Portfolio subject to this
Agreement, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall remain in full force until May 31,
1999. Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Portfolio for successive periods of twelve months each, or
such shorter period as may be agreed upon, provided such continuance is
specifically approved at least annually, (a) by the vote of a majority of those
members of the FUND's Trustees who are not interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the vote of a majority of the FUND's Trustees or by
vote of a majority of the outstanding voting securities of such Portfolio.
Notwithstanding the foregoing this Agreement may be terminated as to any
Portfolio at any time, without the payment of any penalty, by the FUND (by vote
of the FUND's Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio), or by the ADVISER, on sixty days' written
notice. This Agreement will immediately terminate in the event of its
assignment.

This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:

a. if the FUND or the ADVISER shall go into liquidation (except
a voluntary liquidating for the purpose of and followed by a bona
fide reconstruction or amalgamation upon terms previously
approved in writing by the party not in liquidation) or if a
receiver or receiver and manger of any of the assets of any of
them is appointed; or

b. if either of the parties hereto shall commit any breach of
the provisions hereof and shall not have remedied such breach
within 30 days after the service of notice by the party not in
breach on the other requiring the same to be remedied.

Termination shall be without prejudice to the completion of any
transactions which the ADVISER shall have committed to on behalf
of a Portfolio prior to the time of termination. The ADVISER
shall not effect and the FUND shall not be entitled to instruct
the ADVISER to effect any further transactions on behalf of a
Portfolio subsequent to the time termination takes effect.

On the termination of this Agreement and completion of all
matters referred to in the foregoing paragraph, the ADVISER
shall deliver or cause to be delivered to the FUND all
documents, records, books and any other properties which are
in its possession, power or control and which are valid and in
force at the date of termination.

(9) AMENDMENT TO THIS AGREEMENT

No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective as to a particular
Portfolio until approved by vote of a majority of the outstanding voting series
of such Portfolio.

(10) MISCELLANEOUS PROVISIONS

a. Definitions

For the purposes of this Agreement, the terms "affiliated person, "
"assignment," "interested person," and "majority of the outstanding voting
securities" shall have their respective meanings defined in the

<PAGE> 6

1940 Act and the Rules and Regulations thereunder, subject, however, to
such exemptions as may be granted to either the ADVISER or the FUND by the
Securities and Exchange Commission (the "Commission"), or such interpretive
positions as may be taken by the Commission or its staff, under the 1940 Act,
and the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.

b. Indemnity for U.K. Taxes

i. Notwithstanding any other provision of this Agreement, the FUND
shall indemnify and save the ADVISER harmless from, against, for and in respect
of all liabilities incurred pursuant to Section 3.4 of the Subadvisory
Agreement.

ii. The FUND will not be liable under this indemnification provision
with respect to any liabilities incurred by the ADVISER's willful misfeasance,
bad faith, or gross negligence in the performance of the ADVISER's duties or by
reason of the ADVISER's reckless disregardof obligations and duties under this
Agreement or to the FUND.

iii. The FUND will not be liable under this indemnification provision
with respect to any claim made against the ADVISER unless the ADVISER shall
have notified the FUND in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
ave been served upon the ADVISER (or afer the ADVISER shall have received
notice of such service on any designated agent). In case any such action is
brought against the ADVISER, the FUND will be entitled to participate, at its
own exepnse, in the defense therof. The FUND also will be 3entitled to assume
the defense thereof, with counsel satisfactory to the party named in the
action. Afer notice from the FUND to such party of the FUND's election ot
assume the defense thereof, such party will bear the fees and expenses of any
additional counsel retained by it, and the FUND will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof.

c. Choice of Law

This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the State
of Texas.

d. Other

The execution of this Agreement has been authorized by the FUND's Trustees
and by the sole shareholder. This Agreement is executed on behalf of the Fund
or the Trustees of the FUND as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the FUND individually but are binding only upon the
assets and property of the FUND. A Certificate of Trust in respect of the Fund
is on file with the Secretary of State of Delaware.

In connection with its employment hereunder, the ADVISER hereby agrees and
covenants not to change its name without the prior consent of the Board of
Trustees of the FUND.

<PAGE> 7

The parties hereto each have caused this Agreement to be signed in duplicate
on its behalf by its duly authorized officer on the above date.

VAN KAMPEN AMERICAN CAPITAL VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC. WORLD PORTFOLIO SERIES TRUST

By:/s/ Dennis J. McDonnell By: /s/ Peter W. Hegel
------------------------ -----------------------
Name: Dennis J. McDonnell Name: Peter W. Hegel

Its: President Its: Executive Vice President

<PAGE> 1
Exhibit 5(b)(i)

INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
AND
MORGAN STANLEY ASSET MANAGEMENT INC.

THIS AGREEMENT is made as of this May 31, 1997 by and between MORGAN
STANLEY ASSET MANAGEMENT INC., a Delaware Corporation, located at 1221
Avenue of the Americas, New York, New York 10020, and VAN KAMPEN AMERICAN
CAPITAL ASSET MANAGEMENT, INC. ("VKAC") a Delaware Corporation, located at One
Parkview Plaza, Oakbrook Terrace, IL 60181.

WHEREAS, VKAC has heretofore sponsored and acts as Investment Adviser
to Van Kampen American Capital Global Equity Fund, a series of Van
Kampen American Capital World Portfolio Series Trust (the "Fund"); and

WHEREAS, MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM") has available
a staff of experienced investment personnel and facilities for
providing investment sub-advisory services to the investment portfolio; and

WHEREAS, MSAM is an investment adviser registered under the Investment
Advisers Act of 1940, as amended and is willing to provide VKAC with
investment advisory services on the terms and conditions hereinafter set forth;
and

WHEREAS, VKAC and MSAM (jointly referred to as "the Advisers") desire to
enter into an agreement for MSAM to provide sub-advisory services to
the Fund and to VKAC with respect to the Fund's investments.

NOW THEREFORE it is mutually agreed:

1. INVESTMENT SUB-ADVISORY SERVICES

1.1 Investment Advice

a) Subject to the overall policies, control, direction and
review of the Fund's Trustees, MSAM shall keep under review the investments of
the Fund and continuously furnish to the Fund and to VKAC (1) investment advice
with respect to all or such portion of the Fund's assets as the Advisers agree
to from time to time; (2) economic, statistical and research information and
advice, including advice on the allocation of investments among countries,
relating to all or such portion of the Fund's assets as the Advisers shall
agree to from time to time; (3) recommendations as to the voting of proxies
solicited by or with respect to securities under MSAM's supervision; and (4) an
investment program with respect to securities and recommendations as to what
securities shall be purchased, sold or exchanged, and what portion, if any, of
the securities shall be held in money market instruments.

b) The Advisers are responsible for the allocation of the Fund's
assets among the various securities markets of the world. The Advisers will
determine at least quarterly the percentage of the assets that shall be
allocated to each of the Advisers (the "Asset Allocation"). The Asset
Allocation will specify the percentage and nature of the assets of the Fund
allocated to each of the Advisers for management on the effective date of the
determination and will apply to cash inflows or outflows and income and expense
accruals thereafter until such time as the Asset Allocation is redetermined.
Each of the Advisers will be responsible for the allocation of assets among the
securities markets within various regions as they agree to from time to time.

<PAGE> 2

c) Unless otherwise instructed by VKAC or the Trustees, and
subject to the provisions of this Agreement and to any guidelines or
limitations specified from time to time by VKAC or by the Trustees, MSAM shall
determine the securities to be purchased and sold by the Fund and shall place
orders for the purchase, sale or exchange of securities for the Fund's accounts
with brokers or dealers and to that end MSAM is authorized by the Trustees to
give instructions to the Custodian and any Sub-Custodian of the Fund as to
deliveries of such securities, transfers of currencies and payments of cash for
the account of the Fund.

d) In performing these services, MSAM shall adhere to the Fund's
investment objectives, restrictions and limitations as contained in its
Prospectus, Statement of Additional Information, or Agreement and Declaration
of Trust and shall comply with all statutory and regulatory restrictions,
limitations and requirements applicable to the activity of the Fund.

e) Unless otherwise instructed by VKAC or the Trustees, and
subject to the provisions of this Agreement and to any guidelines or
limitations specified from time to time by VKAC or by the Trustees, MSAM shall
have executed and performed on behalf of and at the expense of the Fund:

i) Purchases, sales, exchanges, conversions, and placement or
orders for execution, and

ii) Reporting of all transactions to VKAC and to other
entities as directed by VKAC or by the Trustees.

f) MSAM shall provide the Trustees at least quarterly, in
advance of the regular meetings of the Trustees, a report of its activities
hereunder on behalf of the Fund and its proposed strategy for the next quarter,
all in such form and detail as requested by the Trustees. MSAM shall also make
an investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.

1.2 Restriction of MSAM's Powers

(a) MSAM shall not commit the Fund to any extent beyond the
amount of the cash and securities placed by the Fund under the control of MSAM.

(b) In carrying out its duties hereunder MSAM shall comply with
all reasonable instruction of the Fund or VKAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to
MSAM.

(c) All securities, cash, and other assets of the Fund shall be
placed and maintained in the care of a member bank of the Federal Reserve
System of the United States approved by the Trustees as custodian and one or
more "Eligible Foreign Custodians" (as defined in Rule 17f-5 under the
Investment Company Act of 1940 (the "1940 Act")) approved by the Trustees as
sub-custodians.

(d) Persons authorized by resolution of the Trustees shall have
the right to inspect and copy contracts, notes, vouchers, and copies of entries
in books or electronic recording media relating to the Fund's transactions at
the registered office of MSAM at any time during normal business hours. Such
records, in relation to each transaction effected by MSAM on behalf of the Fund
shall be maintained by MSAM for a period of seven years from the date of such
transaction.

1.3 Purchase and Sale of Securities

In performing the services described above, MSAM shall use its
best efforts to obtain for the Fund the most favorable price and execution
available. Subject to prior authorization of appropriate policies and
procedures by the Trustees, MSAM may, to the extent authorized by law, cause
the Fund to pay a broker or dealer who provides brokerage and research services
an amount of commission for effecting the Fund's investment transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, in recognition of the brokerage and research
services

<PAGE> 3

provided by the broker or dealer. To the extent authorized by law,
MSAM shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of such action.

1.4 Custodian

MSAM shall not act as Custodian for the securities or any other
assets of the Fund. All such assets shall be held by the Custodian or
Sub-Custodian appointed by the Trustees.

2. DUTIES OF VKAC

2.1 Provision of Information

VKAC shall advise MSAM from time to time with respect to the Fund
of its investment objectives and of any changes or modifications thereto, as
well as any specific investment restrictions or limitations by sending to MSAM
a copy of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by MSAM, VKAC shall furnish
such information to MSAM as to holdings, purchases, and sales of the securities
under its management as will reasonably enable MSAM to furnish its investment
advice under this Agreement.

2.2 Compensation to MSAM

The fee for the services provided under this Agreement will be
determined as follows:

(a) An amount for each month (or such other valuation period as
may be mutually agreed upon) equivalent, on an annual basis, to 50% of the
compensation actually received by VKAC pursuant to the investment advisory fee
schedule set forth in the Investment Advisory Agreement between the Fund and
VKAC taking into account any waiver or return to the Fund of any or all of such
advisory fee by VKAC (with any such return of fees to be treated as if not
actually received). The value of the assets of the Fund shall be computed as of
the close of business on the last day of each valuation period for the Fund,
using the average of all the daily determinations of the net value of the
assets of the Fund.

(b) The foregoing fee shall be paid in cash by VKAC to MSAM
within five (5) business days after the last day of the valuation period.

3. MISCELLANEOUS

3.1 Activities of MSAM

The services of MSAM as Sub-Adviser to VKAC under this Agreement
are not to be deemed exclusive, MSAM and its affiliates being free to render
services to others. It is understood that shareholders, trustees, officers and
employees of MSAM may become interested in the Fund or VKAC as a shareholder,
trustee, officer, partner or otherwise.

3.2 Services to Other Clients

VKAC acknowledges that MSAM may have investment responsibilities,
or render investment advice to, or perform other investment advisory services
for, other individuals or entities ("Clients"). Subject to the provisions of
this paragraph, VKAC agrees that MSAM may give advice or exercise investment
responsibility and take such other action with respect to such Clients which
may differ from advice given or the timing or nature of action taken with
respect to the Fund, provided that MSAM acts in good faith, and provided,
further, that it is MSAM policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Clients, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. VKAC acknowledges that one or more of the Clients may at
any time hold, acquire,

<PAGE> 4

increase, decrease, dispose of or otherwise deal with
positions in investments in which the Fund may have an interest from time to
time, whether in transactions which may involve the Fund or otherwise. MSAM
shall have no obligation to acquire for the Fund a position in any investment
which any Client may acquire, and VKAC shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Fund or otherwise.

3.3 Best Efforts

It is understood and agreed that in furnishing the investment
advice and other services as herein provided, MSAM shall use its best
professional judgment to recommend actions which will provide favorable results
for the Fund. MSAM shall not be liable to the Fund or to any shareholder of
the Fund to any greater degree than VKAC.

3.4 Duration of Agreement

a) This Agreement, unless terminated pursuant to paragraph b or
c below or Section 2.2(c), shall continue in effect through May 31, 1999, and
thereafter shall continue in effect from year to year, provided its continued
applicability is specifically approved at least annually by the Trustees or by
a vote of the holders of a majority of the outstanding shares of the Fund. In
addition, such continuation shall be approved by vote of a majority of the
Trustees who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. As used in this paragraph, the term "interested person" shall
have the same meaning as set forth in the 1940 Act.

b) This Agreement may be terminated by sixty (60) days' written
notice by either VKAC or MSAM to the other party. The Agreement may also be
terminated at any time, without the payment of any penalty, by the Fund (by
vote of the Trustees or, by the vote of a majority of the outstanding voting
securities of such Fund), on sixty (60) days' written notice to both VKAC and
MSAM. This Agreement shall automatically terminate in the event of the
termination of the investment advisory agreement between VKAC and the Fund.

c) This Agreement shall terminate in the event of its
assignment. The term "assignment" for this purpose shall have the same meaning
set forth in Section 2(a)(4) of the 1940 Act.

d) Termination shall be without prejudice to the completion of
any transactions which MSAM shall have committed to on behalf of the Fund prior
to the time of termination. MSAM shall not effect and the Fund shall not be
entitled to instruct MSAM to effect any further transactions on behalf of the
Fund subsequent to the time termination takes effect.

e) This Agreement shall terminate forthwith by notice in writing
on the happening of any of the following events:

i) If VKAC or MSAM shall go into liquidation (except a
voluntary liquidation for the purpose of and followed by a bona fide
reconstruction or amalgamation upon terms previously approved in writing by the
party not in liquidation) or if a receiver or receiver and manager of any of
the assets of any of them is appointed; or

ii) If either of the parties hereto shall commit any
breach of the provisions hereof and shall not have remedied such breach within
30 days after the service of notice by the party not in breach on the other
requiring the same to be remedied.

f) On the termination of this Agreement and completion of all
matters referred to in the foregoing paragraph (d) MSAM shall deliver or cause
to be delivered to the Fund copies of all documents, records and books of the
Fund required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act
which are in MSAM's possession, power or control and which are valid and in
force at the date of termination.

<PAGE> 5

3.5 Notices

Any notice, request, instruction, or other document to be given
under this Agreement by any party hereto to the other parties shall be in
writing and delivered personally or sent by mail or telecopy (with a hard copy
to follow),

If to MSAM, to:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
attn: Warren J. Olsen

with a copy to:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
attn: Harold J. Schaaff, Esq.

If to VKAC, to:

Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
attn: Dennis J. McDonnell

with a copy to:

Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
attn: Ronald A. Nyberg, Esq.

or at such other address for a party as shall be specified by like notice.
Any notice that is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is directed
upon actual receipt by such party (or its agent for notices hereunder). Any
notice that is addressed and mailed in the manner herein provided shall be
presumed to have been duly given to the party to which it is addressed, on the
date three (3) days after mailing, and in the case of delivery by telecopy, on
the date the hard copy is received.

3.6 Choice of Law

This Agreement shall be construed according to, and the rights
and liabilities of the parties hereto shall be governed by, the laws of the
United States and the State of New York, without regard to the conflicts of
laws principles thereof.

3.7 Miscellaneous Provisions

The execution of this Agreement has been authorized by the Fund's
Trustees and by the shareholders. This Agreement is executed on behalf of the
Fund or the Trustees of the Fund as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the Fund individually but are binding only upon the
assets and property of the Fund. A Certificate of Trust in respect of the Fund
is on file with the Secretary of State of Delaware.

<PAGE> 6

IN WITNESS WHEREOF, the Agreement has been executed as of the date first above
given.

VAN KAMPEN AMERICAN CAPITAL MORGAN STANLEY
ASSET MANAGEMENT, INC. ASSET MANAGEMENT INC.

By: /s/ Dennis J. McDonnell By: /s/ Harold J. Schaaff, Jr.
-------------------------------------- -----------------------------
Name: Dennis J. McDonnell Name: Harold J. Schaaff, Jr.
------------------------------------ ---------------------------
Its: President & Chief Operating Officer Its: General Counsel & Secretary
------------------------------------- ----------------------------

<PAGE> 1
Exhibit 5(b)(ii)

INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
AND
MORGAN STANLEY ASSET MANAGEMENT INC.

THIS AGREEMENT is made as of this May 31, 1997 by and between MORGAN STANLEY
ASSET MANAGEMENT INC., a Delaware Corporation, located at 1221 Avenue of the
Americas, New York, New York 10020, and VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC. ("VKAC") a Delaware Corporation, located at One Parkview
Plaza, Oakbrook Terrace, IL 60181.

WHEREAS, VKAC has heretofore sponsored and acts as Investment Adviser to Van
Kampen American Capital Global Government Securities Fund, a series of Van
Kampen American Capital World Portfolio Series Trust (the "Fund"); and

WHEREAS, MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM") has available a staff of
experienced investment personnel and facilities for providing investment
sub-advisory services to the investment portfolio; and

WHEREAS, MSAM is an investment adviser registered under the Investment Advisers
Act of 1940, as amended and is willing to provide VKAC with investment advisory
services on the terms and conditions hereinafter set forth; and

WHEREAS, VKAC and MSAM (jointly referred to as "the Advisers") desire to enter
into an agreement for MSAM to provide sub-advisory services to the Fund and to
VKAC with respect to the Fund's investments.

NOW THEREFORE it is mutually agreed:

1. INVESTMENT SUB-ADVISORY SERVICES

1.1 Investment Advice

a) Subject to the overall policies, control, direction and review of the
Fund's Trustees, MSAM shall keep under review the investments of the Fund and
continuously furnish to the Fund and to VKAC (1) investment advice with respect
to all or such portion of the Fund's assets as the Advisers agree to from time
to time; (2) economic, statistical and research information and advice,
including advice on the allocation of investments among countries, relating to
all or such portion of the Fund's assets as the Advisers shall agree to from
time to time; (3) recommendations as to the voting of proxies solicited by or
with respect to securities under MSAM's supervision; and (4) an investment
program with respect to securities and recommendations as to what securities
shall be purchased, sold or exchanged, and what portion, if any, of the
securities shall be held in money market instruments.

b) The Advisers are responsible for the allocation of the Fund's assets
among the various securities markets of the world. The Advisers will determine
at least quarterly the percentage of the assets that shall be allocated to each
of the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within various regions as they agree to from time to time.

<PAGE> 2

c) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified
from time to time by VKAC or by the Trustees, MSAM shall determine the
securities to be purchased and sold by the Fund and shall place orders for the
purchase, sale or exchange of securities for the Fund's accounts with brokers
or dealers and to that end MSAM is authorized by the Trustees to give
instructions to the Custodian and any Sub-Custodian of the Fund as to
deliveries of such securities, transfers of currencies and payments of cash for
the account of the Fund.

d) In performing these services, MSAM shall adhere to the Fund's investment
objectives, restrictions and limitations as contained in its Prospectus,
Statement of Additional Information, or Agreement and Declaration of Trust and
shall comply with all statutory and regulatory restrictions, limitations and
requirements applicable to the activity of the Fund.

e) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified
from time to time by VKAC or by the Trustees, MSAM shall have executed and
performed on behalf of and at the expense of the Fund:

i) Purchases, sales, exchanges, conversions, and placement or orders for
execution, and

ii) Reporting of all transactions to VKAC and to other entities as
directed by VKAC or by the Trustees.

f) MSAM shall provide the Trustees at least quarterly, in advance of the
regular meetings of the Trustees, a report of its activities hereunder on
behalf of the Fund and its proposed strategy for the next quarter, all in such
form and detail as requested by the Trustees. MSAM shall also make an
investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.

1.2 Restriction of MSAM's Powers

(a) MSAM shall not commit the Fund to any extent beyond the amount of the
cash and securities placed by the Fund under the control of MSAM.

(b) In carrying out its duties hereunder MSAM shall comply with all
reasonable instruction of the Fund or VKAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to
MSAM.

(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Trustees as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Trustees as sub-custodians.

(d) Persons authorized by resolution of the Trustees shall have the right to
inspect and copy contracts, notes, vouchers, and copies of entries in books or
electronic recording media relating to the Fund's transactions at the
registered office of MSAM at any time during normal business hours. Such
records, in relation to each transaction effected by MSAM on behalf of the Fund
shall be maintained by MSAM for a period of seven years from the date of such
transaction.

1.3 Purchase and Sale of Securities

In performing the services described above, MSAM shall use its best efforts
to obtain for the Fund the most favorable price and execution available.
Subject to prior authorization of appropriate policies and procedures by the
Trustees, MSAM may, to the extent authorized by law, cause the Fund to pay a
broker or dealer who provides brokerage and research services an amount of
commission for effecting the Fund's investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, in recognition of the brokerage and research services

<PAGE> 3

provided by the broker or dealer. To the extent authorized by law, MSAM shall
not be deemed to have acted unlawfully or to have breached any duty created by
this Agreement or otherwise solely by reason of such action.

1.4 Custodian

MSAM shall not act as Custodian for the securities or any other assets of the
Fund. All such assets shall be held by the Custodian or Sub-Custodian appointed
by the Trustees.

2. DUTIES OF VKAC

2.1 Provision of Information

VKAC shall advise MSAM from time to time with respect to the Fund of its
investment objectives and of any changes or modifications thereto, as well as
any specific investment restrictions or limitations by sending to MSAM a copy
of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by MSAM, VKAC shall furnish
such information to MSAM as to holdings, purchases, and sales of the securities
under its management as will reasonably enable MSAM to furnish its investment
advice under this Agreement.

2.2 Compensation to MSAM

The fee for the services provided under this Agreement will be
determined as follows:

(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the
compensation actually received by VKAC pursuant to the investment advisory fee
schedule set forth in the Investment Advisory Agreement between the Fund and
VKAC taking into account any waiver or return to the Fund of any or all of such
advisory fee by VKAC (with any such return of fees to be treated as if not
actually received). The value of the assets of the Fund shall be computed as of
the close of business on the last day of each valuation period for the Fund,
using the average of all the daily determinations of the net value of the
assets of the Fund.

(b) The foregoing fee shall be paid in cash by VKAC to MSAM within five (5)
business days after the last day of the valuation period.

3. MISCELLANEOUS

3.1 Activities of MSAM

The services of MSAM as Sub-Adviser to VKAC under this Agreement are not to
be deemed exclusive, MSAM and its affiliates being free to render services to
others. It is understood that shareholders, trustees, officers and employees of
MSAM may become interested in the Fund or VKAC as a shareholder, trustee,
officer, partner or otherwise.

3.2 Services to Other Clients

VKAC acknowledges that MSAM may have investment responsibilities, or render
investment advice to, or perform other investment advisory services for, other
individuals or entities ("Clients"). Subject to the provisions of this
paragraph, VKAC agrees that MSAM may give advice or exercise investment
responsibility and take such other action with respect to such Clients which
may differ from advice given or the timing or nature of action taken with
respect to the Fund, provided that MSAM acts in good faith, and provided,
further, that it is MSAM policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Clients, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. VKAC acknowledges that one or more of the Clients may at
any time hold, acquire,

<PAGE> 4

increase, decrease, dispose of or otherwise deal with positions in investments
in which the Fund may have an interest from time to time, whether in
transactions which may involve the Fund or otherwise. MSAM shall have no
obligation to acquire for the Fund a position in any investment which any
Client may acquire, and VKAC shall have no first refusal, coinvestment or other
rights in respect of any such investment, either for the Fund or otherwise.

3.3 Best Efforts

It is understood and agreed that in furnishing the investment advice and
other services as herein provided, MSAM shall use its best professional
judgment to recommend actions which will provide favorable results for the
Fund. MSAM shall not be liable to the Fund or to any shareholder of the Fund
to any greater degree than VKAC.

3.4 Duration of Agreement

a) This Agreement, unless terminated pursuant to paragraph b or c below or
Section 2.2(c), shall continue in effect through May 31, 1999, and thereafter
shall continue in effect from year to year, provided its continued
applicability is specifically approved at least annually by the Trustees or by
a vote of the holders of a majority of the outstanding shares of the Fund. In
addition, such continuation shall be approved by vote of a majority of the
Trustees who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. As used in this paragraph, the term "interested person" shall
have the same meaning as set forth in the 1940 Act.

b) This Agreement may be terminated by sixty (60) days' written notice by
either VKAC or MSAM to the other party. The Agreement may also be terminated at
any time, without the payment of any penalty, by the Fund (by vote of the
Trustees or, by the vote of a majority of the outstanding voting securities of
such Fund), on sixty (60) days' written notice to both VKAC and MSAM. This
Agreement shall automatically terminate in the event of the termination of the
investment advisory agreement between VKAC and the Fund.

c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 1940 Act.

d) Termination shall be without prejudice to the completion of any
transactions which MSAM shall have committed to on behalf of the Fund prior to
the time of termination. MSAM shall not effect and the Fund shall not be
entitled to instruct MSAM to effect any further transactions on behalf of the
Fund subsequent to the time termination takes effect.

e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:

i) If VKAC or MSAM shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or

ii) If either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days
after the service of notice by the party not in breach on the other requiring
the same to be remedied.

f) On the termination of this Agreement and completion of all matters
referred to in the foregoing paragraph (d) MSAM shall deliver or cause to be
delivered to the Fund copies of all documents, records and books of the Fund
required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act
which are in MSAM's possession, power or control and which are valid and in
force at the date of termination.

<PAGE> 5

3.5 Notices

Any notice, request, instruction, or other document to be given under this
Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow),

If to MSAM, to:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
attn: Warren J. Olsen

with a copy to:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
attn: Harold J. Schaaff, Esq.

If to VKAC, to:

Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
attn: Dennis J. McDonnell

with a copy to:

Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
attn: Ronald A. Nyberg, Esq.

or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three (3)
days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.

3.6 Choice of Law

This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the United
States and the State of New York, without regard to the conflicts of laws
principles thereof.

3.7 Miscellaneous Provisions

The execution of this Agreement has been authorized by the Fund's Trustees
and by the shareholders. This Agreement is executed on behalf of the Fund or
the Trustees of the Fund as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the Fund individually but are binding only upon the
assets and property of the Fund. A Certificate of Trust in respect of the Fund
is on file with the Secretary of State of Delaware.

<PAGE> 6

IN WITNESS WHEREOF, the Agreement has been executed as of the date first above
given.

VAN KAMPEN AMERICAN CAPITAL MORGAN STANLEY
ASSET MANAGEMENT, INC. ASSET MANAGEMENT INC.

By: /s/ Dennis J. McDonnell By: /s/ Harold J. Schaaff, Jr.
-------------------------------------- ----------------------------

Name: Dennis J. McDonnell Name: Harold J. Scaaff, Jr.
------------------------------------ --------------------------

Its: President & Chief Operating Officer Its: General Counsel & Secretary
------------------------------------- ---------------------------

<PAGE> 1
EXHIBIT 6(a)(i)

DISTRIBUTION AND SERVICE AGREEMENT

THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of May 31, 1997(the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES
TRUST, a Delaware business trust (the "Trust"), on behalf of its series, VAN
KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND (the "Fund"), and VAN KAMPEN
AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").

1. Appointment of Distributor. The Fund appoints the Distributor as a
principal underwriter and exclusive distributor of each class of its shares of
beneficial interest (the "Shares") offered for sale from time to time pursuant
to the then current prospectus of the Fund, subject to different combinations
of front-end sales charges, distribution fees, service fees and contingent
deferred sales charges. Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"FESC Classes" and the Shares of such classes are referred to herein as "FESC
Shares." Classes of shares, if any, subject to a contingent-deferred sales
charge and a distribution and/or a service fee are referred to herein as "CDSC
Classes" and Shares of such classes are referred to herein as "CDSC Shares."
Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares." The Fund reserves the right to
refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Board of Trustees of the Fund.

The Distributor will use its best efforts to sell, through its
organization and through other dealers and agents, the Shares which the
Distributor has the right to purchase under Section 2 hereof, but the
Distributor does not undertake to sell any specific number of Shares.

The Distributor agrees that it will not take any long or short
positions in the Shares, except for long positions in those Shares purchased by
the Distributor in accordance with any systematic sales plan described in the
then current Prospectus of the Fund and except as permitted by Section 2
hereof, and that so far as it can control the situation, it will prevent any of
its trustees, officers or shareholders from taking any long or short positions
in the Shares, except for legitimate investment purposes.

2. Sale of Shares to Distributor. The Fund hereby grants to the
Distributor the exclusive right, except as herein otherwise provided, to
purchase Shares directly from the Fund upon the terms herein set forth. Such
exclusive right hereby granted shall not apply to Shares issued or transferred
or sold at net asset value: (a) in connection with the merger or consolidation
of the Fund with any other investment company or the acquisition by the Fund of
all or substantially all of the assets of or the outstanding Shares of any
investment company; (b) in connection with a pro rata distribution directly to
the holders of Fund Shares in the nature of a stock dividend or stock split or
in connection with any other recapitalization approved by the Board of
Trustees; (c) upon the exercise of purchase or subscription rights granted to
the holders of Shares on a pro rata basis; (d) in connection with the automatic
reinvestment of dividends and distributions from the Fund; or (e) in connection
with the issue and sale of Shares to trustees, officers and employees of the
Fund; to directors, officers and employees of the investment adviser of the
Fund or any principal underwriter (including the Distributor) of the Fund; to
retirees of the Distributor that purchased shares of any mutual fund
distributed by the Distributor prior to retirement; to directors, officers and
employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt
Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly
VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and
to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").

The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission

1
<PAGE> 2

and cancellation of orders) to fill unconditional orders for Shares received by
the Distributor from dealers, agents and investors during each period when
particular net asset values and public offering prices are in effect as
provided in Section 3 hereof; and the price which the Distributor shall pay for
the Shares so purchased shall be the respective net asset value used in
determining the public offering price on which such orders were based. The
Distributor shall notify the Fund at the end of each such period, or as soon
thereafter on that business day as the orders received in such period have been
compiled, of the number of Shares of each class that the Distributor elects to
purchase hereunder.

3. Public Offering Price. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund. In
no event shall the public offering price exceed the net asset value per Share,
plus, with respect to the FESC Shares, a front-end sales charge not in excess
of the applicable maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., as in effect
from time to time. The net asset value per share for each class of Shares,
respectively, shall be determined in the manner provided in the Declaration of
Trust and By-Laws of the Trust as then amended, the Certificate of Designation
with respect to the Fund, as amended, and in accordance with the then current
Prospectus of the Fund consistent with the terms and conditions of the
exemptive order with respect to the Fund (Release No. IC-19600) issued by the
Securities and Exchange Commission on July 28, 1993, as it may be amended from
time to time or succeeded by other exemptive orders or rules promulgated by the
Securities and Exchange Commission under the 1940 Act. The Fund will cause
immediate notice to be given to the Distributor of each change in net asset
value as soon as it is determined. Discounts to dealers purchasing FESC Shares
from the Distributor for resale and to brokers and other eligible agents making
sales of FESC Shares to investors and compensation payable from the Distributor
to dealers, brokers and other eligible agents making sales of CDSC Shares and
Combination Shares shall be set forth in the selling agreements between the
Distributor and such dealers or agents, respectively, as from time to time
amended, and, if such discounts and compensation are described in the then
current Prospectus for the Fund, shall be as so set forth.

4. Compliance with NASD Rules, SEC Orders, etc. In selling Fund
Shares, the Distributor will in all respects duly comply with all state and
federal laws relating to the sale of such securities and with all applicable
rules and regulations of all regulatory bodies, including without limitation
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and all applicable rules and regulations of the Securities and Exchange
Commission under the 1940 Act, and will indemnify and save the Fund harmless
from any damage or expense on account of any unlawful act by the Distributor or
its agents or employees. The Distributor is not, however, to be responsible
for the acts of other dealers or agents, except to the extent that they shall
be acting for the Distributor or under its direction or authority. None of the
Distributor, any dealer, any agent or any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus heretofore or hereafter
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act") (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved by
the Fund in connection with the offer or sale of Shares. None of the
Distributor, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise. All such sales shall be made by the Distributor as
principal for its own account.

In selling Shares to investors, the Distributor will adopt and comply
with certain standards, as set forth in Exhibit III attached hereto as to when
each respective class of Shares may appropriately be sold to particular
investors. The Distributor will require every broker, dealer and other
eligible agent participating in the offering of the Shares to agree to adopt
and comply with such standards as a condition precedent to their participation
in the offering.

<PAGE> 3
5. Expenses.

(a) The Fund will pay or cause to be paid:

(i) all expenses in connection with the registration of
Shares under the federal securities laws, and the Fund
will exercise its best efforts to obtain said
registration and qualification;

(ii) all expenses in connection with the printing of any
notices of shareholders' meetings, proxy and proxy
statements and enclosures therewith, as well as any
other notice or communication sent to shareholders in
connection with any meeting of the shareholders or
otherwise, any annual, semiannual or other reports or
communications sent to the shareholders, and the
expenses of sending prospectuses relating to the Shares
to existing shareholders;

(iii) all expenses of any federal or state original-issue tax
or transfer tax payable upon the issuance, transfer or
delivery of Shares from the Fund to the Distributor;
and

(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.

(b) The Distributor will also permit its officers and employees
to serve without compensation as trustees and officers of the Fund if duly
elected to such positions.

(c) The Fund shall reimburse the Distributor for out-of-pocket
costs and expenses actually incurred by it in connection with distribution of
each class of Shares respectively in accordance with the terms of a plan (the
"12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as
such 12b-1 Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Distributor hereunder with respect to a
class of Shares unless and until this Agreement shall have been approved for
each such class by a majority of the Board of Trustees of the Fund and by a
majority of the "Disinterested Trustees" (as such term is defined in such 12b-1
Plan) by vote cast in person at a meeting called for the purpose of voting on
this Agreement. A copy of such 12b-1 Plan as in effect on the date of this
Agreement is attached as Exhibit I hereto. The Fund reserves the right to
terminate such 12b-1 Plan with respect to a class of Shares at any time, as
specified in the Plan. The persons authorized to direct the payment of funds
pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board
of Trustees, and the Trustees shall review, at least quarterly, a written
report with respect to each of the classes of Shares of the amounts so paid and
the purposes for which such expenditures were made for each such class of
Shares.

(d) The Fund shall compensate the Distributor for providing
services to, and the maintenance of, shareholder accounts in the Fund
(including prepaying service fees to eligible brokers, dealers and financial
intermediaries and expenses incurred in connection therewith) and the
Distributor may pay as agent for and on behalf of the Fund a service fee with
respect to each class of Shares to brokers, dealers and financial
intermediaries for the provision of shareholder services and the maintenance of
shareholder accounts in the Fund in the amount with respect to each class of
Shares set forth from time to time in the Fund's prospectus. The Fund shall
compensate the Distributor for such expenses in accordance with the terms of a
service plan (the "Service Plan"), as such Service Plan may be in effect from
time to time; provided, however, that no service fee payments shall be due or
paid to the Distributor hereunder with respect to a class of Shares unless and
until this Agreement shall have been approved for each such class by a majority
of the Board of Trustees of the Fund and by a majority of the Disinterested
Trustees by vote cast in person at a meeting called for the purpose of voting
on this Agreement. A copy of such Service Plan as in effect on the date of
this Agreement is attached as Exhibit II hereto. The Fund reserves the right
to terminate such Service Plan with respect to a class of Shares at any time,
as specified in the Plan. The persons authorized to direct the payment of
funds pursuant to this Agreement and the Service Plan shall provide to the
Fund's Board of Trustees, and the Trustees shall

<PAGE> 4

review, at least quarterly, a written report with respect to each of the
classes of Shares of the amounts paid as service fees for each such class of
Shares.

6. Redemption of Shares. In connection with the Fund's redemption of
its Shares, the Fund hereby authorizes the Distributor to repurchase, upon the
terms and conditions hereinafter set forth, as the Fund's agent and for the
Fund's account, such Shares as may be offered for sale to the Fund from time to
time by holders of such Shares or their agents.

(a) Subject to and in conformity with all applicable federal
and state legislation, any applicable rules of the National Association of
Securities Dealers, Inc., and any applicable rules and regulations of the
Securities and Exchange Commission under the 1940 Act, the Distributor may
accept offers of holders of Shares to resell such Shares to the Fund on such
terms and conditions and at such prices as described and provided for in the
then current Prospectus of the Fund.

(b) The Distributor agrees to notify the Fund at such times as
the Fund may specify of the number of each class of Shares, respectively,
repurchased for the Fund's account and the time or times of such repurchases,
and the Fund shall notify the Distributor of the prices and, in the case of a
class of CDSC Shares or Combination Shares, of the deferred sales charge as
described below, if any, applicable to repurchases of Shares of such class.

(c) The Fund shall have the right to suspend or revoke the
foregoing authorization at any time; unless otherwise stated, any such
suspension or revocation shall be effective forthwith upon receipt of notice
thereof by telegraph or by written instrument from any of the Fund's officers.
In the event that the Distributor's authorization is, by the terms of such
notice, suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote of
the Board of Trustees of the Fund.

(d) The Distributor agrees that all repurchases of Shares made
by the Distributor shall be made only as agent for the Fund's account and
pursuant to the terms and conditions herein set forth.

(e) The Fund agrees to authorize and direct its Custodian to
pay, for the Fund's account, the repurchase price (together with any applicable
contingent deferred sales charge) of any Shares so repurchased for the Fund
against the authorized transfer of book shares from an open account and against
delivery of any other documentation required by the Board of Trustees of the
Fund or, in the case of certificated Shares, against delivery of the
certificates representing such Shares in proper form for transfer to the Fund.

(f) The Distributor shall receive no commissions or other
compensation in respect of any repurchases of FESC Shares for the Fund under
the foregoing authorization and appointment as agent. With respect to any
repurchase of CDSC Shares or Combination Shares, the Distributor shall receive
the deferred sales charge, if any, applicable to the respective class of Shares
that have been held for less than a specified period of time with respect to
such class as set forth from time to time in the Fund's Prospectus. The
Distributor shall receive no other commission or other compensation in respect
of any repurchases of CDSC Shares or Combination Shares for the Fund under the
foregoing authorization and appointment as agent.

(g) If any FESC Shares sold to the Distributor under the terms
of this Agreement are redeemed or repurchased by the Fund or by the Distributor
as agent or are tendered for redemption within seven business days after the
date of the Distributor's confirmation of the original purchase by the
Distributor, the Distributor shall forfeit the amount above the net asset value
received by it in respect of such Shares, provided that the portion, if any, of
such amount re-allowed by the Distributor to dealers or agents shall be
repayable to the Fund only to the extent recovered by the Distributor from the
dealer or agent concerned. The Distributor shall include in agreements with
such dealers and agents a corresponding provision for the forfeiture by them of
their concession with respect to FESC Shares

4
<PAGE> 5

purchased by them or their principals and redeemed or repurchased by the
Fund or by the Distributor as agent within seven business days after the date
of the Distributor's confirmation of such initial purchases.

7. Indemnification. The Fund agrees to indemnify and hold harmless
the Distributor and each of its trustees and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage,
or expense and reasonable counsel fees incurred in connection therewith),
arising by reason of any person acquiring any Shares, based upon the ground
that the registration statement, Prospectus, shareholder reports or other
information filed or made public by the Fund (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading under the 1933 Act or any other statute or the common law. However,
the Fund does not agree to indemnify the Distributor or hold it harmless to the
extent that the statement or omission was made in reliance upon, and in
conformity with, information furnished to the Fund by or on behalf of the
Distributor. In no case (i) is the indemnity of the Fund in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor
or any person against any liability to the Fund or its securityholders to which
the Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be liable under its indemnity agreement
contained in this Section with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or any such person
shall have notified the Fund in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any claims, but
if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any suit and retain counsel, the Distributor, officers or
trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of any suit, it will reimburse
the Distributor, officers or trustees or controlling person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.

The Distributor also covenants and agrees that it will indemnify and
hold harmless the Fund and each of its trustees and officers and each person,
if any, who controls the Fund within the meaning of Section 15 of the 1933 Act
against any loss, liability, damage, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable counsel fees incurred in connection therewith)
arising by reason of any person acquiring any Shares, based upon the 1933 Act
or any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund or such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligation and duties
under this Amended Agreement, or (ii) is the Distributor to be liable under its

5
<PAGE> 6

indemnity agreement contained in this paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or person, as the
case may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
person (or after the Fund or such person shall have received notice of service
on any designated agent). However, failure to notify the Distributor of any
claim shall not relieve the Distributor from any liability which it may have to
the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
Fund or controlling persons, defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the Fund,
officers and trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Distributor agrees to notify the Fund promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Shares.

8. Continuation, Amendment or Termination of This Agreement. This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect year to year with respect to each class of
Shares so long as such continuance is approved at least annually (i) by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the respective class of Shares of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Independent Trustee") cast in person
at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated with respect to
either class of Shares of the Fund without the payment of any penalty either by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the outstanding voting securities of the respective class of Shares of the
Fund, on written notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement
may be terminated by the Distributor on ninety (90) days' written notice to the
Fund. Upon termination of this Agreement with respect to either class of
Shares of the Fund, the obligations of the parties hereunder shall cease and
terminate with respect to such class of Shares as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination.

This Agreement may be amended with respect to either class of Shares at
any time by mutual consent of the parties, provided that such consent on the
part of the Fund shall have been approved (i) by the Board of Trustees of the
Fund, or by a vote of the majority of the outstanding voting securities of the
respective class of Shares of the Fund, and (ii) by vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such amendment.

For the purpose of this section, the terms "vote of a majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the meanings defined in the 1940 Act, as amended.

9. Limited Liability of Shareholder. Notwithstanding anything to the
contrary contained in this Agreement, you acknowledge and agree that, as
provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust,
this Agreement is executed by the Trustees of the Trust and/or Officers of the
Fund by them not individually but as such Trustees and/or Officers, and the
obligations of the Fund hereunder are not binding upon any of the Trustees,
Officers or Shareholders individually, but bind only the trust estate.

10. Notice. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at any
office of such party or at such other address as such party shall have
designated in writing.

<PAGE> 7

11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.

VAN KAMPEN AMERICAN CAPITAL WORLD
PORTFOLIO SERIES TRUST, on behalf of its
series, VAN KAMPEN AMERICAN CAPITAL GLOBAL
EQUITY FUND

By: /s/ Dennis J. McDonnell
------------------------------------
Name: Dennis J. McDonnell
Title: President

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

By: /s/ Ronald A. Nyberg
------------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President

<PAGE> 1
EXHIBIT 6(a)(ii)

DISTRIBUTION AND SERVICE AGREEMENT

THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of May 31, 1997 (the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES
TRUST, a Delaware business trust (the "Trust"), on behalf of its series, VAN
KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND (the "Fund"), and VAN
KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").

1
<PAGE> 2

<PAGE> 3
5. Expenses.

(a) The Fund will pay or cause to be paid:

(i) all expenses in connection with the registration of
Shares under the federal securities laws, and the Fund
will exercise its best efforts to obtain said
registration and qualification;

(iii) all expenses of any federal or state original-issue tax
or transfer tax payable upon the issuance, transfer or
delivery of Shares from the Fund to the Distributor;
and

(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.

(b) The Distributor will also permit its officers and employees
to serve without compensation as trustees and officers of the Fund if duly
elected to such positions.

3
<PAGE> 4

review, at least quarterly, a written report with respect to each of the
classes of Shares of the amounts paid as service fees for each such class of
Shares.

(d) The Distributor agrees that all repurchases of Shares made
by the Distributor shall be made only as agent for the Fund's account and
pursuant to the terms and conditions herein set forth.

<PAGE> 5

purchased by them or their principals and redeemed or repurchased by the Fund
or by the Distributor as agent within seven business days after the date
of the Distributor's confirmation of such initial purchases.

5
<PAGE> 6

<PAGE> 7

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.

VAN KAMPEN AMERICAN CAPITAL WORLD
PORTFOLIO SERIES TRUST, on behalf of
its series, VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND

By: /s/ Dennis J. McDonnell
----------------------------------
Name: Dennis J. McDonnell
Title: President

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.

By: /s/ Ronald A. Nyberg
--------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President

<PAGE> 1
EXHIBIT 8(a)

CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX A
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . 2

2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Moneys . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities System . . . . . . . 8
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Fund Securities . . . . . . . . 11

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . . 11

3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . 12
3.4 Agreements with Foreign Banking Institutions . . . . . . . 12
3.5 Access of Independent Accountants of the Fund . . . . . . 12
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . 12
3.7 Transactions in Foreign Custody Account . . . . . . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . . . . . . 13
3.9 Liability of Custodian . . . . . . . . . . . . . . . . . . 13
3.10 Reimbursement for Advances . . . . . . . . . . . . . . . . 14
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . 14
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . 15

4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . 15

5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 16

6. Actions Permitted Without Express Authority . . . . . . . . . . . 16

7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 17

8. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 17

9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . 18

11. Reports to Fund by Independent Public Accountants . . . . . . . . 18

12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 18

13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 18

14. Effective Period, Termination and Amendment . . . . . . . . . . . 19

15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 20

16. Interpretive and Additional Provisions . . . . . . . . . . . . . . 21

17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . 21

18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . 22

19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 22

20. Shareholder Communications . . . . . . . . . . . . . . . . . . . . 22

21. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT

This Contract between each fund or series of a fund listed on
Appendix A which evidences its agreement to be bound hereby by executing a copy
of this Contract (each such fund is individually hereafter referred to as
the "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",

WITNESSETH:

WITNESSETH THAT, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of the assets
of the Fund, including securities which the Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to
be held outside the United States ("foreign securities") pursuant to the
provisions of the Fund's governing documents. The Fund agrees to deliver to
the Custodian all securities and cash of the Fund, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of capital stock, beneficial
interest or partnership interest, as applicable, of the Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Fund held or received by the Fund and not
delivered to the Custodian.

Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Fund(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund, and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.

1
<PAGE> 5
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States

2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property to be held by it in
the United States including all domestic securities owned by such Fund
other than (a) securities which are maintained pursuant to Section 2.10
in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury
(and certain federal agencies collectively referred to herein as
"Securities System") and (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper System")
pursuant to Section 2.11.

2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Fund held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:

1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;

2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;

3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;

4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;

5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee

2
<PAGE> 6
name of any agent appointed pursuant to Section 2.9 or into
the name or nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;

7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;

10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by
the Fund prior to the receipt of such collateral;

11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;

3
<PAGE> 7
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;

13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;

14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemption;

15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund, a
certified copy of a resolution of the Board of Trustees,
specifying the securities of the Fund to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such
securities shall be made; and

16) Upon termination of the Contract.

2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to

4
<PAGE> 8
Article 1. All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street name" or
other good delivery form. If, however, the Fund directs the Custodian
to maintain securities in "street name", the Custodian shall utilize
its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund ,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian for a
Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited with each
such bank or trust company shall on behalf of each applicable Fund be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions from the Fund, make federal funds available to such Fund
as of specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks received in payment for Shares
of such Fund which are deposited into the Fund's account.

2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder
to which each Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis
all income and other payments with respect to bearer domestic
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when

5
<PAGE> 9
due on securities held hereunder. Income due each Fund on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.

2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from the
Fund, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out moneys of a Fund in the
following cases only:

1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Fund but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee
of the Custodian referred to in Section 2.3 hereof or in proper
form for transfer; (b) in the case of a purchase effected
through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of
a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.11; (d) in the case
of repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to
repurchase such securities from the Fund or (e) for transfer to
a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined
in Article 5;

2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;

6
<PAGE> 10
3) For the redemption or repurchase of Shares issued by the Fund
as set forth in Article 4 hereof;

4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;

5) For the payment of any dividends on Shares of the Fund
declared pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund, a certified copy
of a resolution of the Board of Trustees, specifying the amount
of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment
is to be made; and

8) Upon termination of this Contract.

2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.

7
<PAGE> 11
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:

1) The Custodian may keep securities of the Fund in a U.S.
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the U.S.
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

2) The records of the Custodian with respect to securities of the
Fund which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Fund;

3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (i)
receipt of advice from the U.S. Securities System that payment
for such securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all advices from the U.S. Securities System of
transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Custodian
and be provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Fund.

4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities
System;

8
<PAGE> 12
5) The Custodian shall have received from the Fund the initial or
annual certificate, as the case may be, required by Article 14
hereof;

6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the U.S. Securities System by
reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.

2.11 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a Fund in
the Direct Paper System of the Custodian subject to the following
provisions:

1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund ;

2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held
as a fiduciary, custodian or otherwise for customers;

3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;

4) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the records
of the Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon the
making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the
Fund;

9
<PAGE> 13
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transaction in the U.S. Securities System for the account of
the Fund;

6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may
reasonably request from time to time.

2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund establish and maintain a segregated account
or accounts for and on behalf of each such Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund , the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by
the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund , a certified copy of a
resolution of the Board of Trustees setting forth the purpose or
purposes of such segregated account and declaring such purposes
to be proper corporate purposes.

2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Fund held by it
and in connection with transfers of securities.

10
<PAGE> 14
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.

2.15 Communications Relating to Fund Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls
and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the Custodian is
to take such action.

3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States

3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board of
Trustees, the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.

3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to:
(a) "foreign securities", as defined in

11
<PAGE> 15
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to
effect the Fund's foreign securities transactions. The Custodian
shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.

3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in a clearing agency which acts as a securities depository
or in a book-entry system for the central handling of securities
located outside of the United States (each a "Foreign Securities
System") only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof
(Foreign Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities Systems"). Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.

3.4 Holding Securities. The Custodian may hold cash, securities and other
non-cash property for all of its customers, including the Fund, with a
foreign sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, provided
however, that (1) the records of the Custodian with respect to cash,
securities and other non-cash property of the Fund which are
maintained in such account shall identify by book-entry the cash,
securities and other non-cash property belonging to the Fund and (ii)
the Custodian shall require that cash, securities and other non-cash
property so held by the foreign sub-custodian be held separately from
any assets of the Custodian, the foreign sub-custodian or of others.

3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of
each Fund will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership for the assets of
each Fund will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to each
applicable Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the Fund,
will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the
Custodian; and (e) assets of the Fund(s) held by the foreign
sub-custodian will be subject only to the instructions of the
Custodian or its agents.

3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.

3.7 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Fund(s) securities and other assets
and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking

12
<PAGE> 16
institution for the Custodian on behalf of each applicable Fund
indicating, as to securities acquired for a Fund, the identity of the
entity having physical possession of such securities.

3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Fund and delivery of
securities maintained for the account of each applicable Fund may be
effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer. In addition, and
whether or not such practice is a customary established trading
practice in the relevany jurisdictions, the Custodian will, upon
Proper Instructions from the Fund, deliver cash to securities brokers
in foreign jurisdictions who will effect securities trades for the
Fund and cause the securities purchased to be delivered to the
applicable foreign sub-custodian at some later date. (c) Securities
maintained in the custody of a foreign sub-custodian may be maintained
in the name of such entity's nominee to the same extent as set forth
in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.

3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and each Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense, liability or
claim.

3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this

13
<PAGE> 17
paragraph 3.10, in delegating custody duties to State Street London
Ltd., the Custodian shall not be relieved of any responsibility to the
Fund for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.

3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a Fund
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash
and to dispose of such Fund's assets to the extent necessary to obtain
reimbursement.

3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).

3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Fund's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of

14
<PAGE> 18
said Act. The appointment of any such branch as a sub-custodian shall
be governed by paragraph 1 of this Contract. (b) Cash held for each
Fund in the United Kingdom shall be maintained in an interest bearing
account established for the Fund with the Custodian's London branch,
which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.

3.14 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such
information.

4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund

The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Fund such payments as are received for Shares of that Fund issued
or sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Fund and the Transfer Agent of
any receipt by it of payments for Shares of such Fund.

From such funds as may be available for the purpose but subject to the
limitations of the applicable Fund's governing documents and any applicable
votes of the Board of Trustees of the Fund pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make funds
available for payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In connection
with the redemption or repurchase of Shares of a Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire funds
to or through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund and the Custodian.

15
<PAGE> 19
5. Proper Instructions

Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board of
Trustees of the Fund accompanied by a detailed description of procedures
approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied
that such procedures afford adequate safeguards for the Funds' assets. For
purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires
a segregated asset account in accordance with Section 2.12.

6. Actions Permitted without Express Authority

The Custodian may in its discretion, without express authority from
the Fund:

1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund ;

2) surrender securities in temporary form for securities in
definitive form;

3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Board of
Trustees of the Fund.

16
<PAGE> 20
7. Evidence of Authority

The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Trustees pursuant to the governing documents of
the Fund as described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to the
contrary.

8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income

The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Fund and/or compute the net asset value per share
of the outstanding shares of each Fund or, if the Custodian and the Fund
execute the applicable Price Source Authorization (the "Authorization"), the
Custodian shall keep such books of account and/or compute such net asset value
per share pursuant to the terms of the Authorization and the attachments
thereto. If so directed, the Custodian shall also calculate daily the net
income of the Fund as described in the Fund's currently effective Prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value
per share and the daily income of each Fund shall be made at the time or times
described from time to time in the Fund's currently effective Prospectus
related to such Fund.

9. Records

The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Fund and held by the Custodian and shall, when requested to

17
<PAGE> 21
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.

10. Opinion of Fund's Independent Accountant

The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.

11. Reports to Fund by Independent Public Accountants

The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.

12. Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.

13. Responsibility of Custodian

So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in

18
<PAGE> 22
good faith without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.

Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by: (i) events or circumstances
beyond the reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of trading
on or the closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work stoppages,
natural disasters or other similar events or acts; (ii) errors by the Fund or
its investment adviser in their instructions to the Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency of
or acts or omissions by a Securities System; (iv) any delay or failure of any
broker, agent or intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Custodian's sub-custodian or agent
securities purchased or in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company, corporation, or other
body in charge of registering or transferring securities in the name of the
Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.

The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.

If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the applicable Fund
shall be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain reimbursement.

14. Effective Period, Termination and Amendment

This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30)

19
<PAGE> 23
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Fund act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System by such Fund and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of the
Fund has reviewed any subsequent change regarding the use by such Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not with respect to
a Fund act under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board has
approved the initial use of the Direct Paper System by such Fund and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that the
Board of the Fund has reviewed the use by such Fund of the Direct Paper System;
provided further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, or any
provision of the Fund's governing documents, and further provided, that the Fund
on behalf of one or more of the Funds may at any time by action of its Board (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.

Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.

15. Successor Custodian

If a successor custodian for a Fund shall be appointed by the Board
of Trustees of such Fund, the Custodian shall, upon termination, deliver to
such successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities, Funds and other properties of each
applicable Fund then held by it hereunder and shall transfer to an account of
the successor custodian all of the securities of each Fund held in a Securities
System.

If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Trustees of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.

In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been delivered
to the Custodian on or before the date when such

20
<PAGE> 24
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston, Massachusetts, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Fund and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract on behalf of each applicable
Fund and to transfer to an account of such successor custodian all of the
securities of each such Fund held in any Securities System. Thereafter, such
bank or trust company shall be the successor of the Custodian under this
Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.

16. Interpretive and Additional Provisions

In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the governing documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.

17. Additional Funds

In the event that Van Kampen American Capital Distributors , Inc.
establishes any funds in addition to the Funds listed on Appendix A with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references herein to
the "Fund" are to each of the Funds listed on Appendix A individually, as if

21
<PAGE> 25
this Contract were between each such individual Fund and the Custodian. With
respect to any Fund which issues shares in separate classes or series, each
class or series of such Fund shall be treated as a separate Fund hereunder.

18. Massachusetts Law to Apply

This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.

19. Prior Contracts

This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Funds and the Custodian relating to the custody of
the Fund's assets.

20. Reproduction of Documents

This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties
hereto all/each agree that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether or
not the original is in existence and whether or not such reproduction was made
by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

21. Shareholder Communications

Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Fund tells the Custodian "yes" or does not check either
"yes" or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications. Please
indicate below whether the Fund consent or object by checking one of the
alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions of each Fund listed on
Exhibit A.

NO [X] The Custodian is not authorized to release the Fund's
name, address, and share positions of each Fund listed
on Exhibit A.

22
<PAGE> 26
22. Limitation of Liability.

The execution of this Contract has been authorized by each Fund's
Board of Trustees. This Contract is executed on behalf of each Fund or the
trustees of such Fund as trustees and not individually and the obligations of
the Fund under this Contract are not binding upon any of the Fund's trustees,
officers or shareholders individually but are binding only upon the assets and
property of the Fund.

IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 1st day of August, 1997.

ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A

/s/ Nicholas Dalmaso By: /s/ Ronald A. Nyberg
- ------------------------ -----------------------------------
Ronald A. Nyberg, Vice President
and Secretary

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ Francine Hayes By: [ILLEGIBLE]
- ------------------------ -----------------------------------
Executive Vice President

23
<PAGE> 27
APPENDIX A
FUND NAMES

VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND
VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
Asset Allocation Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Morgan Stanley Real Estate Securities Portfolio
VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN AMERICAN CAPITAL PACE FUND
VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
Van Kampen American Capital High Yield Municipal Fund
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN AMERICAN CAPITAL UTILITIES INCOME FUND
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
Van Kampen American Capital U.S. Government Fund
VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal
Income Fund
Van Kampen American Capital Florida Insured Tax Free
Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital New York Tax Free Income Fund
VAN KAMPEN AMERICAN CAPITAL TRUST
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund
Van Kampen American Capital Strategic Income Fund
VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Prospector Fund
Van Kampen American Capital Aggressive Growth Fund
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND

24
<PAGE> 28
THE EXPLORER INSTITUTIONAL TRUST
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
VAN KAMPEN AMERICAN CAPITAL NAVIGATOR FUNDS
Emerging Markets Equity Portfolio
Emerging Markets Fixed Income Portfolio
U.S. QUALITY FUNDS
VAN KAMPEN AMERICAN CAPITAL EXCHANGE FUND
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR PENNSYLVANIA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL BOND FUND
VAN KAMPEN AMERICAN CAPITAL CONVERTIBLE SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL INCOME TRUST

<PAGE> 1
EXHIBIT (8)(b)

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the 31st day of May, 1997 by and between each of the
VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS set forth on Schedule "A" hereto,
which are organized under the laws of the state and as the entities set forth
in Schedule "A" hereto (collectively, the "Funds"), and ACCESS INVESTOR
SERVICES, INC., a Delaware corporation ("ACCESS").

R E C I T A L:
-------------

WHEREAS, each of the Funds desires to appoint ACCESS as its transfer
agent, dividend disbursing agent and shareholder service agent and ACCESS
desires to accept such appointments;

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

Article 1. Terms of Appointment; Duties of ACCESS.
---------------------------------------

1.01 Subject to the terms and conditions set forth in this Agreement, each
of the Funds hereby employs and appoints ACCESS as its transfer agent, dividend
disbursing agent and shareholder service agent.

1.02 ACCESS hereby accepts such employment and appointments and agrees
that on and after the effective date of this Agreement it will act as the
transfer agent, dividend disbursing agent and shareholder service agent for
each of the Funds on the terms and conditions set forth herein.

1.03 ACCESS agrees that its duties and obligations hereunder will be
performed in a competent, efficient and workmanlike manner with due diligence
in accordance with reasonable industry practice, and that the necessary
facilities, equipment and personnel for such performance will be provided.

1.04 For a period of one year commencing on the effective date of this
Agreement, ACCESS and each of the Funds agree that the retention of (i) the
chief executive officer, president, chief financial officer, chief operating
officer and secretary of ACCESS and (ii) each director, officer and employee of
ACCESS or any of its Affiliates (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) who serves as an officer of the Funds (each
person referred to in (i) or (ii) hereinafter being referred to as an
"Essential Person"), in his or her current capacities, is in the best interest

<PAGE> 2

of the Funds and the Funds' shareholders. In connection with ACCESS's
acceptance of employment hereunder, ACCESS hereby agrees and covenants for
itself and on behalf of its Affiliates that neither ACCESS nor any of its
Affiliates shall make any material or significant personnel changes or replace
or seek to replace any Essential Person or cause to be replaced any Essential
Person, in each case without first informing the Board of Trustees of the Funds
in a timely manner. In addition, neither ACCESS nor any Affiliate of ACCESS
shall change or seek to change or cause to be changed, in any material
respect, the duties and responsibilities of any Essential Person, in each case
without first informing the Board of Trustees of the Funds in a timely
manner.

1.05 In order to assure compliance with section 1.03 and to implement a
cooperative effort to improve and maintain the quality of transfer agency,
dividend disbursing and shareholder services received by each of the Funds and
their shareholders, ACCESS agrees to provide and maintain quantitative
performance objectives, including maximum target turn-around times and maximum
target error rates, for the various services provided hereunder. ACCESS also
agrees to provide a reporting system designed to provide the Board of Trustees
of each of the Funds (the "Board") on a quarterly basis with quantitative data
comparing actual performance for the period with the performance objectives.
The foregoing procedures are designed to provide a basis for continuing
monitoring by the Board of the quality of services rendered hereunder.

Article 2. Fees and Expenses.
------------------

2.01 For the services to be performed by ACCESS pursuant to this
Agreement, each of the Funds agrees to pay ACCESS the fees provided in the fee
schedules agreed upon from time to time by each of the Funds and ACCESS.

2.02 In addition to the amounts paid under section 2.01 above, each of the
Funds agrees to reimburse ACCESS promptly for such Fund's reasonable
out-of-pocket expenses or advances paid on its behalf by ACCESS in connection
with its performance under this Agreement for postage, freight, envelopes,
checks, drafts, continuous forms, reports and statements, telephone, telegraph,
costs of outside mailing firms, necessary outside record storage costs, media
for storage of records (e.g., microfilm, microfiche and computer tapes) and
printing costs incurred due to special requirements of such Fund. In addition,
any other special out-of-pocket expenses paid by ACCESS at the specific request
of any of the Funds will be promptly reimbursed by the requesting Fund.
Postage for mailings of dividends, proxies, Fund reports and other mailings

Page 2

<PAGE> 3

to all shareholder accounts shall be advanced to ACCESS by the concerned Fund
three business days prior to the mailing date of such materials.

Article 3. Representations and Warranties of Access.
-----------------------------------------

ACCESS represents and warrants to each of the Funds that:

3.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware.

3.02 It is duly qualified to carry on its business in each jurisdiction in
which the nature of its business requires it to be so qualified.

3.03 It is empowered under applicable laws and regulations and by its
charter and bylaws to enter into and perform this Agreement.

3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.

3.05 It has and will continue to have during the term of this Agreement
access to the necessary facilities, equipment and personnel to perform its
duties and obligations hereunder.

3.06 It will maintain a system regarding "as of" transactions as follows:

(a) Each "as of" transaction effected at a price other than that in
effect on the day of processing for which an estimate has not been given
to any of the affected Funds and which is necessitated by ACCESS' error,
or delay for which ACCESS is responsible or which could have been avoided
through the exercise of reasonable care, will be identified, and the net
effect of such transactions determined, on a daily basis for each such
Fund.
(b) The cumulative net effect of the transactions included in
paragraph (a) above will be determined each day throughout each month.
If, on any day during the month, the cumulative net effect upon any Fund
is negative and exceeds an amount equivalent to 1/2 of 1 cent per share
of such Fund, ACCESS shall promptly make a payment to such Fund (in cash
or through use of a credit as described in paragraph (c) below) in such
amount as necessary to reduce the negative cumulative net effect to less
than 1/2 of 1 cent per share of such Fund. If on the last business day
of the month the cumulative net effect (adjusted by the amount of any
payments or credits used pursuant to the preceding sentence) upon any
Fund is negative, such Fund shall be entitled to a reduction in the
monthly transfer agency fee next payable by an equivalent amount, except
as provided in paragraph (c) below. If on the last

Page 3

<PAGE> 4

business day of the month the cumulative net effect (similarly adjusted)
upon any Fund is positive, ACCESS shall be entitled to recover certain
past payments, credits used and reductions in fees, and to a credit
against all future payments and fee reductions made under this paragraph
to such Fund, as described in paragraph (c) below.

(c) At the end of each month, any positive cumulative net effect
upon any Fund shall be deemed to be a credit to ACCESS which shall first
be applied to recover any payments, credits used and fee reductions made
by ACCESS to such Fund under paragraph (b) above during the calendar year
by increasing the amount of the monthly transfer agency fee next payable
in an amount equal to prior payments, credits used and fee reductions
made during such year, but not exceeding the sum of that month's credit
and credits arising in prior months during such year to the extent such
prior credits have not previously been utilized as contemplated by this
paragraph (c). Any portion of a credit to ACCESS not so used shall
remain as a credit to be used as payment against the amount of any future
negative cumulative net effects which would otherwise require a payment,
use of a credit or fee reduction to such Fund pursuant to paragraph (b)
above.

Article 4. Representations and Warranties of the Funds.
--------------------------------------------

Each of the Funds hereby represents and warrants on behalf of itself
only and not on behalf of any other Funds which are a party to this Agreement
that:

4.01 It is duly organized and existing and in good standing under the laws
of the commonwealth or state set forth in Schedule "A" hereto.

4.02 It is empowered under applicable laws and regulations and by its
Declaration of Trust and by-laws to enter into and perform this Agreement.

4.03 All requisite proceedings have been taken by its Board to authorize
it to enter into and perform this Agreement.

4.04 It is an open-end, management investment company registered under the
Investment Company Act of 1940, as amended.

Page 4
<PAGE> 5

4.05 A registration statement under the Securities Act of 1933, as
amended, is currently effective and will remain effective, and appropriate
state securities laws filings have been made and will continue to be made, with
respect to all of its shares being offered for sale.

Article 5. Indemnification.
---------------
5.01 ACCESS shall not be responsible for and each of the Funds shall
indemnify and hold ACCESS harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liabilities (collectively, "Losses") arising out of or attributable to:

(a) All actions of ACCESS required to be taken by ACCESS for the
benefit of such Fund pursuant to this Agreement, provided that ACCESS has
acted in good faith with due diligence and without negligence or willful
misconduct.

(b) The reasonable reliance by ACCESS on, or reasonable use by
ACCESS of, information, records and documents which have been prepared or
maintained by or on behalf of such Fund or have been furnished to ACCESS
by or on behalf of such Fund.

(d) The offer or sale of such Fund's shares in violation of any
requirement under the federal securities laws or regulations or the
securities laws or regulations of any state or in violation of any stop
order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such shares in such state unless
such violation results from any failure by ACCESS to comply with written
instructions of such Fund that no offers or sales of such Fund's shares
be made in general or to the residents of a particular state.

(e) Such Fund's refusal or failure to comply with the terms of this
Agreement, or such Fund's lack of good faith, negligence or willful
misconduct or the breach of any representation or warranty of such Fund
hereunder. Notwithstanding the foregoing, no Fund shall be required to
indemnify or hold ACCESS harmless from and against any Losses arising out
of or attributable to any action or failure to take action, or any
information, records or

Page 5
<PAGE> 6

documents prepared or maintained, on behalf of
the Fund by the Fund's investment adviser or distributor, or any person
providing fund accounting or legal services to the Fund that is also an
officer or employee of Van Kampen American Capital, Inc. or its
subsidiaries unless such person or entity is otherwise entitled to
indemnification from the Fund.

5.02 ACCESS shall indemnify and hold harmless each of the Funds from and
against any and all Losses arising out of or attributable to ACCESS' refusal or
failure to comply with the terms of this Agreement, or ACCESS' lack of good
faith, or its negligence or willful misconduct, or the breach of any
representation or warranty of ACCESS hereunder.

5.03 At any time ACCESS may apply to any authorized officer of any of the
Funds for instructions, and may consult with any of the Funds' legal counsel,
at the expense of such concerned Fund, with respect to any matter arising in
connection with the services to be performed by ACCESS under this Agreement,
and ACCESS shall not be liable and shall be indemnified by such concerned Fund
for any action taken or omitted by it in good faith in reasonable reliance upon
such instructions or upon the opinion of such counsel. ACCESS shall be
protected and indemnified in acting upon any paper or document reasonably
believed by ACCESS to be genuine and to have been signed by the proper person
or persons and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the concerned Fund.
ACCESS shall also be protected and indemnified in recognizing stock
certificates which ACCESS reasonably believes to bear the proper manual or
facsimile signatures of the officers of the concerned Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.

5.04 In the event that any party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes.

5.05 In no event and under no circumstances shall any party to this
Agreement be liable to another party for consequential damages under any
provision of this Agreement or for any act or failure to act hereunder.

5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which one party may be
required to indemnify another, the party seeking indemnification shall promptly
notify the other party of such assertion, and shall keep the other party
advised with respect to all developments concerning such claim.

Page 6
<PAGE> 7

The party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.

Article 6. Covenants of Each of the Funds and ACCESS.
------------------------------------------
6.01 Each of the Funds shall promptly furnish to ACCESS the following:

(a) Certified copies of the resolution of its Board authorizing the
appointment of ACCESS and the execution and delivery of this Agreement.
(b) Certified copies of its Declaration of Trust or Articles of
Incorporation and by-laws and all amendments thereto.

6.02 ACCESS hereby agrees to maintain facilities and procedures
reasonably acceptable to each of the Funds for safekeeping of share
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such
certificates, forms and devices.

6.03 ACCESS shall keep records relating to the services to be
performed hereunder in the form and manner as it may deem advisable; provided,
however, that all accounts, books and other records of each of the Funds
(hereinafter referred to as "Fund Records") prepared or maintained by ACCESS
hereunder shall be maintained and kept current in compliance with Section 31 of
the Investment Company Act of 1940 and the Rules thereunder (such Section and
Rules being hereinafter referred to as the "1940 Act Requirements"). To the
extent required by the 1940 Act Requirements, ACCESS agrees that all Fund
Records prepared or maintained by ACCESS hereunder are the property of the
concerned Fund and shall be preserved and made available in accordance with the
1940 Act Requirements, and shall be surrendered promptly to the concerned Fund
on its request. ACCESS agrees at such reasonable times as may be requested by
the Board and at least quarterly to provide (i) written confirmation to the
Board that all Fund Records are maintained and kept current in accordance with
the 1940 Act Requirements, and (ii) such other reports regarding its
performance hereunder as may be reasonably requested by the Board.

Page 7
<PAGE> 8

6.04 ACCESS and each of the Funds agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.

6.05 In case of any requests or demands for the inspection of any of
the Fund Records, ACCESS will endeavor to notify each of the concerned
Funds and to secure instructions from an authorized officer of each of the
concerned Funds as to such inspection. ACCESS reserves the right, however, to
exhibit such Fund Records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit such Fund records to such
person.

Article 7. Term and Termination Of Agreement.
----------------------------------
7.01 The initial term of this Agreement shall expire May 31, 1999,
and thereafter this Agreement shall automatically be renewed for
successive one year periods to begin on June 1 of each year unless any party
provides notice to the other party at least 120 days in advance of that date
that this Agreement is not to be renewed.

7.02 Notwithstanding the foregoing, any party may terminate this
Agreement for good and reasonable cause at any time by giving written
notice to the other party at least 60 days prior to the date on which such
termination is to be effective or such shorter period as may be required by
law.

7.03 Any unpaid fees or reimbursable expenses payable to ACCESS at
the termination date of this Agreement shall be due on that termination date.
ACCESS agrees to use its best efforts to cooperate with the Funds and the
successor transfer, dividend disbursement, or shareholder servicing agent
or agents in accomplishing an orderly transition.

Article 8. Miscellaneous.
--------------
8.01 Except as provided in section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by any party
without the written consent of ACCESS or the concerned Fund, as the case may
be; provided, however, that no consent shall be required for any merger of any
of the Funds with, or any sale of all or substantially all the assets of
any of the Funds to, another investment company.

8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

Page 8
<PAGE> 9

8.03 ACCESS may, without further consent on the part of any of the
Funds, subcontract with DST, Inc., a Missouri corporation, or any other
qualified servicer, for the performance of data processing activities;
provided, however, that ACCESS shall be as fully responsible to each of
the Funds for the acts and omissions of DST, Inc. or other qualified
servicer as it is for its own acts and omissions.

8.04 Without the prior approval of the Boards of Trustees of the
Funds, ACCESS shall not, directly or indirectly, provide services,
including services such as transfer agent, dividend disbursing agent or
shareholder service agent, to any investment companies.

8.05 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes
any prior agreement with respect thereto, whether oral or written, and
this Agreement may not be modified except by written instrument executed
by the affected parties.

8.06 The execution of this Agreement has been authorized by the
Funds' Trustees. This Plan is executed on behalf of the Funds or the
Trustees of the Funds as Trustees and not individually and the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the Funds individually but are binding only
upon the assets and property of the Funds. A Certificate of Trust in
respect of each of the Funds is on file with the appropriate state
agency.

8.07 For each of those Funds which have one or more portfolios as
set forth in Schedule "A" hereto, all obligations of those Funds under
this Agreement shall apply only on a portfolio-by-portfolio basis and the
assets of one portfolio shall not be liable for the obligations of any
other.

8.08 In the event of a change in the business or regulatory
environment affecting all or any portion of this Agreement, the parties
hereto agree to renegotiate such affected portions in good faith.

8.09 All questions concerning the validity, meaning and effect of
this Agreement shall be determined in accordance with the laws (without
giving effect to the conflict-of-law principles thereof) of the State of
Delaware applicable to contracts made and to be performed in that state.

8.10 (a) Any dispute, controversy, or claim arising out of or
relating to this Agreement, or the breach, termination or validity
thereof, shall be finally settled by arbitration in accordance with
the Expedited Procedures

Page 9

<PAGE> 10

of the commercial arbitration Rules of the American Arbitration
Association (the "AAA") then in effect (the "Rules"). The
arbitration shall be held in Chicago, Illinois.

(b) There shall be one arbitrator who shall be selected jointly by
the parties. If the parties are unable to agree on an arbitrator
within 15 days after a demand for arbitration is made by a party,
the arbitrator shall be appointed by the AAA in accordance with the
Rules. The hearing shall be held within 90 days of the appointment
of the arbitrator. Notwithstanding the Expedited Procedures
of the Rules, the arbitrator, at his discretion, may schedule
additional days of hearings.

(c) Either party may, without inconsistency with this Agreement,
seek from a court any interim or provisional relief in aid of
arbitration, pending the establishment of the arbitral tribunal.
The parties hereby submit to the exclusive jurisdiction of the
federal and state courts located in the northern district of the
state of Illinois for any such relief in aid of arbitration, or for
any relief relating to arbitration, except for the enforcement of an
arbitral award which may be enforced in any court having
jurisdiction.

(d) Any arbitration proceedings or award rendered hereunder and the
validity, effect and interpretation of Section 8.10 shall be
governed by the Federal Arbitration Act (9 U.S.C. Sections 1 et
--
seq.) The award shall be final and binding upon the parties.
---
Judgment upon any award may be entered in any court having
jurisdiction.

(e) This Agreement and the rights and obligations of the Parties
shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.

Page 10

<PAGE> 11

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf and through their duly authorized
officers, as of the date first above written.

EACH OF THE VAN KAMPEN AMERICAN CAPITAL
OPEN END FUNDS LISTED ON SCHEDULE
"A" HERETO

BY: /s/ Ronald A. Nyberg
----------------------------------
Vice President

ATTEST:

/s/ Nicholas Dalmaso
- ----------------------------------
Assistant Secretary

ACCESS INVESTOR SERVICES, INC.

BY: /s/ Paul R. Wolkenberg
---------------------------------
President and Chief Executive Officer

ATTEST:
/s/ Huey P. Falgout
- ---------------------------------
Assistant Secretary

Page 11
<PAGE> 12

SCHEDULE "A"
------------
VAN KAMPEN AMERICAN CAPITAL OPEN-END FUNDS

<TABLE>
<CAPTION>
Organization Type
Fund Name State of [Business Trust
(including Portfolios) Organization "T"]
=====================================================================================================
<S> <C> <C>
Van Kampen American Capital Aggressive Growth Fund DE T
Van Kampen American Capital California Insured Tax Free Fund DE T
Van Kampen American Capital Comstock Fund DE T
Van Kampen American Capital Corporate Bond Fund DE T
Van Kampen American Capital Emerging Growth Fund DE T
Van Kampen American Capital Enterprise Fund DE T
Van Kampen American Capital Equity Income Fund DE T
Van Kampen American Capital Florida Insured Tax Free Income Fund DE T
Van Kampen American Capital Foreign Securities Fund DE T
Van Kampen American Capital Global Managed Assets Fund DE T
Van Kampen American Capital Government Securities Fund DE T
Van Kampen American Capital Government Target Fund DE T
Van Kampen American Capital Great American Companies Fund DE T
Van Kampen American Capital Growth Fund DE T
Van Kampen American Capital Growth and Income Fund DE T
Van Kampen American Capital Harbor Fund DE T
Van Kampen American Capital High Income Corporate Bond Fund DE T
Van Kampen American Capital High Yield Fund DE T
Van Kampen American Capital Insured Tax Free Income Fund DE T
Van Kampen American Capital Intermediate Term Municipal Income Fund DE T
</TABLE>

Page 12
<PAGE> 13

Van Kampen American Capital Limited Maturity Government Fund DE T
Van Kampen American Capital Municipal Income Fund DE T
Van Kampen American Capital New Jersey Tax Free Income Fund DE T
Van Kampen American Capital New York Tax Free Income Fund DE T
Van Kampen American Capital Pace Fund DE T
Van Kampen American Capital Pennsylvania Tax Free Income Fund PA T
Van Kampen American Capital Prospector Fund DE T
Van Kampen American Capital Real Estate Securities Fund DE T
Van Kampen American Capital Reserve Fund DE T
Van Kampen American Capital Short-Term Global Income Fund DE T
Van Kampen American Capital Small Capitalization Fund DE T
Van Kampen American Capital Strategic Income Fund DE T
Van Kampen American Capital Tax-Exempt Trust DE T
Van Kampen American Capital High Yield Municipal Fund
Van Kampen American Capital Tax Free High Income Fund DE T
Van Kampen American Capital Tax Free Money Fund DE T
Van Kampen American Capital U.S. Government Fund DE T
Van Kampen American Capital U.S. Government Trust for Income DE T
Van Kampen American Capital Utility Fund DE T
Van Kampen American Capital Value Fund DE T
</TABLE>

PAGE 13
<PAGE> 14

PAGE 14

<PAGE> 1

Exhibit 9(b)

FUND ACCOUNTING AGREEMENT

THIS AGREEMENT, dated May 31, 1997, by and between the parties
set forth in Schedule A hereto (designated collectively hereafter as the
"Funds") and VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware
corporation ("Advisory Corp.").

W I T N E S S E T H:

WHEREAS, each of the Funds is registered as a management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, Advisory Corp. has the capability of providing certain
accounting services to the Funds; and

WHEREAS, each desires to utilize Advisory Corp. in the
provision of such accounting services; and

WHEREAS, Advisory Corp. intends to maintain its staff in order
to accommodate the provision of all such services.

NOW THEREFORE, in consideration of the premises and the mutual
covenants spelled out herein, it is agreed between the parties hereto as
follows:

1. Appointment of Advisory Corp. As agent, Advisory Corp. shall provide
-----------------------------
each of the Funds the accounting services ("Accounting Services") as set
forth in Paragraph 2 of this Agreement. Advisory Corp. accepts such
appointment and agrees to furnish the Accounting Services in return for the
compensation provided in Paragraph 3 of this Agreement.

2. Accounting Services to be Provided. Advisory Corp. will provide
----------------------------------
to each respective Fund accounting related services in connection with the
maintenance of the financial records of such Fund, including without
limitation: (i) maintenance of the general ledger and other financial books
and records; (ii) processing of portfolio transactions; (iii) coordination
of the valuation of portfolio securities; (iv) calculation of the Fund's
net asset value; (v) coordination of financial and regulatory reporting;
(vi) preparation of financial reports for each Fund's Board of Trustees;
(vii) coordination of tax and financial compliance issues; (viii) the
establishment and maintenance of accounting policies; (ix) recommendations
with respect to dividend policies; (x) preparation of each Fund's financial
reports and other accounting and tax related notice information to
shareholders; and (xi) the assimilation and interpretation of accounting
data for meaningful management review. Advisory Corp. shall provide
accurate maintenance of each Fund's financial books and records as required
by the applicable securities statutes and regulations, and shall hire
persons (collectively the "Accounting Service Group") as needed to provide
such Accounting Services.

<PAGE> 2

3. Expenses and Reimbursements. Advisory Corp. shall be reimbursed by the
Funds for all costs and services incurred in connection with the provision
of the aforementioned Accounting Services ("Accounting Service Expenses"),
including but not limited to all salary and related benefits paid to the
personnel of the Accounting Service Group, overhead and expenses related to
office space and related equipment and out-of-pocket expenses.

The Accounting Services Expenses will be paid by Advisory Corp.
and reimbursed by the Funds. Advisory Corp. will tender to each Fund a monthly
invoice as of the last business day of each month which shall certify the total
support service expenses expended. Except as provided herein, Advisory Corp.
will receive no other compensation in connection with Accounting Services
rendered in accordance with this Agreement.

4. Payment for Accounting Service Expenses Among the Funds. As to one
quarter (25%) of the Accounting Service Expenses incurred under the
Agreement, the expense shall be allocated between all Funds based on the
number of classes of shares of beneficial interest that each respective
Fund has issued. As to the remaining three quarters (75%) of the Accounting
Service Expenses incurred under the Agreement, the expense shall be
allocated between all Funds based on their relative net assets. For
purposes of determining the percentage of expenses to be allocated to any
Fund, the liquidation preference of any preferred shares issued by any such
Fund shall not be considered a liability of such Fund for the purposes of
calculating relative net assets of such Fund.

5. Maintenance of Records. All records maintained by Advisory Corp. in
connection with the performance of its duties under this Agreement will
remain the property of each respective Fund and will be preserved by
Advisory Corp. for the periods prescribed in Section 31 of the 1940 Act and
the rules thereunder or such other applicable rules that may be adopted
from time to time under the act. In the event of termination of the
Agreement, such records will be promptly delivered to the respective Funds.
Such records may be inspected by the respective Funds at reasonable times.

6. Liability of Advisory Corp. Advisory Corp. shall not be liable to any
Fund for any action taken or thing done by it or its agents or contractors
on behalf of the fund in carrying out the terms and provisions of the
Agreement if done in good faith and without gross negligence or misconduct
on the part of Advisory Corp., its agents or contractors.

7. Indemnification By Funds. Each Fund will indemnify and hold Advisory
Corp. harmless from all lost, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Advisory Corp. resulting from: (a) any
claim, demand, action or suit in connection with Advisory Corp.'s acceptance of
this Agreement; (b) any action or omission by Advisory Corp. in the performance
of its duties hereunder; (c) Advisory Corp.'s acting upon instructions believed
by it to have been executed by a duly authorized officer of the Fund; or (d)
Advisory Corp.'s acting upon information provided by the Fund in form and under
policies agreed to by Advisory Corp. and the Fund. Advisory Corp. shall not be
entitled to such indemnification in respect of actions or omissions
constituting gross negligence or willful misconduct of Advisory Corp. or its
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, Advisory Corp. shall give the Fund reasonable
opportunity to defend against said claim in its own name or in the name of
Advisory Corp.

8. Indemnification By Advisory Corp. Advisory Corp. will indemnify and
hold harmless each Fund from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the Fund resulting from any
claim, demand, action or suit arising out of Advisory Corp.'s failure to comply
with the terms of this Agreement or which arises out of the gross negligence or
willful misconduct of Advisory Corp. or its agents or contractors; provided
that such negligence or misconduct is not attributable to the Funds, their
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, the Fund shall give Advisory Corp. reasonable
opportunity to defend against said claim in its own name or in the name of such
Fund.

2
<PAGE> 3

9. Further Assurances. Each party agrees to perform such further acts and
-------------------
execute such further documents as are necessary to effectuate the purposes
hereof.

10. Dual Interests. It is understood that some person or persons may be
---------------
directors, trustees, officers or shareholders of both the Funds and Advisory
Corp. (including Advisory Corp.'s affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.

11. Execution, Amendment and Termination. The term of this Agreement shall
-------------------------------------
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through May, 1998, and
thereafter from year to year, if such continuation is specifically approved at
least annually by the Board of Trustees of each Fund, including a majority of
the independent Trustees of each Fund. This Agreement may be modified or
amended from time to time by mutual agreement between the parties hereto and
may be terminated after May, 1998, by at least sixty (60) days' written notice
given by one party to the others. Upon termination hereof, each Fund shall pay
to Advisory Corp. such compensation as may be due as of the date of such
termination and shall likewise reimburse Advisory Corp. for its costs, expenses
and disbursements payable under this Agreement to such date. This Agreement
may be amended in the future to include as additional parties to the Agreement
other investment companies for with Advisory Corp., any subsidiary or affiliate
serves as investment advisor or distributor if such amendment is approved by
the President of each Fund.

12. Assignment. Any interest of Advisory Corp. under this Agreement shall
-----------
not be assigned or transferred, either voluntarily or involuntarily, by
operation of law or otherwise, without the prior written consent of the Funds.
This Agreement shall automatically and immediately terminate in the event of
its assignment without the prior written consent of the Funds.

13. Notice. Any notice under this Agreement shall be in writing, addressed
-------
and delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President and that of Advisory Corp. for
this purpose is One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
Attention: President.

14. Personal Liability. As provided for in the Agreement and Declaration of
------------------
Trust of the various Funds, under which the Funds are organized as
unincorporated trusts, the shareholders, trustees, officers, employees and
other agents of the Fund shall not personally be found by or liable for the
matters set forth hereto, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder.

15. Interpretative Provisions. In connection with the operation of this
--------------------------
Agreement, Advisory Corp. and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor of this
Agreement.

16. State Law. This Agreement shall be construed and enforced in accordance
----------
with and governed by the laws of the State of Illinois.

17. Captions. The captions in this Agreement are included for convenience
---------
of reference only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.

3
<PAGE> 4

IN WITNESS WHEREOF, the parties have caused this amended and
restated Agreement to be executed as of the day and year first above written.

ALL OF THE PARTIES SET FORTH IN SCHEDULE A

By: /s/ Ronald A. Nyberg
---------------------------------------
Ronald A. Nyberg, Vice President

VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.

By: /s/ Dennis J. McDonnell
---------------------------------------
Dennis J. McDonnell, President

4
<PAGE> 5
SCHEDULE A

I. Funds advised by Van Kampen American Capital Investment
Advisory Corp. ("Investment Advisory Corp.") (Collectively, the "Former
Van Kampen Funds"):

CLOSED END FUNDS
- ----------------

Van Kampen American Capital Municipal Income Trust
Van Kampen American Capital California Municipal Trust
Van Kampen American Capital High Income Trust
Van Kampen American Capital High Income Trust II
Van Kampen American Capital Investment Grade Municipal Trust
Van Kampen American Capital Municipal Trust
Van Kampen American Capital California Quality Municipal Trust
Van Kampen American Capital Florida Quality Municipal Trust
Van Kampen American Capital New York Quality Municipal Trust
Van Kampen American Capital Ohio Quality Municipal Trust
Van Kampen American Capital Pennsylvania Quality Municipal Trust
Van Kampen American Capital Trust For Insured Municipals
Van Kampen American Capital Trust For Investment Grade Municipals
Van Kampen American Capital Trust For Investment Grade California Municipals
Van Kampen American Capital Trust For Investment Grade Florida Municipals
Van Kampen American Capital Trust For Investment Grade New Jersey Municipals
Van Kampen American Capital Trust For Investment Grade New York Municipals
Van Kampen American Capital Trust For Investment Grade Pennsylvania Municipals
Van Kampen American Capital Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust
Van Kampen American Capital Advantage Pennsylvania Municipal Income Trust
Van Kampen American Capital Strategic Sector Municipal Trust
Van Kampen American Capital Value Municipal Income Trust
Van Kampen American Capital California Value Municipal Income Trust
Van Kampen American Capital Massachusetts Value Municipal Income Trust
Van Kampen American Capital New Jersey Value Municipal Income Trust
Van Kampen American Capital New York Value Municipal Income Trust
Van Kampen American Capital Ohio Value Municipal Income Trust
Van Kampen American Capital Pennsylvania Value Municipal Income Trust
Van Kampen American Capital Municipal Opportunity Trust II
Van Kampen American Capital Florida Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust II
Van Kampen American Capital Select Sector Municipal Trust

INSTITUTIONAL FUNDS
- -------------------

II. Funds Advised by Van Kampen American Capital Management, Inc.
("Management, Inc.") (Collectively, the "Former Van Kampen Funds"):

The Explorer Institutional Trust
on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund

5
<PAGE> 6

OPEN END FUNDS
- --------------

III. Funds Advised by Van Kampen American Capital Asset Management, Inc.
("Asset Management, Inc.") (Collectively, the "Former American Capital Funds"):

Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed Assets
Funds")
Van Kampen American Capital Government Securities Fund ("Government Securities
Fund")
Van Kampen American Capital Government Target Fund ("Government Target Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund")
Van Kampen American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")

Van Kampen American Capital Life Investment Trust ("Life Investment Trust" or
"LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")

Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small Capitalization
Fund")

Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust") on behalf of
its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")

Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")

6
<PAGE> 7

IV. Funds advised by Van Kampen American Capital Investment
Advisory Corp. ("Investment Advisory Corp.") (Collectively, the "Former
Van Kampen Funds"):

Van Kampen American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")

Van Kampen American Capital Tax Free Trust ("Tax Free Trust") on behalf of its
series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High Income
Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
(Intermediate Term Municipal Income Fund")
Van Kampen American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Van Kampen American Capital New Jersey Tax Free Income Fund ("New Jersey
Tax Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York
Tax Free Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California Tax
Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")

Van Kampen American Capital Trust ("VKAC Trust")
Van Kampen American Capital High Yield Fund ("High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income Fund")

Van Kampen American Capital Equity Trust ("Equity Trust")
on behalf of its series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great American
Companies Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")
Van Kampen American Capital Aggressive Growth Fund ("Aggressive Growth Fund")

Van Kampen American Capital Foreign Securities Fund ("Foreign Securities Fund")

Van Kampen American Capital Pennsylvania Tax Free Income Fund ("Pennsylvania
Tax Free Income Fund")

Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund")

<PAGE> 1

EXHIBIT 11(i)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 14, Amendment No. 15, to
the registration statement on Form N-1A (the "Registration Statement") of our
report dated July 14, 1997, relating to the financial statements and financial
highlights of Van Kampen American Capital Global Equity Fund, a series of Van
Kampen American Capital World Portfolio Series Trust, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights" and "Independent Accountants" in such Prospectus and to the
reference to us under the heading "Independent Accountants" in such Statement of
Additional Information.

/s/ PRICE WATERHOUSE LLP

PRICE WATERHOUSE LLP

Houston, Texas
September 26, 1997

<PAGE> 1

EXHIBIT 11(ii)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 14, Amendment No. 15, to
the registration statement on Form N-1A (the "Registration Statement") of our
report dated July 14, 1997, relating to the financial statements and financial
highlights of Van Kampen American Capital Global Government Securities Fund, a
series of Van Kampen American Capital World Portfolio Series Trust, which
appears in such Statement of Additional Information, and to the incorporation by
reference of our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "Independent Accountants" in such Prospectus
and to the reference to us under the heading "Independent Accountants" in such
Statement of Additional Information.

/s/ PRICE WATERHOUSE LLP

PRICE WATERHOUSE LLP

Houston, Texas
September 26, 1997

<PAGE> 1
Exhibit 15(a)(i)

PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1

VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND

The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL GLOBAL
EQUITY FUND (the "Fund"), a series of the Van Kampen American Capital World
Portfolio Series Trust (the "Trust"). This Distribution Plan describes the
material terms and conditions under which assets of the Fund may be used in
connection with financing distribution related activities with respect to each
of its classes of shares of beneficial interest (the "Shares"), each of which
is offered and sold subject to a different combination of front-end sales
charges, distribution fees, service fees and contingent deferred sales
charges.(1) Classes of shares, if any, subject to a front-end sales charge and a
distribution and/or service fee are referred to herein as "Front-End Classes"
and the Shares of such classes are referred to herein as "Front-End Shares."
Classes of shares, if any, subject to a contingent-deferred sales charge and a
distribution and/or a service fee are referred to herein as "CDSC Classes" and
Shares of such classes are referred to herein as "CDSC Shares." Classes of
shares, if any, subject to a front-end sales charge, a contingent-deferred
sales charge and a distribution and/or service fee are referred to herein as
"Combination Classes" and Shares of such class are referred to herein as
"Combination Shares."

The Fund has adopted a service plan (the "Service Plan") pursuant to
which the Fund is authorized to expend on an annual basis a portion of its
average net assets attributable to any or each class of Shares in connection
with the provision by the principal underwriter (within the meaning of the 1940
Act) of the Shares and by brokers, dealers and other financial intermediaries
(collectively, "Financial Intermediaries") of personal services to holders of
Shares and/or the maintenance of shareholder accounts. The Fund also has
entered into a distribution and services agreement (the "Distribution and
Services Agreement") with Van Kampen American Capital Inc. (the "Distributor"),
pursuant to which the Distributor acts as the principal underwriter with
respect to each class of Shares and provides services to the Fund and acts as
agent on behalf of the Fund in connection with the implementation of the
Service Plan. The Distributor may enter into selling agreements (the "Selling
Agreements") with Financial Intermediaries in order to implement the
Distribution and Services Agreement, the Service Plan and this Distribution
Plan.

1. The Fund hereby is authorized to pay the Distributor a distribution
fee with respect to each class of its Shares to compensate the Distributor for
activities which are primarily intended to result in the sale of such Shares
("distribution related activities") performed by the Distributor with respect
to the respective class of Shares of the Fund. Such distribution related
activities include without limitation: (a) printing and distributing copies of
any prospectuses and annual and interim reports of the Fund (after the Fund has
prepared and set in type such materials) that are used by such Distributor in
connection with the offering of Shares; (b) preparing, printing or otherwise
manufacturing and distributing any other literature or materials of any nature
used by such Distributor in connection with promoting, distributing or offering
the Shares; (c) advertising, promoting and selling Shares to broker-dealers,
banks and the public; (d) distribution related overhead and the provision of
information programs and shareholder services intended to enhance the
attractiveness of investing in the Fund; (e) incurring initial outlay expenses
in connection with compensating Financial Intermediaries for (i) selling CDSC
Shares and Combination Shares and (ii) providing personal services to
shareholders and the maintenance of
____________________

(1) The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.

1
<PAGE> 2

shareholder accounts of all classes of Shares, including paying interest on and
incurring other carrying costs on funds borrowed to pay such initial outlays;
and (f) acting as agent for the Fund in connection with implementing this
Distribution Plan pursuant to the Selling Agreements.

2. The amount of the distribution fee hereby authorized with respect to
each class of Shares of the Fund shall be as follows:

3. With respect to Class A Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 0.25% of the Fund's average daily net
assets attributable to Class A Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to Class A Shares. The
Fund may pay a distribution fee as determined from time to time by its Board of
Trustees in an annual amount not to exceed the lesser of (i) (A) 0.25% of the
Fund's average daily net asset value during such year attributable to Class A
Shares sold on or after the date on which this Distribution Plan was first
implemented with respect to Class A Shares minus (B) the amount of the service
fee with respect to the Class A Shares actually expended during such year by
the Fund pursuant to the Service Plan and (ii) the actual amount of
distribution related expenses incurred by the Distributor with respect to Class
A Shares.

4. With respect to Class B Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class B Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class B Shares. The
Fund may pay a distribution fee with respect to the Class B Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class B Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class B
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class B Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class B Shares.

5. With respect to Class C Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class C Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class C Shares. The
Fund may pay a distribution fee with respect to the Class C Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class C Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class C
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class C Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class C Shares.

6. Payments pursuant to this Distribution Plan shall not be made more
often than monthly upon receipt by the Fund of a separate written expense
report with respect to each class of Shares setting forth the expenses
qualifying for such reimbursement allocated to each class of Shares and the
purposes thereof.

7. In the event that amounts payable hereunder with respect to shares of
a Front-End Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of such class, there
is no carryforward of reimbursement obligations to succeeding years. In the
event the amounts payable hereunder with respect to shares of a CDSC Class or a
Combination Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of the respective
class, such unreimbursed distribution expenses will be carried forward and paid
by the Fund hereunder in future years so long as this Distribution Plan remains
in effect, subject to applicable laws

2
<PAGE> 3

and regulations. Reimbursements for distribution related expenses payable
hereunder with respect to a particular class of Shares may not be used to
subsidize the sale of Shares of any other class of Shares.

8. The Fund shall not compensate the Distributor, and neither the Fund
nor the Distributor shall compensate any Financial Intermediary, for any
distribution related expenses incurred with respect to a class of Shares prior
to the later of (a) the implementation of this Distribution Plan with respect
to such class of Shares or (b) the date that such Financial Intermediary enters
into a Selling Agreement with the Distributor.

9. The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. The Distributor may reallocate all or a
portion of its distribution fee to such Financial Intermediaries as
compensation for the above-mentioned activities and services. Such
reallocation shall be in an amount as set forth from time to time in the Fund's
prospectus. Such Selling Agreements shall provide that the Financial
Intermediaries shall provide the Distributor with such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Paragraphs 3 and 8 hereof.

10. Subject to the provisions of this Distribution Agreement, the Fund is
hereby authorized to pay a distribution fee to any person that is not an
"affiliated person" or "interested person" of the Fund or its "investment
adviser" or "principal underwriter" (as such terms are defined in the 1940 Act)
who provides any of the foregoing services for the Fund. Such fee shall be
paid only pursuant to written agreements between the Fund and such other person
the terms of which permit payments to such person only in accordance with the
provisions of this Distribution Agreement and which have the approval of a
majority of the Disinterested Trustees by vote cast separately with respect to
each class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.

11. The Fund and the Distributor shall prepare separate written reports
for each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Distribution Plan, the Service
Plan and the agreements contemplated hereby, the purposes for which such
payments were made and such other information as the Board of Trustees or the
Disinterested Trustees may reasonably request from time to time, and the Board
of Trustees shall review such reports and other information.

12. This Distribution Plan shall become effective upon its approval by (a)
a majority of the Board of Trustees and a majority of the Disinterested
Trustees by vote cast separately with respect to each class of Shares cast in
person at a meeting called for the purpose of voting on this Distribution Plan,
and (b) with respect to each class of Shares, a "majority of the outstanding
voting securities" (as such phrase is defined in the 1940 Act) of such class of
Shares voting separately as a class.

13. This Distribution Plan and any agreement contemplated hereby shall
continue in effect beyond the first anniversary of its adoption by the Board of
Trustees of the Fund only so long as (a) its continuation is approved at least
annually in the manner set forth in clause (a) of paragraph 9 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.

14. This Distribution Plan may be terminated with respect to a class of
Shares without penalty at any time by a majority of the Disinterested Trustees
or by a "majority of the outstanding voting securities" of the respective
class of Shares of the Fund.

15. This Distribution Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund and may not be amended in any other material

3
<PAGE> 4

respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Distribution Plan to changes in the Rule or
to other changes in the 1940 Act or the rules and regulations thereunder shall
not be deemed to be material amendments.

16. To the extent any service fees paid by the Fund pursuant to the
Service Plan are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Shares issued by the Fund within
the meaning of the Rule, the terms and provisions of such plan and any payments
made pursuant to such plan hereby are authorized pursuant to this Distribution
Plan in the amounts and for the purposes authorized in the Service Plan without
any further action by the Board of Trustees or the shareholders of the Fund.
To the extent the terms and provisions of the Service Plan conflict with the
terms and provisions of this Distribution Plan, the terms and provisions of the
Service Plan shall prevail with respect to amounts payable pursuant thereto.
This paragraph 16 is adopted solely due to the uncertainty that may exist with
respect to whether payments to be made by the Fund pursuant to the Service Plan
constitute payments primarily intended to result in the sale of Shares issued
by the Fund within the meaning of the Rule.

17. The Trustees of the Trust have adopted this Distribution Plan as
trustees under the Declaration of Trust of the Trust and the policies of the
Trust adopted hereby are not binding upon any of the Trustees or shareholders
of the Trust individually, but bind only the trust estate.

<PAGE> 1
Exhibit 15(a)(ii)

PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1

VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND

The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL GLOBAL
GOVERNMENT SECURITIES FUND (the "Fund"), a series of the Van Kampen American
Capital World Portfolio Series Trust (the "Trust"). This Distribution Plan
describes the material terms and conditions under which assets of the Fund may
be used in connection with financing distribution related activities with
respect to each of its classes of shares of beneficial interest (the "Shares"),
each of which is offered and sold subject to a different combination of
front-end sales charges, distribution fees, service fees and contingent
deferred sales charges.(1) Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"Front-End Classes" and the Shares of such classes are referred to herein as
"Front-End Shares." Classes of shares, if any, subject to a contingent-deferred
sales charge and a distribution and/or a service fee are referred to herein as
"CDSC Classes" and Shares of such classes are referred to herein as "CDSC
Shares." Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares."

(1) The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.

1
<PAGE> 2

2. The amount of the distribution fee hereby authorized with respect to
each class of Shares of the Fund shall be as follows:

2
<PAGE> 3

3
<PAGE> 4

<PAGE> 1
EXHIBIT (15)(b)

FORM OF

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

SHAREHOLDER ASSISTANCE AGREEMENT

This Agreement is entered into as of the _____day of _____, 199__, by and
between Van Kampen American Capital Distributors, Inc. (the "Company") and the
undersigned (the "Broker-Dealer").

WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and

WHEREAS, the Broker-Dealer is registered as a broker-dealer with the
National Association of Securities Dealers, Inc.; and

WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") and a service plan (the "Service Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act"), relating to such Fund, the Distribution Plans being described in
the Fund's Prospectus and Statement of Additional Information; and

WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution assistance agreements such as this Agreement with
broker-dealers selected by the Company, and the Broker-Dealer has been so
selected; and

WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such broker-dealer on or after the effective date
of this Agreement, as determined pursuant to Section 4 hereof, and held at the
close of each day in accounts of clients or customers of a particular
broker-dealer, such amount being referred to herein as the "Holding Level"; for
purposes of calculating the Holding Level, shares of such Fund which are
redeemed or otherwise disposed of from any account existing prior to such
effective date shall be deemed to have been shares sold prior to such effective
date to the extent of the number of shares held in such account immediately
after the close of business on the day prior to such effective date; and

WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;

NOW, THEREFORE, the Company and the Broker-Dealer agree as follows:

1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Broker-Dealer shall be entitled distribution fee and
service fee to payments, if any, to be paid by the Company at the annual
percentage rate of the Holding Level set forth from time to time in the then
current Prospectus of the Fund on a quarterly basis (prorated for any portion
of such period during which this Agreement is in effect for less than the full
amount of such period); it is understood and agreed that the Company may make
final and binding determinations as to whether such continuing compliance and
as to whether or not any Fund shares are to be considered in determining the
Holding Level of any particular broker-dealer and what Fund shares, if any, are
to be attributed to such purpose to a particular broker-dealer, to a different
broker-dealer or to no broker-dealer. Payments shall be made to the
Broker-Dealer named above and portions of the payments may be, in the
discretion of the Broker-Dealer,

<PAGE> 2

paid over to individual registered representatives of said Broker-Dealer to
whom there have been assigned accounts of clients or customers of the
Broker-Dealer with respect to which the respective Holding Level was determined.

2. The distribution fee payments with respect to a class of the Fund's
shares to be made in accordance with Section 1 hereof, if any, shall be paid to
the Broker-Dealer as compensation for selling shares of the respective class.

3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Broker-Dealer shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Broker-dealer may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the fund, assisting
in selected dividend payment options, account designations and addresses and
maintaining the investment of such customer or client in the Fund.

4. The Company shall have the right at any time and from time to time
without notice to the Broker-Dealer to amend its Prospectus with respect to the
amount of the service free and the amount of the distribution fee to be paid
pursuant hereto. Such amendments shall be effective as of the date of the
amended Prospectus.

5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be), and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act), of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Broker-dealer, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.

IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.

VAN KAMPEN AMERICAN CAPITAL
- -------------------------- DISTRIBUTORS, INC.
Broker-dealer Firm Name

- -------------------------- By:
Firm Address -------------------------
Senior Vice President

By:
-----------------------

Title:
--------------------

<PAGE> 1
EXHIBIT (15)(c)

FORM OF

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

ADMINISTRATIVE SERVICES AGREEMENT

This Agreement is entered into as of the ____ day of ____, 19__, by and
between Van Kampen American Capital Distributors, Inc. (the "Company") and the
undersigned (the "Intermediary").

WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and

WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and a Service Plan (the
"Service Plan") relating to such Fund, the Distribution Plans being described
in the Fund's Prospectus and Statement of Additional Information; and

WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution services agreements such as this Agreement with
certain financial intermediaries selected by the Company, and the Intermediary
has been so selected; and

WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such financial intermediary on or after the
effective date of this Agreement, as determined pursuant to Section 4 hereof,
and held at the close of each day in accounts of clients or customers of
particular intermediary, such amount being referred to herein as the "Holding
Level"; for purposes of calculating the Holding Level, shares of such Fund
which are redeemed or otherwise disposed of from any account existing prior to
such effective date shall be deemed to have been shares sold prior to such
effective date to the extent of the number of shares held in such account
immediately after the close of business on the day prior to such effective
date; and

WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;

NOW, THEREFORE, the Company and the Intermediary agree as follows:

1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Intermediary shall be entitled to distribution fee and
service fee payments, if any, to be paid by the Company with respect to each
class of the Fund's shares at the annual percentage rate of the Holding Level
set forth from time to time in the then current Prospect of the Fund on a
quarterly basis (prorated for any portion of such period during which this
Agreement is in effect for less than the full amount of such period); it is
understood and agreed that the Company may make final and binding
determinations as to whether such continuing compliance and as to whether or
not any Fund shares are to be considered in determining the Holding Level of
any particular financial intermediary and what Fund shares, if any, are to be
attributed to such purpose to a particular financial intermediary, to a
different financial intermediary or to no financial intermediary.

<PAGE> 2

3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Intermediary shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Intermediary may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the Fund,
assisting in selected dividend payment options, account designations and
addresses and maintaining the investment of such customer or client in the
Fund.

5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be) and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act) of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Intermediary, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.

IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.

By:
- ------------------------ ----------------------
Intermediary Senior Vice President

- ------------------------
Address

By:
---------------------
Title

<PAGE> 1
EXHIBIT 16(i)

GLOBAL EQUITY FUND - CLASS A SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $ 15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,109.28 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 10.93% = T

Excluding Payment of the Sales Charge

Net Asset Value $ 15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,176.71 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 17.67% = T
</TABLE>

TOTAL RETURN CALCULATION FIVE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,626.01 = ERV

n
Five year period ended 05/31/97 5 =

TOTAL RETURN FOR THE PERIOD 10.21% = T

Excluding Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,725.21 = ERV

n
Five year period ended 05/31/97 5 =

TOTAL RETURN FOR THE PERIOD 11.52% = T
</TABLE>

<PAGE> 2

GLOBAL EQUITY FUND - CLASS A SHARES

TOTAL RETURN CALCULATION INCEPTION THROUGH MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,838.72 = ERV

n
Inception through 05/31/97 5.79 =

TOTAL RETURN FOR THE PERIOD 11.09% = T

Excluding Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,951.09 = ERV

n
Inception through 05/31/97 5.79 =

TOTAL RETURN FOR THE PERIOD 12.24% = T
</TABLE>

Non-Standardized Cumulative Total Return Calculation

Inception Through May 31, 1997

Formula ERV - P
---------
P = T

<S> <C> <C> <C>
Including Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,838.72 = ERV

TOTAL RETURN FOR THE PERIOD 83.87% = T

Excluding Payment of the Sales Charge

Net Asset Value $15.84

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,951.09 = ERV

TOTAL RETURN FOR THE PERIOD 95.11% = T
</TABLE>
<PAGE> 3

GLOBAL EQUITY FUND - CLASS B SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,118.30 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 11.83% = T

Excluding Payment of the CDSC

Net Asset Value $15.32

Initial Investment $ 1000.00 = P

Ending Redeemable Value $1,168.30 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 16.83% = T
</TABLE>

TOTAL RETURN CALCULATION FIVE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,643.60 = ERV

n
Five year period ended 05/31/97 5 =

TOTAL RETURN FOR THE PERIOD 10.45% = T

Excluding Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,658.60 = ERV

n
Five year period ended 05/31/97 5 =

TOTAL RETURN FOR THE PERIOD 10.65% = T
</TABLE>

<PAGE> 4

GLOBAL EQUITY FUND - CLASS B SHARES

Total Return Calculation Inception Through May 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,760.53 = ERV

n
Inception through 05/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 10.75% = T

Excluding Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,760.53 = ERV

n
Inception through 05/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 10.75% = T
</TABLE>

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION

INCEPTION THROUGH MAY 31, 1997

<TABLE>
<S> <C> <C>
Formula ERV - P
---------
P = T

Including Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,760.53 = ERV

TOTAL RETURN FOR THE PERIOD 76.05% = T

Excluding Payment of the CDSC

Net Asset Value $15.32

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,760.53 = ERV

TOTAL RETURN FOR THE PERIOD 76.05% = T
</TABLE>

<PAGE> 5
GLOBAL EQUITY FUND - CLASS C SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,158.17 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 15.82% = T

Excluding Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,168.17 = ERV

n
One year period ended 05/31/97 1 =

TOTAL RETURN FOR THE PERIOD 16.82% = T
</TABLE>

TOTAL RETURN CALCULATION INCEPTION THROUGH MAY 31, 1997

<TABLE>
<S> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,637.93 = ERV

n
Inception through 05/31/97 3.95 =

TOTAL RETURN FOR THE PERIOD 13.31% = T

Excluding Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,637.93 = ERV

n
Inception through 05/31/97 3.95 =

TOTAL RETURN FOR THE PERIOD 13.31% = T
</TABLE>
<PAGE> 6

GLOBAL EQUITY FUND - CLASS C SHARES

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH MAY 31, 1997

<TABLE>
<S> <C> <C> <C> <C>
Formula ERV - P
---------
P = T

Including Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,637.93 = ERV

TOTAL RETURN FOR THE PERIOD 63.79% = T

Excluding Payment of the CDSC

Net Asset Value $15.46

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,637.93 = ERV

TOTAL RETURN FOR THE PERIOD 63.79% = T
</TABLE>

<PAGE> 1
EXHIBIT 16(ii)

GLOBAL GOVERNMENT SECURITIES FUND - CLASS A SHARES

Total Return Calculation One Year Period Ended May 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $978.33 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD (2.17%) = T

Excluding Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,026.48 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD 2.65% = T

TOTAL RETURN CALCULATION FIVE YEARS ENDED MAY 31, 1997

Formula P(1+T)n = ERV

Including Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,194.69 = ERV

n
Five years ended 5/31/97 5 =

TOTAL RETURN FOR THE PERIOD 3.62% = T

Excluding Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,254.02 = ERV

n
Five years ended 5/31/97 5 =

TOTAL RETURN FOR THE PERIOD 4.63% = T
</TABLE>

<PAGE> 2

GLOBAL GOVERNMENT SECURITIES FUND - CLASS A SHARES

TOTAL RETURN CALCULATION INCEPTION THROUGH MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,201.64 = ERV

n
Inception through 5/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 3.37% = T

Excluding Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,261.57 = ERV

n
Inception through 5/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 4.28% = T

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION

INCEPTION THROUGH MAY 31, 1997

Formula ERV - P
---------
P = T

Including Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,201.64 = ERV

TOTAL RETURN FOR THE PERIOD 20.16% = T

Excluding Payment of the Sales Charge

Net Asset Value $7.60

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,261.57 = ERV

TOTAL RETURN FOR THE PERIOD 26.16% = T
</TABLE>

<PAGE> 3

GLOBAL GOVERNMENT SECURITIES FUND - CLASS B SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $981.53 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD (1.85%) = T

Excluding Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,019.97 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD 2.00% = T

TOTAL RETURN CALCULATION FIVE YEARS ENDED MAY 31, 1997

n
Formula P(1+T) = ERV

Including Payment of the Sales Charge

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,196.36 = ERV

n
Five years ended 5/31/97 5.00 =

TOTAL RETURN FOR THE PERIOD 3.65% = T

Excluding Payment of the Sales Charge

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,208.98 = ERV

n
Five years ended 5/31/97 5.00 =

TOTAL RETURN FOR THE PERIOD 3.87% = T
</TABLE>

<PAGE> 4

GLOBAL GOVERNMENT SECURITIES FUND - CLASS B SHARES

TOTAL RETURN CALCULATION INCEPTION THROUGH MAY 31, 1997

n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,215.32 = ERV

n
Inception through 5/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 3.58% = T

Excluding Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,215.32 = ERV

n
Inception through 5/31/97 5.54 =

TOTAL RETURN FOR THE PERIOD 3.58% = T

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION

INCEPTION THROUGH MAY 31, 1997

Formula ERV - P
---------
P = T

Including Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,215.32 = ERV

TOTAL RETURN FOR THE PERIOD 21.53% = T

Excluding Payment of the CDSC

Net Asset Value $7.65

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,215.32 = ERV

TOTAL RETURN FOR THE PERIOD 21.53% = T
</TABLE>

<PAGE> 5

GLOBAL GOVERNMENT SECURITIES FUND - CLASS C SHARES

TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED MAY 31, 1997

<TABLE>
<S> <C> <C> <C>
n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,009.21 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD 0.92% = T

Excluding Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,018.81 = ERV

n
One year period ended 5/31/97 1 =

TOTAL RETURN FOR THE PERIOD 1.88% = T

TOTAL RETURN CALCULATION INCEPTION THROUGH MAY 31, 1997

n
Formula P(1+T) = ERV

Including Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,136.50 = ERV

n
Inception through 5/31/97 4.14 =

TOTAL RETURN FOR THE PERIOD 3.14% = T

Excluding Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,136.50 = ERV

n
Inception through 5/31/97 4.14 =

TOTAL RETURN FOR THE PERIOD 3.14% = T
</TABLE>
<PAGE> 6

GLOBAL GOVERNMENT SECURITIES FUND - CLASS C SHARES

NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION

INCEPTION THROUGH MAY 31, 1997

Formula ERV - P
---------
P = T

Including Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,136.50 = ERV

TOTAL RETURN FOR THE PERIOD 13.65% = T

Excluding Payment of the CDSC

Net Asset Value $7.59

Initial Investment $1,000.00 = P

Ending Redeemable Value $1,136.50 = ERV

TOTAL RETURN FOR THE PERIOD 13.65% = T
</TABLE>

CALCULATION OF YIELD

<TABLE>
<S> <C> <C> <C>
Class A: Formula Total Income - Total Expenses 6 B
Class A Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = SEC Yield
Average Dividend Shares x Public Offering Price

125,050 - 35,845 6 B
Class A Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = 4.01%
3,371,172 x $7.98

Class B: Formula Total Income - Total Expenses 6 B
Class B Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = SEC Yield
Average Dividend Shares x Public Offering Price

$280,197 - $122,915 6 B
Class B Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = 3.31%
7,512,222 x $7.65

Class C: Formula Total Income - Total Expenses 6 B
Class C Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = SEC Yield
Average Dividend Shares x Public Offering Price

$27,788 - $11,954 6 B
Class C Shares [(((( ------------------------------------------------- ) +1) ) -1) 2] = 3.36%
750,870 x $7.59
</TABLE>

<PAGE> 1
EXHIBIT 17(a)

INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
SEPTEMBER 15, 1997

Van Kampen American Capital U.S. Government Trust
Van Kampen American Capital U.S. Government Fund
Van Kampen American Capital Tax Free Trust
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital Trust
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund
Van Kampen American Capital Strategic Income Fund
Van Kampen American Capital Equity Trust
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Prospector Fund
Van Kampen American Capital Aggressive Growth Fund
Van Kampen American Capital Foreign Securities Fund
Van Kampen American Capital Pennsylvania Tax Free Income Fund
Van Kampen American Capital Tax Free Money Fund
Van Kampen American Capital Prime Rate Income Trust
Van Kampen American Capital Comstock Fund
Van Kampen American Capital Corporate Bond Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Enterprise Fund
Van Kampen American Capital Equity Income Fund
Van Kampen American Capital Limited Maturity Government Fund
Van Kampen American Capital Global Managed Assets Fund
Van Kampen American Capital Government Securities Fund
Van Kampen American Capital Government Target Fund
Van Kampen American Capital Growth and Income Fund
Van Kampen American Capital Harbor Fund
Van Kampen American Capital High Income Corporate Bond Fund
Van Kampen American Capital Life Investment Trust
Van Kampen American Capital Asset Allocation Portfolio
Van Kampen American Capital Domestic Income Portfolio
Van Kampen American Capital Emerging Growth Portfolio
Van Kampen American Capital Enterprise Portfolio
Van Kampen American Capital Global Equity Portfolio
Van Kampen American Capital Government Portfolio
Van Kampen American Capital Growth and Income Portfolio
Van Kampen American Capital Money Market Portfolio
Van Kampen American Capital Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio

<PAGE> 2

Van Kampen American Capital Pace Fund
Van Kampen American Capital Real Estate Securities Fund
Van Kampen American Capital Reserve Fund
Van Kampen American Capital Tax -Exempt Trust
Van Kampen American Capital High Yield Municipal Fund
Van Kampen American Capital U.S. Government Trust for Income
Van Kampen American Capital World Portfolio Series Trust
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
Morgan Stanley Aggressive Equity Fund
Morgan Stanley American Value Fund
Morgan Stanley Asian Growth Fund
Morgan Stanley Emerging Markets Fund
Morgan Stanley Global Equity Allocation Fund
Morgan Stanley Global Fixed Income Fund
Morgan Stanley Government Obligations Money Market Fund
Morgan Stanley High Yield Fund
Morgan Stanley International Magnum Fund
Morgan Stanley Latin American Fund
Morgan Stanley Money Market Fund
Morgan Stanley Stable Value Fund (SVFRX)
Morgan Stanley Stable Value Fund II (SVFIX)
Morgan Stanley U.S. Real Estate Fund
Morgan Stanley Value Fund
Morgan Stanley Worldwide High Income Fund

<PAGE> 3

<TABLE>
<CAPTION>
<S> <C>
Emerging Markets Municipal Income Trust................................................................. Series 1
Insured Municipals Income Trust......................................................................... Series 1 through 378
Insured Municipals Income Trust (Discount).............................................................. Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term)............................................... Series 1 through 104
Insured Municipals Income Trust (Intermediate Term)..................................................... Series 5 through 88
Insured Municipals Income Trust (Limited Term).......................................................... Series 9 through 85
Insured Municipals Income Trust (Premium Bond Series)................................................... Series 1 through 3
Insured Municipals Income Trust (Intermediate Laddered Maturity)........................................ Series 1 and 2
Insured Tax Free Bond Trust............................................................................. Series 1 through 6
Insured Tax Free Bond Trust (Limited Term).............................................................. Series 1
Investors' Quality Tax-Exempt Trust..................................................................... Series 1 through 93
Investors' Quality Tax-Exempt Trust-Intermediate........................................................ Series 1
Investors' Corporate Income Trust....................................................................... Series 1 through 12
Investors' Governmental Securities Income Trust......................................................... Series 1 through 7
Van Kampen Merritt International Bond Income Trust...................................................... Series 1 through 21
Alabama Investors' Quality Tax-Exempt Trust............................................................. Series 1
Alabama Insured Municipals Income Trust................................................................. Series 1 through 9
Arizona Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16
Arizona Insured Municipals Income Trust................................................................. Series 1 through 17
Arkansas Insured Municipals Income Trust................................................................ Series 1 through 2
Arkansas Investors' Quality Tax-Exempt Trust............................................................ Series 1
California Insured Municipals Income Trust.............................................................. Series 1 through 158
California Insured Municipals Income Trust (Premium Bond Series)........................................ Series 1
California Insured Municipals Income Trust (1st Intermediate Series).................................... Series 1 through 3
California Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 21
California Insured Municipals Income Trust (Intermediate Laddered)...................................... Series 1 through 22
Colorado Insured Municipals Income Trust................................................................ Series 1 through 81
Colorado Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 18
Connecticut Insured Municipals Income Trust ............................................................ Series 1 through 31
Connecticut Investors' Quality Tax-Exempt Trust......................................................... Series 1
Delaware Investor's Quality Tax-Exempt Trust............................................................ Series 1 and 2
Florida Insured Municipal Income Trust - Intermediate................................................... Series 1 and 2
Florida Insured Municipals Income Trust................................................................. Series 1 through 107
Florida Investors' Quality Tax-Exempt Trust............................................................. Series 1 and 2
Florida Insured Municipals Income Trust (Intermediate Laddered)......................................... Series 1 through 13
Georgia Insured Municipals Income Trust................................................................. Series 1 through 80
Georgia Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16
Hawaii Investors' Quality Tax-Exempt Trust.............................................................. Series 1
Indiana Insured Municipals Income Trust................................................................. Series 1
Investors' Quality Municipals Trust (AMT)............................................................... Series 1 through 9
Kansas Investors'Quality Tax-Exempt Trust .............................................................. Series 1 through 11
Kentucky Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 58
Louisiana Insured Municipals Income Trust............................................................... Series 1 through 17
Maine Investor's Quality Tax-Exempt Trust............................................................... Series 1
Maryland Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 79
Massachusetts Insured Municipals Income Trust........................................................... Series 1 through 34
Massachusetts Insured Municipals Income Trust (Premium Bond Series)..................................... Series 1
Michigan Financial Institutions Trust................................................................... Series 1
Michigan Insured Municipals Income Trust................................................................ Series 1 through 140
Michigan Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1
Michigan Insured Municipals Income Trust (1st Intermediate Series)...................................... Series 1 through 3
Michigan Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 30
Michigan Select Trust................................................................................... Series 1
Minnesota Insured Municipals Income Trust............................................................... Series 1 through 59
Minnesota Investors' Quality Tax-Exempt Trust........................................................... Series 1 through 21
Mississippi Insured Municipals Income Trust............................................................. Series 1
Missouri Insured Municipals Income Trust................................................................ Series 1 through 98
Missouri Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1
Missouri Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 15
Missouri Insured Municipals Income Trust
</TABLE>

<PAGE> 4

<TABLE>
<CAPTION>
<S> <C>
(Intermediate Laddered Maturity)....................................................................... Series 1
Nebraska Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 9
New Mexico Insured Municipals Income Trust.............................................................. Series 1 through 18
New Jersey Insured Municipals Income Trust.............................................................. Series 1 through 114
New Jersey Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 22
New Jersey Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 1 and 4
New York Insured Municipals Income Trust-Intermediate................................................... Series 1 through 6
New York Insured Municipals Income Trust (Limited Term)................................................. Series 1
New York Insured Municipals Income Trust................................................................ Series 1 through 136
New York Insured Tax-Free Bond Trust.................................................................... Series 1
New York Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 1 through 17
New York Investors' Quality Tax-Exempt Trust............................................................ Series 1
North Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 88
Ohio Insured Municipals Income Trust.................................................................... Series 1 through 104
Ohio Insured Municipals Income Trust (Premium Bond Series).............................................. Series 1 and 2
Ohio Insured Municipals Income Trust (Intermediate Term)................................................ Series 1
Ohio Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 3 through 6
Ohio Investors' Quality Tax-Exempt Trust................................................................ Series 1 through 16
Oklahoma Insured Municipal Income Trust................................................................. Series 1 through 17
Oregon Investors' Quality Tax-Exempt Trust.............................................................. Series 1 through 53
Pennsylvania Insured Municipals Income Trust - Intermediate............................................. Series 1 through 6
Pennsylvania Insured Municipals Income Trust............................................................ Series 1 through 223
Pennsylvania Insured Municipals Income Trust (Premium Bond Series)...................................... Series 1
Pennsylvania Investors' Quality Tax-Exempt Trust........................................................ Series 1 through 14
South Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 84
Stepstone Growth Equity and Treasury Securities Trust................................................... Series 1
Tennessee Insured Municipals Income Trust............................................................... Series 1-3 and 5-37
Texas Insured Municipals Income Trust................................................................... Series 1 through 40
Texas Insured Municipal Income Trust (Intermediate Ladder).............................................. Series 1
Virginia Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 73
Van Kampen American Capital Equity Opportunity Trust.................................................... Series 1 through 41
Van Kampen American Capital Utility Income Trust........................................................ Series 1 through 8
Van Kampen American Capital Insured Income Trust........................................................ Series 1 through 61
Van Kampen American Capital Insured Income Trust (Intermediate Term).................................... Series 1 through 60
Van Kampen Merritt Select Equity Trust.................................................................. Series 1
Van Kampen Merritt Select Equity and Treasury Trust..................................................... Series 1
Washington Insured Municipals Income Trust.............................................................. Series 1
West Virginia Insured Municipals Income Trust........................................................... Series 1 through 7
Principal Financial Institutions Trust.................................................................. Series 1
Internet Trust.......................................................................................... Series 1 through 3
Michigan Real Estate Income and Growth Trust............................................................ Series 1
Strategic Ten Trust, United States...................................................................... Series 1 through 10
Strategic Ten Trust, United Kingdom..................................................................... Series 1 through 10
Strategic Ten Trust, Hong Kong ......................................................................... Series 1 through 10
Strategic Five Trust, United States..................................................................... Series 1 through 4
Global Fifteen Trust.................................................................................... Series 1 through 2
Global Thirty Trust..................................................................................... Series 1 through 3
Great International Firms Trust......................................................................... Series 1
Undervalued Growth Opportunities Trust.................................................................. Series 1
Emerging Growth and Treasury............................................................................ Series 1
Global Blue Chip Trust.................................................................................. Series 1
Renaissance Trust....................................................................................... Series 1
Blue Chip Opportunity and Treasury Trust................................................................ Series 1 through 4
Wheat First Strategic Opportunity Unit Trust............................................................ Series 1
Baby Boomer Opportunity Trust........................................................................... Series 1

</TABLE>

<PAGE> 1
EXHIBIT 17 (b)
Officers
Van Kampen American Capital Distributors, Inc.

NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman Houston, TX

Philip N. Duff Chief Executive Officer Oakbrook Terrace, IL

William R. Molinari President & Chief Operating Oakbrook Terrace, IL
Officer

Ronald A. Nyberg Executive Vice President, General Oakbrook Terrace, IL
Counsel & Assistant Secretary

William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL
Financial Officer
Paul R. Wolkenberg Executive Vice President Houston, TX

Robert A. Broman Sr. Vice President Oakbrook Terrace, IL
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
Keith K. Furlong Sr. Vice President Oakbrook Terrace, IL
Douglas B. Gehrman Sr. Vice President Houston, TX
Richard D. Humphrey Sr. Vice President Houston, TX
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Mark T. McGannon Sr. Vice President Oakbrook Terrace, IL
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL
Michael L. Stallard Sr. Vice President Oakbrook Terrace, IL
Robert S. West Sr. Vice President Oakbrook Terrace, IL
John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL

Dominic C. Martellaro 1st Vice President Danville, CA
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
George J. Vogel 1st Vice President Oakbrook Terrace, IL
Patrick J. Woelfel 1st Vice President Oakbrook Terrace, IL

Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL
James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Sheldon Barker Vice President Moon, PA
Patricia A. Bettlach Vice President Chesterfield, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
James J. Boyne Vice President, Associate General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Brooksley Burke Vice President Marina Del Ray, CA
William F Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Christine Cleary Byrum Vice President Tampa, FL
Glenn M. Cackovic Vice President Laguna Niguel, CA
Joseph N. Caggiano Vice President New York, NY
</TABLE>
<PAGE> 2

<TABLE>
<S> <C> <C>
Daniel R. Chambers Vice President Austin, TX
Richard J. Charlino Vice President Houston, TX
Deanna 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
Nicholas Dalmaso Vice President & Asst. Secretary Oakbrook Terrace, IL
Ken DiFrancesca Vice President Oakbrook Terrace, IL
Daniel R. DeJong Vice President Oakbrook Terrace, IL
Tracey M. DeLusant Vice President New York, NY
Mark B. Doremus Vice President Houston, TX
Michael E. Eccleston Vice President Oakbrook Terrace, IL
Jonathan Eckard Vice President Tampa, FL
Charles Edward Fisher Vice President Naperville, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Erich P. Gerth Vice President Piedmont, CA
Richard G. Golod Vice President Annapolis, MD
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John A. Hanhauser Vice President Philadelphia, PA
John G. Hansen Vice President Oakbrook Terrace, IL
Eric J. Hargens Vice President Orlando, FL
Calvin B. Hays Vice President Richmond, VA
Joseph Hays Vice President Cherry Hill, NJ
Gregory Heffington Vice President Ft. Collins, CO
Susan J. Hill Vice President Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
David S. Hogaboom Vice President Oakbrook Terrace, IL
Bryn M. Hoggard Vice President Houston, TX
Robert S. Hunt Vice President Phoenix, MD
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Jeffrey S. Kinney Vice President Overland Park, KS
Dana R. Klein Vice President Oakbrook Terrace, IL
Ann Marie Klingenhagen Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Director Oakbrook Terrace, IL
of Compliance
Richard D. Kozlowski Vice President Atlanta, GA
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
S. William Lehew III Vice President Charlotte, NC
Tony E. Leal Vice President Daphne, AL
Eric Levinson Vice President San Francisco, CA
Jonathan Linstra Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Carl Mayfield Vice President Lakewood, CO
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
</TABLE>
<PAGE> 3

<TABLE>
<S> <C> <C>
Ted Morrow Vice President Dallas, TX
Robert Muller, Jr. Vice President Cypress, TX
Peter Nicholas Vice President Beverly, MA
Michael D. Ossmen Vice President Oakbrook Terrace, IL
Todd W. Page Vice President Oakbrook Terrace, IL
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Anthony Piazza Vice President Old Bridge, NJ
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Fairlawn, OH
Daniel D. Reams Vice President Royal Oak, MI
Walter E. Rein Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Thomas Rowley Vice President St. Louis, MO
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Bedford Corners, NY
Andrew J. Scherer Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorensen 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
Gary R. Steele Vice President Philadelphia, PA
Richard Stefanec Vice President Los Angeles, CA
James D. Stevens Vice President North Andover, MA
James M. Stilwell Vice President San Diego, CA
William C. Strafford Vice President Granger, IN
David A. Tabone Vice President Scottsdale, AZ
James C. Taylor Vice President Naperville, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Todd Volkman Vice President Austin, TX
Daniel B. Waldron Vice President Oakbrook Terrace, IL
Christopher Walsh Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Robert A. Watson Vice President Oakbrook Terrace, IL
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Kirk Wiggins Vice President Arlington, TX
David M. Wynn Vice President Phoenix, AZ
James R. Yount Vice President Mercer Island, WA
Patrick M. Zacchea Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX
Walter C. Gray Asst. Vice President Houston, TX
Laurie L. Jones Asst. Vice President Houston, TX
Michael B. Kollins Asst. Vice President Oakbrook Terrace, IL
Ivan R. Lowe Asst. Vice President Houston, TX
Linda S. MacAyaal Asst. Vice President Oakbrook Terrace, IL
Stuart R. Moehlman Asst. Vice President Houston, TX
Steven R. Norvid Asst. Vice President Oakbrook Terrace, IL
Gregory S. Parker Asst. Vice President Houston, TX
David B. Partain Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Michael Quinn Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
</TABLE>

<PAGE> 4

<TABLE>
<S> <C> <C>
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Natalie Wilson Asst. Vice President New York, NY
Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL

Gina M. Costello Asst. Secretary Oakbrook Terrace, IL
Cathy Napoli Asst. Secretary Oakbrook Terrace, IL

Elizabeth M. Brown Officer Houston, TX
John Browning Officer Oakbrook Terrace. IL
Leticia George Officer Houston, TX
Sarah Kessler Officer Oakbrook Terrace, IL
William D. McLaughlin Officer Houston, TX
Becky Newman Officer Houston, TX
Rosemary Pretty Officer Houston, TX
Colette Saucedo Officer Houston, TX
Frederick Shepherd Officer Houston, TX
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
</TABLE>
<PAGE> 5

DIRECTORS

VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ------------------- ------------------------ ---------------------------------
<S> <C> <C>
Don G. Powell Chairman & CEO 2800 Post Oak
Blvd.Houston, TX 77056

William R. Molinari President & COO One Parkview Plaza
Oakbrook Terrace, IL 60181

Ronald A. Nyberg Executive Vice President One Parkview Plaza
& General Counsel Oakbrook Terrace, IL 60181

William R. Rybak Executive Vice President One Parkview Plaza
& CFO Oakbrook Terrace, IL 60181
</TABLE>

<PAGE> 1

EXHIBIT 18

AMENDED

MULTI-CLASS PLAN

FOR

VAN KAMPEN AMERICAN CAPITAL FAMILY OF FUNDS

This Plan is adopted pursuant to Rule 18f-3 under the Act to provide
for the issuance and distribution of multiple classes of shares by each of the
Funds in accordance with the terms, procedures and conditions set forth below.
A majority of the Trustees of the Funds, including a majority of the Trustees
who are not interested persons of the Funds within the meaning of the Act,
found this Multi-Class Plan, including the expense allocations, to be in the
best interest of each Fund and each Class of Shares of each Fund. The Fund
adopted this Plan on January 26, 1996 and amended the Plan as of January 1,
1997.

A. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.

1. The Act - Investment Company Act of 1940, as amended.

2. CDSC - contingent deferred sales charge.

3. CDSC Period - the period of years following acquisition during
which Shares are assessed a CDSC upon redemption.

4. Class - a class of Shares of a Fund.

5. Class A Shares - shall have the meaning ascribed in Section B. 1.

6. Class B Shares - shall have the meaning ascribed in Section B. 1.

7. Class C Shares - shall have the meaning ascribed in Section B. 1.

8. Distribution Expenses - expenses incurred in activities which are
primarily intended to result in the distribution and sale of
Shares as defined in a Plan of Distribution and/or board
resolutions.

9. Distribution Fee - a fee paid by a Fund to the Distributor in
reimbursement of Distribution Expenses.

10. Distributor - Van Kampen American Capital Distributors, Inc.

11. Fund - an investment company listed on Exhibit A hereto and each
series thereof.

12. Money Market Fund - Van Kampen American Capital Reserve Fund or
Van Kampen American Capital Tax Free Money Fund.
<PAGE> 2

13. Plan of Distribution - Any plan adopted under Rule 12b-1 under the
Act with respect to payment of a Distribution Fee.

14. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders and/or
the maintenance of shareholder accounts.

15. Share - a share of beneficial interest in a Fund.

16. Trustees - the trustees of a Fund.

B. Classes. Each Fund may offer three Classes as follows:

1. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Trustees and set forth in the Funds' prospectus,
which may be reduced or eliminated for Money Market Funds,
larger purchases, under a combined purchase privilege, under a
right of accumulation, under a letter of intent or for certain
categories of purchasers as permitted by Rule 22(d) of the Act
and as set forth in the Fund's prospectus. Class A Shares that
are not subject to a front-end sales charge as a result of the
foregoing, may be subject to a CDSC for the CDSC Period set forth
in Section D.1. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with Rule
22c-1 and Section 22(d) of the Act and the rules and regulations
thereunder. Class A Shares shall be subject to ongoing Service
Fees approved from time to time by the Trustees and set forth in
the Funds' prospectus. Although shares of Van Kampen American
Capital Tax Free Money Market Fund are not designated as "Class A"
they are substantially similar to Class A Shares as defined herein
and shall be treated as Class A shares for the purposes of this
Plan.

2. Class B Shares. Class B Shares shall be (1) offered at net asset
value, (2) subject to a CDSC for the CDSC Period set forth in
Section D. 1, (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) converted to Class A
Shares three to ten years after the calendar month in which the
shareholder's order to purchase was accepted, which number of
years shall be as approved from time to time by the Trustees and
set forth in the respective Fund's prospectus.

3. Class C Shares. Class C Shares shall be (1) offered at net
asset value, (2) subject to a CDSC for the CDSC Period set forth
in Section D. 1. , (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) prior to January 1,
1997, converted to Class A Shares eight to fifteen years after
the calendar month in which the shareholder's order to purchase
was accepted, which number of years shall be as approved from
time to time by the Trustees and set forth in the respective
Fund's prospectus.

<PAGE> 3

C. Rights and Privileges of Classes. Each Class of each Fund will
represent an interest in the same portfolio of investments of that
Fund and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions except as
described otherwise herein.

D. CDSC. A CDSC may be imposed upon redemption of Class A Shares, Class
B Shares and Class C Shares that do not incur a front end sales charge
subject to the following conditions:

1. CDSC Period. The CDSC Period for Class A Shares and Class C Shares
shall be one year. The CDSC Period for Class B Shares shall be at
least three but not more than ten years as recommended by the
Distributor and approved by the Trustees.

2. CDSC Rate. The CDSC rate shall be recommended by the Distributor
and approved by the Trustees. If a CDSC is imposed for a period
greater than one year the CDSC rate must decline during the CDSC
Period such that (a) the CDSC rate is less in the last year of the
CDSC Period than in the first and (b) in each succeeding year the
CDSC rate shall be less than or equal to the CDSC rate in the
preceding year.

3. Disclosure and Changes. The CDSC rates and CDSC Period shall be
disclosed in a Fund's prospectus and may be decreased at the
discretion of the Distributor but may not be increased unless
approved as set forth in Section L.

4. Method of Calculation. The CDSC shall be assessed on an amount
equal to the lesser of the then current market value or the cost of
the Shares being redeemed. No sales charge shall be imposed on
increases in the net asset value of the Shares being redeemed above
the initial purchase price. No CDSC shall be assessed on Shares
derived from reinvestment of dividends or capital gains
distributions. The order in which Class B Shares and Class C
Shares are to be redeemed when not all of such Shares would be
subject to a CDSC shall be as determined by the Distributor in
accordance with the provisions of Rule 6c-10 under the Act.

5. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares under circumstances
previously approved by the Trustees and disclosed in the Fund's
prospectus or statement of additional information and as allowed
under Rule 6c-10 under the Act.

6. Calculation of offering price. The offering price of Shares subject
to a CDSC shall be computed in accordance with Rule 22c-1 and
Section 22(d) of the Act and the rules and regulations thereunder.

7. Retention by Distributor. The CDSC paid with respect to Shares of
a Fund may be retained by the Distributor to reimburse the
Distributor for commissions paid by it in

<PAGE> 4

connection with the sale of Shares subject to a CDSC and
Distribution Expenses to the extent of such commissions and
Distribution Expenses eligible for reimbursement and approved by
the Trustees.

E. Service and Distribution Fees. Class A Shares shall be subject to a
Service Fee and Class B and Class C Shares shall be subject to a
Service Fee and a Distribution Fee. The Service Fee applicable to any
class shall not exceed 0.25% per annum of the average daily net assets
of the Class and the Distribution Fee shall not exceed 0.75% per annum
of the average daily net assets of the Class. All other terms and
conditions with respect to Service Fees and Distribution Fees shall be
governed by the plans adopted by the Fund with respect to such fees
and Rule 12b-1 of the Act.

F. Conversion. Shares purchased through the reinvestment of dividends
and distributions paid on Shares subject to conversion shall be
treated as if held in a separate sub-account. Each time any Shares
in a Shareholder's account (other than Shares held in the sub-
account) convert to Class A Shares, a proportionate number of Shares
held in the sub-account shall also convert to Class A Shares. All
conversions shall be effected on the basis of the relative net asset
values of the two Classes without the imposition of any sales load or
other charge. So long as any Class of Shares converts into Class A
Shares, the Distributor shall waive or reimburse each Fund, or take
such other actions with the approval of the Trustees as may be
reasonably necessary, to ensure the expenses, including payments
authorized under a Plan of Distribution, applicable to the Class A
Shares are not higher than the expenses, including payments authorized
under the Plan of Distribution, applicable to the class of shares
converting into Class A Shares.

G. Allocation of Expenses, Income and Gains Among Classes.

1. Expenses applicable to a particular class. Each Class of each
Fund shall pay any Service Fee, Distribution Fee and CDSC
applicable to that Class. Other expenses applicable to a
particular Class such as incremental transfer agency fees, but not
including advisory or custodial fees or other expenses related to
the management of the Fund's assets, shall be allocated between
Classes in different amounts if they are actually incurred in
different amounts by the Classes or the Classes receive services
of a different kind or to a different degree than other Classes.

2. Distribution Expenses. Distribution Expenses actually
attributable to the sale of all Classes shall be allocated to each
Class based upon the ratio which sales of each Class bears to the
sales of all Shares of the Fund. For this purpose, Shares issued
upon reinvestment of dividends or distributions, upon conversion
from Class B Shares or Class C Shares to Class A Shares or upon
stock splits will not be considered sales.

3. Income, capital gains and losses, and other expenses applicable to
all Classes. Income, realized and unrealized capital gains and
losses, and expenses such as advisory fees applicable to all
Classes shall be allocated to each Class on the basis of the net
asset value of that Class in relation to the net asset value of
the Fund.

<PAGE> 5

4. Determination of nature of expenses. The Trustees shall determine
in their sole discretion whether any expense other than those
listed herein is properly treated as attributed to a particular
Class or all Classes.

H. Exchange Privilege. Exchanges of Shares shall be permitted between
Funds as follows.

1. General. Shares of one Fund may be exchanged for Shares of the
same Class of another Fund at net asset value and without sales
charge, provided that

a. The Distributor may specify that certain Funds may not be
exchanged within a designated period, which shall not exceed
90 days, after acquisition without prior Distributor approval.

b. Class A Shares of a Money Market Fund that were not acquired
in exchange for Class B or Class C Shares of a Fund may be
exchanged for Class A Shares of another Fund only upon payment
of the excess, if any, of the sales charge rate applicable to
the Shares being acquired over the sales charge rate
previously paid.

c. Shares of a Money Market Fund acquired through an exchange of
Class B Shares or Class C Shares may be exchanged only for the
same Class of another Fund as the Class they were acquired in
exchange for or any Class into which those shares were
converted.

2. Target Fund. Shares of Van Kampen American Capital Government
Target Fund may be exchanged for Class A Shares of a Fund.

3. CDSC Computation. The acquired Shares will remain subject to the
CDSC rate schedule and CDSC Period for the original Fund upon the
redemption of the Shares from the Van Kampen American Capital
complex of funds. For purposes of computing the CDSC payable on a
disposition of the new Shares, the holding period for the
original Shares shall be added to the holding period of the new
Shares.

I. Voting Rights of Classes.

1. Shareholders of each Class shall have exclusive voting rights on
any matter submitted to them that relates solely to the Plan of
Distribution related to that Class, provided that

d. If any amendment is proposed to the plan under which Service
Fees are paid with respect to Class A Shares of a Fund that
would increase materially the amount to be borne by Class A
Shares under that plan, then no Class B Shares or Class C
Shares shall convert into Class A Shares of that Fund until
the holders of Class B Shares and Class C Shares of that Fund
have also approved the proposed amendment.

<PAGE> 6

e. If the holders of either the Class B Shares and/or Class C
Shares referred to in subparagraph a. do not approve the
proposed amendment, the Trustees of the Fund and the
Distributor shall take such action as is necessary to ensure
that the Class voting against the amendment shall convert into
another Class identical in all material respects to Class A
Shares of the Fund as constituted prior to the amendment.

2. Shareholders shall have separate voting rights on any matter
submitted to shareholders in which the interest of one Class
differs from the interests of any other Class.

J. Dividends. Dividends paid by a Fund with respect to each Class, to
the extent any dividends are paid, will be calculated in the same
manner at the same time on the same day and will be in substantially
the same amount, except any Distribution Fees,Service Fees or
incremental expenses relating to a particular Class will be borne
exclusively by that Class.

K. Reports to Trustees. The Distributor shall provide to the Trustees of
each Fund quarterly and annual statements concerning distribution and
Shareholder servicing expenditures complying with paragraph (b)(3)(ii)
of Rule 12b-1 of the Act, as it may be amended from time to time. The
Distributors also shall provide the Trustees such information as the
Trustees may from time to time deem to be reasonably necessary to
evaluate this Plan.

L. Amendment. Any material amendment to this Plan shall be approved by
the affirmative vote of a majority of the Trustees of a Fund,
including the affirmative vote of the trustees of the Fund
who are not interested persons of the Fund, except that any amendment
that increases the CDSC rate schedule or CDSC Period must also be
approved by the affirmative vote of a majority of the Shares of the
affected Class. The Distributor shall provide the Trustees such
information as may be reasonably necessary to evaluate any amendment
to this Plan.

<PAGE> 7

EXHIBIT A

<PAGE> 1

EXHIBIT 24

POWER OF ATTORNEY

The undersigned, being officers and trustees of each of the Van Kampen
American Capital Open End Trusts (with the exception of Don G. Powell), as
indicated on Schedule 1 attached hereto and incorporated by reference, each a
Delaware business trust, except for the Van Kampen American Capital
Pennsylvania Tax Free Income Fund, being a Pennsylvania business trust
(individually, a "Trust"), do hereby, in the capacities shown below,
individually appoint Dennis J. McDonnell and Ronald A. Nyberg, each of
Oakbrook Terrace, Illinois, and each of them, as the 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 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: July 24, 1997

Signature Title
--------- -----

/s/ J. Miles Branagan Trustee
- ---------------------------
J. Miles Branagan

/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 (For Former Van
- --------------------------- Kampen Funds only)
Don G. Powell

/s/ Jerome L. Robinson Trustee
- ---------------------------
Jerome L. Robinson

/s/ Phillip B. Rooney Trustee
- ---------------------------
Phillip B. Rooney

/s/ Fernando Sisto, Sc.D. Trustee
- ---------------------------
Fernando Sisto, Sc.D.

/s/ Wayne W. Whalen Trustee and Chairman
- ---------------------------
Wayne W. Whalen

/s/ Edward C. Wood III Vice President and
- --------------------------- Chief Financial Officer
Edward C. Wood III

/s/ Dennis J. McDonnell President
- ---------------------------
Dennis J. McDonnell
<PAGE> 2

SCHEDULE 1

I. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):

Van Kampen American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")

Van Kampen American Capital Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High Income
Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
("Intermediate Term Municipal Income Fund") (f/k/a Limited Term Municipal
Income Fund)
Van Kampen American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Van Kampen American Capital New Jersey Tax Free Income Fund ("New Jersey Tax
Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York Tax Free
Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California Tax
Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax Free
Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax Free
Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free Income
Fund")

Van Kampen American Capital Trust ("VKAC Trust")
on behalf of its series
Van Kampen American Capital High Yield Fund ("VKAC High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term Global
Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income Fund")

Van Kampen American Capital Equity Trust ("Equity Trust")
on behalf of its series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great American
Companies Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")

Van Kampen American Capital Pennsylvania Tax Free Income Fund
("Pennsylvania Tax Free Income Fund")

Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund")

<PAGE> 3

II. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL FUNDS"):

Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed Assets
Fund")
Van Kampen American Capital Government Securities Fund ("Government Securities
Fund")
Van Kampen American Capital Government Target Fund ("Government Target Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund")
Van Kampen American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")

Van Kampen American Capital Life Investment Trust ("Life Investment Trust" or
"LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Morgan Stanley Real Estate Securities Portfolio ("LIT Morgan Stanley Real
Estate Securities Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")

Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small Capitalization
Fund")

Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust")
on behalf of its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")

Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")

Van Kampen American Capital World Portfolio Series Trust ("World Portfolio
Series Trust") on behalf of its Series
Van Kampen American Capital Global Equity Fund ("Global Equity Fund")
Van Kampen American Capital Global Government Securities Fund ("Global
Government Securities Fund")

<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOBAL EQUITY FUND CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 240819409<F1>
<INVESTMENTS-AT-VALUE> 266819462<F1>
<RECEIVABLES> 7648888<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2648750<F1>
<TOTAL-ASSETS> 277117116<F1>
<PAYABLE-FOR-SECURITIES> 1823802<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1229397<F1>
<TOTAL-LIABILITIES> 3053199<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103173521
<SHARES-COMMON-STOCK> 8645220
<SHARES-COMMON-PRIOR> 7632191
<ACCUMULATED-NII-CURRENT> (879465)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 38644391<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 26931817<F1>
<NET-ASSETS> 136924605
<DIVIDEND-INCOME> 3102509<F1>
<INTEREST-INCOME> 732388<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (5787088)<F1>
<NET-INVESTMENT-INCOME> (1952191)<F1>
<REALIZED-GAINS-CURRENT> 42112838<F1>
<APPREC-INCREASE-CURRENT> (810153)<F1>
<NET-CHANGE-FROM-OPS> 39350494<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (1133880)
<DISTRIBUTIONS-OF-GAINS> (3319275)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6134539
<NUMBER-OF-SHARES-REDEEMED> (5426393)
<SHARES-REINVESTED> 304883
<NET-CHANGE-IN-ASSETS> 30217219
<ACCUMULATED-NII-PRIOR> (297866)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 2342104<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 5795888<F1>
<AVERAGE-NET-ASSETS> 118602084
<PER-SHARE-NAV-BEGIN> 13.980
<PER-SHARE-NII> (0.064)
<PER-SHARE-GAIN-APPREC> 2.460
<PER-SHARE-DIVIDEND> (0.137)
<PER-SHARE-DISTRIBUTIONS> (0.401)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.838
<EXPENSE-RATIO> 2.09
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Indicates composite number for the fund.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GLOBAL EQUITY FUND CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 240819409<F1>
<INVESTMENTS-AT-VALUE> 266819462<F1>
<RECEIVABLES> 7648888<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2648750<F1>
<TOTAL-ASSETS> 277117116<F1>
<PAYABLE-FOR-SECURITIES> 1823802<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1229397<F1>
<TOTAL-LIABILITIES> 3053199<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95878421
<SHARES-COMMON-STOCK> 8101269
<SHARES-COMMON-PRIOR> 6857163
<ACCUMULATED-NII-CURRENT> (879465)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 38644391<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 26931817<F1>
<NET-ASSETS> 124096728
<DIVIDEND-INCOME> 3102509<F1>
<INTEREST-INCOME> 732388<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (5787088)<F1>
<NET-INVESTMENT-INCOME> (1952191)<F1>
<REALIZED-GAINS-CURRENT> 42112838<F1>
<APPREC-INCREASE-CURRENT> (810153)<F1>
<NET-CHANGE-FROM-OPS> 39350494<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (221577)
<DISTRIBUTIONS-OF-GAINS> (2976985)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2431724
<NUMBER-OF-SHARES-REDEEMED> (1408797)
<SHARES-REINVESTED> 221179
<NET-CHANGE-IN-ASSETS> 31297817
<ACCUMULATED-NII-PRIOR> (297866)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 2342104<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 5795888<F1>
<AVERAGE-NET-ASSETS> 104823894
<PER-SHARE-NAV-BEGIN> 13.530
<PER-SHARE-NII> (0.139)
<PER-SHARE-GAIN-APPREC> 2.358
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> (0.401)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.318
<EXPENSE-RATIO> 2.86
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Indicates composite number for the fund.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GLOBAL EQUITY FUND CLASS C

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 240819409<F1>
<INVESTMENTS-AT-VALUE> 266819462<F1>
<RECEIVABLES> 7648888<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2648750<F1>
<TOTAL-ASSETS> 277117116<F1>
<PAYABLE-FOR-SECURITIES> 1823802<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1229397<F1>
<TOTAL-LIABILITIES> 3053199<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10315232
<SHARES-COMMON-STOCK> 843377
<SHARES-COMMON-PRIOR> 671872
<ACCUMULATED-NII-CURRENT> (879465)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 38644391<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 26931817<F1>
<NET-ASSETS> 13042584
<DIVIDEND-INCOME> 3102509<F1>
<INTEREST-INCOME> 732388<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (5787088)<F1>
<NET-INVESTMENT-INCOME> (1952191)<F1>
<REALIZED-GAINS-CURRENT> 42112838<F1>
<APPREC-INCREASE-CURRENT> (810153)<F1>
<NET-CHANGE-FROM-OPS> 39350494<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (22491)
<DISTRIBUTIONS-OF-GAINS> (303566)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 326525
<NUMBER-OF-SHARES-REDEEMED> (176672)
<SHARES-REINVESTED> 21652
<NET-CHANGE-IN-ASSETS> 3867015
<ACCUMULATED-NII-PRIOR> (297866)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 2342104<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 5795888<F1>
<AVERAGE-NET-ASSETS> 10784371
<PER-SHARE-NAV-BEGIN> 13.660
<PER-SHARE-NII> (0.137)
<PER-SHARE-GAIN-APPREC> 2.372
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> (0.401)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.464
<EXPENSE-RATIO> 2.87
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Indicates composite number for the fund.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 21
<NAME> GLOBAL GOVERNMENT SECURITIES FUND CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 87172936<F1>
<INVESTMENTS-AT-VALUE> 87426535<F1>
<RECEIVABLES> 715239<F1>
<ASSETS-OTHER> 99<F1>
<OTHER-ITEMS-ASSETS> 815897<F1>
<TOTAL-ASSETS> 88957770<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 754412<F1>
<TOTAL-LIABILITIES> 754412<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36467276
<SHARES-COMMON-STOCK> 3374330
<SHARES-COMMON-PRIOR> 4595368
<ACCUMULATED-NII-CURRENT> 94388<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (39045625)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1613248<F1>
<NET-ASSETS> 25658438
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 10014924<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2610581)<F1>
<NET-INVESTMENT-INCOME> 7404343<F1>
<REALIZED-GAINS-CURRENT> (9480352)<F1>
<APPREC-INCREASE-CURRENT> 5119861<F1>
<NET-CHANGE-FROM-OPS> 3043852<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (2102906)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 415170
<NUMBER-OF-SHARES-REDEEMED> (1805879)
<SHARES-REINVESTED> 169671
<NET-CHANGE-IN-ASSETS> (10752977)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171823)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 918419<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2619381<F1>
<AVERAGE-NET-ASSETS> 31698767
<PER-SHARE-NAV-BEGIN> 7.920
<PER-SHARE-NII> 0.526
<PER-SHARE-GAIN-APPREC> (0.310)
<PER-SHARE-DIVIDEND> (0.532)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.604
<EXPENSE-RATIO> 1.57
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class
basis.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 22
<NAME> GLOBAL GOVERNMENT SECURITIES FUND CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 87172936<F1>
<INVESTMENTS-AT-VALUE> 87426535<F1>
<RECEIVABLES> 715239<F1>
<ASSETS-OTHER> 99<F1>
<OTHER-ITEMS-ASSETS> 815897<F1>
<TOTAL-ASSETS> 88957770<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 754412<F1>
<TOTAL-LIABILITIES> 754412<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79889687
<SHARES-COMMON-STOCK> 7441320
<SHARES-COMMON-PRIOR> 12261711
<ACCUMULATED-NII-CURRENT> 94388<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (39045625)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1613248<F1>
<NET-ASSETS> 56889670
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 10014924<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2610581)<F1>
<NET-INVESTMENT-INCOME> 7404343<F1>
<REALIZED-GAINS-CURRENT> (9480352)<F1>
<APPREC-INCREASE-CURRENT> 5119861<F1>
<NET-CHANGE-FROM-OPS> 3043852<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (4816433)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 612589
<NUMBER-OF-SHARES-REDEEMED> (5798718)
<SHARES-REINVESTED> 365738
<NET-CHANGE-IN-ASSETS> (40770669)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171823)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 918419<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2619381<F1>
<AVERAGE-NET-ASSETS> 82933982
<PER-SHARE-NAV-BEGIN> 7.960
<PER-SHARE-NII> 0.477
<PER-SHARE-GAIN-APPREC> (0.320)
<PER-SHARE-DIVIDEND> (0.472)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.645
<EXPENSE-RATIO> 2.33
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class
basis.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 23
<NAME> GLOBAL GOVERNMENT SECURITIES FUND CLASS C

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 87172936<F1>
<INVESTMENTS-AT-VALUE> 87426535<F1>
<RECEIVABLES> 715239<F1>
<ASSETS-OTHER> 99<F1>
<OTHER-ITEMS-ASSETS> 815897<F1>
<TOTAL-ASSETS> 88957770<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 754412<F1>
<TOTAL-LIABILITIES> 754412<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9184384
<SHARES-COMMON-STOCK> 745566
<SHARES-COMMON-PRIOR> 1201697
<ACCUMULATED-NII-CURRENT> 94388<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (39045625)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1613248<F1>
<NET-ASSETS> 5655250
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 10014924<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2610581)<F1>
<NET-INVESTMENT-INCOME> 7404343<F1>
<REALIZED-GAINS-CURRENT> (9480352)<F1>
<APPREC-INCREASE-CURRENT> 5119861<F1>
<NET-CHANGE-FROM-OPS> 3043852<F1>
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (459054)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36431
<NUMBER-OF-SHARES-REDEEMED> (523469)
<SHARES-REINVESTED> 30907
<NET-CHANGE-IN-ASSETS> (3845735)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171823)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 918419<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2619381<F1>
<AVERAGE-NET-ASSETS> 7823049
<PER-SHARE-NAV-BEGIN> 7.910
<PER-SHARE-NII> 0.471
<PER-SHARE-GAIN-APPREC> (0.324)
<PER-SHARE-DIVIDEND> (0.472)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.585
<EXPENSE-RATIO> 2.33
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class
basis.
</FN>

</TABLE>