VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST, 485APOS, 1997-07-28

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
485APOS, 1997-07-28

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 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. 13 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 14 [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)

[ ] on (date) pursuant to paragraph (b)

[X] 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:

[ ] 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

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
4. General Description of Registrant.......... The Trust; Investment Objective and
Policies; Investment Practices; Description
of Shares of the Trust
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 Objective and Policies;
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 Agreement
16. Investment Advisory and Other Services..... General Information; Trustees and Officers;
Investment Advisory Agreement;
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; Alternative Sales
Arrangements; Exchange Privilege
20. Tax Status................................. Dividends, Distributions and Federal Taxes
21. Underwriters............................... Distributor
22. Calculation of Performance Data............ Fund Performance
23. Financial Statements....................... Report of Independent Accountants;
Financial Statements; Notes to Financial
Statements
</TABLE>

PART C
- ------

Information required to be included in Part C is set forth under the
appropriate item in Part C of this registration statement.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION

DATED JULY 28, 1997

- ------------------------------------------------------------------------------
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. 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 , 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 , 1997.

<PAGE> 4

- ------------------------------------------------------------------------------
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........................................ 15
Investment Advisory Services................................ 20
Alternative Sales Arrangements.............................. 23
Purchase of Shares.......................................... 26
Shareholder Services........................................ 36
Redemption of Shares........................................ 40
Distribution and Service Plans.............................. 43
Distributions from the Fund................................. 45
Tax Status.................................................. 46
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> 5

- ------------------------------------------------------------------------------
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." Use of options, futures contracts and related options
may include additional risks. See "Investment Practices -- Using Options,
Futures Contracts and Related Options."

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

RISK FACTORS. Investing in common stocks 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."

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> 6

Class B Shares. Class B shares are offered at net asset value per share and
are subject to a maximum CDSC of 5.00% of redemption proceeds 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% of redemption proceeds 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> 7

- ------------------------------------------------------------------------------
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> 8

- ------------------------------------------------------------------------------
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)............. % % %
12b-1 Fees (as a percentage of average
daily net assets)(1).................. % %(2) %(2)
Other Expenses (as a percentage of
average daily net assets)............. % % %
Total Fund Operating Expenses (as a
percentage of average daily net
assets)(4)............................ % % %
</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) Individual 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> 9

<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 [ ]% for
Class A shares, [ ]% for Class B
shares and [ ]% for Class C shares,
(ii) a 5.00% annual return and (iii)
redemption at the end of each time
period:
Class A............................. $ $ $ $
Class B............................. $ $ $ $ *
Class C............................. $ $ $ $
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................. $ $ $ $
Class B............................. $ $ $ $ *
Class C............................. $ $ $ $
</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. 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 "Distribution and Service Plans."

7
<PAGE> 10

- --------------------------------------------------------------------------------
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(1)
--------------------------------------------------------------------- TO
1997(2) 1996(2) 1995(2) 1994 1993(2) MAY 31, 1992(2)
--------- --------- ------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period... $11.79 $11.67 $10.76 $10.44 $9.33
--------- --------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Investment income..................... .24 .23 .26 .235 .21
Expenses.............................. (.28) (.27) (.32) (.325) (.185)
Expense reimbursement................. -- -- -- .035 --
--------- --------- ------- -------- -------- --------
Net investment income (loss)........... (.04) (.04) (.06) (.055) .025
Net realized and unrealized gain on
securities............................ 2.561 .42 1.0125 .7775 1.145
--------- --------- ------- -------- -------- --------
Total from investment operations....... 2.521 .38 .9525 .7225 1.17
--------- --------- ------- -------- -------- --------
LESS DISTRIBUTIONS FROM
Net realized gain on securities....... (.331) -- (.0425) (.4025) (.06)
Excess of book-basis net realized gain
on securities....................... -- (.26) -- -- --
--------- --------- ------- -------- -------- --------
Total distributions.................... (.331) (.26) (.0425) (.4025) (.06)
--------- --------- ------- -------- -------- --------
Net asset value, end of period......... $13.98 $11.79 $11.67 $10.76 $10.44
========= ========= ======= ======== ======== ========
TOTAL RETURN(3)........................ 21.85% 3.36% 9.17% 7.13% 12.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)... $106.7 $60.1 $41.8 $12.7 $8.4
Average net assets (millions)..........
Ratios to average net assets
(annualized).......................... $77.6 $54.5 $25.8 $9.2 $6.2
Expenses.............................. 2.22% 2.29% 2.46% 2.93% 2.07%
Expenses, without expense
reimbursement....................... 2.23% -- -- 3.28% --
Net investment income (loss).......... (.30%) (.35%) (.46%) (.57%) .29%
Net investment (loss), without expense
reimbursement....................... (.31%) -- -- (.92%) --
Average commission rate per equity
stock traded.......................... $.02 -- -- -- --
Portfolio turnover rate................ 94% 120% 116% 120% 135%
</TABLE>

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

(1) Commencement of offering of shares.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.

8
<PAGE> 11

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

<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------------------------------------
YEAR ENDED MAY 31 NOV. 15, 1991(1)
----------------------------------------------------- TO
1997(2) 1996(2) 1995(2) 1994 1993(2) MAY 31, 1992(2)
--------- --------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period....... $11.50 $11.48 $10.67 $10.46 $9.78
--------- --------- --------- --------- --------- -----------
INCOME FROM INVESTMENT OPERATIONS
Investment income......................... .23 .22 .22 .235 .16
Expenses.................................. (.37) (.35) (.35) (.435) (.165)
Expense reimbursement..................... -- -- -- .065 --
--------- --------- --------- --------- --------- -----------
Net investment income (loss)............... (.14) (.13) (.13) (.135) (.005)
Net realized and unrealized gain on
securities................................ 2.501 .41 .9825 .7475 .745
--------- --------- --------- --------- --------- -----------
Total from investment operations........... 2.361 .28 .8525 .6125 .74
--------- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS FROM
Net realized gain on securities........... (.331) -- (.0425) (.4025) (.06)
Excess of book-basis net realized gain on
securities.............................. -- (.26) -- -- --
--------- --------- --------- --------- --------- -----------
Total distributions........................ (.331) (.26) (.0425) (.4025) (.06)
--------- --------- --------- --------- --------- -----------
Net asset value, end of period............. $13.53 $11.50 $11.48 $10.67 $10.46
========= ========= ========= ========= ========= ===========
TOTAL RETURN(3)............................ 20.90% 2.62% 8.21% 6.15% 7.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)....... $92.8 $64.7 $48.8 $6.9 $1.2
Average net assets (millions)..............
Ratios to average net assets
(annualized).............................. $75.6 $59.4 $26.4 $2.8 $.5
Expenses.................................. 2.99% 3.05% 3.21% 3.88% 3.11%
Expenses, without expense reimbursement... 2.99% -- -- 4.50% --
Net investment income (loss).............. (1.11%) (1.11%) (1.19%) (1.41%) (.12%)
Net investment (loss), without expense
reimbursement........................... (1.11%) -- -- (2.02%) --
Average commission rate per equity stock
traded.................................... $.02 -- -- -- --
Portfolio turnover rate.................... 94% 120% 116% 120% 135%

<CAPTION>
CLASS C SHARES(2)
-------------------------------------------------
YEAR ENDED MAY 31, JUNE 21, 1993(1)
------------------------------- TO
1997 1996 1995 MAY 31, 1994
--------- --------- --------- ----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period....... $11.61 $11.59 $10.29
--------- --------- --------- -----------
INCOME FROM INVESTMENT OPERATIONS
Investment income......................... .24 .22 .24
Expenses.................................. (.38) (.35) (.37)
Expense reimbursement..................... -- -- --
--------- --------- --------- -----------
Net investment income (loss)............... (.14) (.13) (.13)
Net realized and unrealized gain on
securities................................ 2.521 .41 1.4725
--------- --------- --------- -----------
Total from investment operations........... 2.381 .28 1.3425
--------- --------- --------- -----------
LESS DISTRIBUTIONS FROM
Net realized gain on securities........... (.331) -- (.0425)
Excess of book-basis net realized gain on
securities.............................. -- (.26) --
--------- --------- --------- -----------
Total distributions........................ (.331) (.26) (.0425)
--------- --------- --------- -----------
Net asset value, end of period............. $13.66 $11.61 $11.59
========= ========= ========= ===========
TOTAL RETURN(3)............................ 20.87% 2.60% 13.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)....... $9.2 $6.6 $5.1
Average net assets (millions)..............
Ratios to average net assets
(annualized).............................. $7.4 $6.2 $2.4
Expenses.................................. 3.00% 3.05% 3.21%
Expenses, without expense reimbursement... 3.00% -- --
Net investment income (loss).............. (1.10%) (1.13%) (1.15%)
Net investment (loss), without expense
reimbursement........................... (1.10%) -- --
Average commission rate per equity stock
traded.................................... $.02 -- --
Portfolio turnover rate.................... 94% 120% 116%
</TABLE>

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

9
<PAGE> 12

- ------------------------------------------------------------------------------
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. The
Fund is one of the two series currently established under the Trust. The other
series is Van Kampen American Capital Global Government Securities Fund ("Global
Government").

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.

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<PAGE> 13

The Adviser utilizes a "top-down" approach in selecting investments for the
Fund that emphasizes country selection and weighting rather than individual
stock 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
common stocks 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

11
<PAGE> 14

large, 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 common stocks generally. Investment in common stocks 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 common stocks may not be as liquid and may be more volatile than
comparable domestic common stocks.

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

12
<PAGE> 15

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> 16

however, hold a portion of its assets in cash to meet redemptions and other
day-to-day operating expenses. 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.

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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.

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 efficiencies and
economies of scale that may contribute to reduced transaction costs, higher
returns, higher quality investments and greater diversity of investments for the
Fund than would be available to the Fund investing separately. The manner in
which the joint account is managed is subject to conditions set forth in an SEC
exemptive order authorizing this practice, which conditions are designed to
ensure the fair administration of the joint account and to protect the amounts
in that account.

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<PAGE> 17

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. 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.

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-

15
<PAGE> 18

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 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.

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 payments on securities in its
portfolio that are convertible into the securities sold short. The Fund will not
purchase and deliver new securities to satisfy its short order if such purchase
and sale would cause the Fund to derive more than 30% of its gross income from
the sale of securities held for less than three months.

USING OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS. The Fund expects to
utilize options, futures contracts and options thereon in several different
ways,

16
<PAGE> 19

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 stock market. 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 take a defensive
position, reducing 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.

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

17
<PAGE> 20

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.

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.

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 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

18
<PAGE> 21

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.

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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 $57 billion under management or supervision. Van Kampen American Capital's
more than 40 open-end and 38 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

19
<PAGE> 22

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 December 31,
1996, the Subadviser had, together with its affiliated investment management
companies, assets under management (including assets under fiduciary advisory
control) totaling approximately $162 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> 23

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) 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 is primarily responsible for recommending the
allocation of investments among various international markets and currencies and
recommendation and selection of particular securities in the markets. 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
of the Subadviser's emerging markets group, and has been involved in the
launching

21
<PAGE> 24

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.

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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."

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

22
<PAGE> 25

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."

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> 26

"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> 27

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.

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 ("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

25
<PAGE> 28

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 acceptance 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> 29

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>

* 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

27
<PAGE> 30

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 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 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.

28
<PAGE> 31

foregoing; a trustee or other fiduciary purchasing for a single trust or for a
single fiduciary account, or a "company" as defined in Section 2(a)(8) of the
1940 Act.

As used herein, "Participating Funds" refers to certain open-end investment
companies advised by 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

29
<PAGE> 32

Fund or the Distributor. The Fund reserves the right to modify or terminate
these arrangements at any time.

Unit Investment Trust Reinvestment Programs. The Fund permits unitholders of
unit investment trusts to reinvest distributions from such trusts in Class A
shares of the Fund, at net asset value 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> 33

(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.

(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) Investors purchasing shares of the Fund with redemption proceeds from
other mutual fund complexes on which the investor has paid a front-end
sales charge or was subject to a deferred sales charge, whether or not
paid, if such redemption has occurred no more than 30 days prior to such
purchase.

(8) Trusts created under pension, profit sharing or other employee benefit
plans qualified under Section 401(a) of the Code, or custodial accounts
held by a bank created pursuant to Section 403(b) of the Code and
sponsored by non-profit organizations defined under Section 501(c)(3) of
the Code and assets held by an employer or trustee in connection with an
eligible deferred compensation plan under Section 457 of the Code. Such
plans will qualify for purchases at net asset value provided, for plans
initially establishing accounts with the Distributor in the Participating
Funds after February 1, 1997, that (1) the initial amount invested in the
Participating Funds is at least $500,000 or (2) such shares are purchased
by an employer sponsored plan with more than 100 eligible employees. Such
plans that have been established with a Participating Fund or have
received proposals from the Distributor prior to February 1, 1997 based on
net asset value purchase privileges previously in effect will be qualified
to purchase shares of the

31
<PAGE> 34

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.

(9) Individuals who are members of a "qualified group". For this purpose, a
qualified group is one which (i) has been in existence for more than six
months, (ii) has a purpose other than to acquire shares of the Fund or
similar investments, (iii) has given and continues to give its endorsement
or authorization, on behalf of the group, for purchase of shares of the
Fund and 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

32
<PAGE> 35

made as described in (3) through (9) above. The Fund may terminate, or amend the
terms of, offering shares of the Fund at net asset value to such groups at any
time.

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.

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.

33
<PAGE> 36

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, 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

34
<PAGE> 37

"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.

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

35
<PAGE> 38

may, on the initial application or prior to any declaration, instruct that
dividends be paid in cash and capital gains distributions be reinvested at net
asset value, or that both dividends and capital gains distributions be paid in
cash.

AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under
which a shareholder can authorize 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. Distribu-

36
<PAGE> 39

tions 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 or of any Participating Fund other than
Van Kampen American Capital Government Target Fund ("Government Target"), Van
Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund") or Van
Kampen American Capital Reserve Fund ("Reserve Fund"), may be exchanged for
shares of the same class of any other fund without sales charge, provided that
shares of certain Van Kampen American Capital fixed-income funds are subject to
a 30-day holding period requirement before exchange. Shares of Government Target
may be exchanged for Class A shares of the Fund without sales charge. Class A
shares of Tax Free Money Fund or Reserve Fund that were not acquired in exchange
for Class B shares or Class C shares of a Participating Fund may be exchanged
for Class A shares of the Fund 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. Shares of Tax Free Money Fund or Reserve Fund acquired through
an exchange of Class B shares or Class C shares may be exchanged only for the
same class of shares of a Participating Fund without incurring a CDSC. 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.
Additional funds may be added from time to time as determined by the Fund's
Board of Trustees as Participating Funds.

Class B shareholders and Class C shareholders of the Fund have the ability to
exchange their shares ("original shares") for the same class of shares of any
other Participating Fund that offers shares ("new shares") in an amount equal to
the aggregate net asset value of the original shares, without the payment of any
CDSC otherwise due upon redemption of the original shares. For purposes of
computing the CDSC payable upon a disposition of the new shares, the holding
period for the original shares is added to the holding period of the new shares.
Class B shareholders or Class C shareholders would remain subject to the CDSC
schedule imposed by the original fund upon their redemption from the Van Kampen
American Capital complex of funds.

Shares of the Fund to be acquired must be registered for sale in the
investor's state. Exchanges of shares are sales and may result in a gain or loss
for federal income tax purposes, although if the shares exchanged have been held
for less than 91 days, the sales charge paid on such shares is not included in
the tax basis of the exchanged shares, but 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

37
<PAGE> 40

(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 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 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."

38
<PAGE> 41

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.

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

39
<PAGE> 42

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 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, usually a period of 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

40
<PAGE> 43

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 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

41
<PAGE> 44

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 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,

42
<PAGE> 45

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.

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

43
<PAGE> 46

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 $[ ] and $[ ] of unreimbursed distribution
expenses with respect to Class B shares and Class C shares, respectively,
representing [ ]% and [ ]% 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.

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. 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

44
<PAGE> 47

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,
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 immedi-

45
<PAGE> 48

ately 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 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.

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). Tax-exempt shareholders not

46
<PAGE> 49

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 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, 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 their taxable incomes or use them as foreign tax
credits against their 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

47
<PAGE> 50

paid to each such country and (ii) the portion of dividends that represent
income derived from sources with 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 U.S.
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 circumstances of each shareholder,
shareholders are advised to consult their own tax advisers.

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.

48
<PAGE> 51

Pursuant to proposed regulations, the Fund would be entitled to elect to
"mark-to-market" its stock in certain PFICs. "Marking-to-market," in this
context, means recognizing as ordinary income for each taxable year the excess
as of the end of that year, of the fair market value of the PFIC's stock over
the owner's adjusted basis in that stock (including mark-to-market gain for each
prior year for which an election was in effect). Unrealized losses, however,
would not be recognized. By making the mark-to-market election, the Fund could
ameliorate the adverse tax consequences with respect to its ownership of stock
of a PFIC, 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. These regulations, if adopted, would be effective
for taxable years ending after their promulgation as final regulations.

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 and will be long-term if such shares
have been held for more than one year. Any loss realized upon a taxable
disposition of shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gains dividends received with respect
to such shares. For purposes of determining whether shares have been held for
six months or less, the holding period is suspended for any periods during which
the shareholder's risk of loss is diminished as a result of holding one or more
other positions in substantially similar or related property or through certain
options or short sales.

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 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.

49
<PAGE> 52

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.

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.

50
<PAGE> 53

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 the standard performance information required by the SEC as
described above.

The Fund's Annual Report contains additional performance information. A copy
of the 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.

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

51
<PAGE> 54

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

Shareholder inquiries should be directed to the Van Kampen American Capital
Global Equity Fund, One Parkview Plaza, Oakbrook Terrace, Illinois 60181, Attn:
Correspondence.

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.

52
<PAGE> 55

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> 56

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

GLOBAL EQUITY FUND

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

P R O S P E C T U S

SEPTEMBER , 1997

------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 57

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION

DATED JULY 28, 1997

- ------------------------------------------------------------------------------
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 , 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 , 1997.

<PAGE> 58

- ------------------------------------------------------------------------------
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................................................... 11
Investment Objectives and Policies.......................... 11
Risk Factors................................................ 14
Investment Practices........................................ 16
Investment Advisory Services................................ 23
Alternative Sales Arrangements.............................. 26
Purchase of Shares.......................................... 29
Shareholder Services........................................ 40
Redemption of Shares........................................ 45
Distribution and Service Plans.............................. 48
Distributions from the Fund................................. 50
Tax Status.................................................. 50
Fund Performance............................................ 55
Description of Shares of the Fund........................... 58
Additional Information...................................... 59
</TABLE>

2
<PAGE> 59

- ------------------------------------------------------------------------------
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. The use of options, futures contracts and options on
futures contracts may include additional risks. See "Investment Practices."

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."

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

3
<PAGE> 60

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 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."

Class C Shares. Class C shares are offered at net asset value per share and
are subject to a CDSC of 1.00% on redemption proceeds 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."

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> 61

- ------------------------------------------------------------------------------
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> 62

<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)..................... % % %
12b-1 Fees (as a percentage of average
daily net assets)(1)..................... % %(2) %(2)
Other Expenses (as a percentage of average
daily net assets)........................ % % %
Total Fund Operating Expenses (as a
percentage of average daily net
assets).................................. % % %
</TABLE>

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

(2) Individual 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> 63

<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 % for Class
A shares, % for Class B shares and
% for Class C shares, (ii) a 5.00%
annual return and (iii) redemption at the
end of each time period:
Class A............................... $ $ $ $
Class B............................... $ $ $ $ *
Class C............................... $ $ $ $
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................... $ $ $ $
Class B............................... $ $ $ $ *
Class C............................... $ $ $ $
</TABLE>

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

7
<PAGE> 64

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

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 NOV. 15, 1991(1)
------------------------------------------------------------ TO MAY 31,
1997 1996 1995 1994 1993(2) 1992(2)
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period............. $8.24 $8.26 $9.01 $9.07 $9.43
-------- -------- -------- -------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................... .69 .72 .92 .98 .62
Expenses........................................ (.13) (.12) (.14) (.135) (.03)
-------- -------- -------- -------- -------- ---------
Net investment income............................ .56 .60 .78 .845 .59
Net realized and unrealized gain (loss) on
securities...................................... (.328) (.016) (.5715) (.123) (.5245)
-------- -------- -------- -------- -------- ---------
Total from investment operations................. .232 .584 .2085 .722 .0655
-------- -------- -------- -------- -------- ---------
LESS DISTRIBUTIONS FROM
Net investment income........................... (.552) (.604) (.726) (.782) (.4255)
Excess of book-basis net realized gain on
securities.................................... -- -- (.2325) -- --
-------- -------- -------- -------- -------- ---------
Total distributions.............................. (.552) (.604) (.9585) (.782) (.4255)
-------- -------- -------- -------- -------- ---------
Net asset value, end of period................... $7.92 $8.24 $8.26 $9.01 $9.07
======== ======== ======== ======== ======== =========
TOTAL RETURN(3).................................. 2.81% 7.52% 1.89% 8.47% .71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)............. $36.4 $47.9 $62.8 $36.1 $25.0
Average net assets (millions).................... 43.1 54.5 55.6 32.4 14.0
Ratio to average net assets (annualized)
Expenses........................................ 1.51% 1.42% 1.45% 1.52% .50%
Expenses, without expense reimbursement......... 1.52% -- -- -- 1.29%
Net investment income........................... 6.66% 7.18% 8.12% 9.33% 10.41%
Net investment income, without expense
reimbursement................................. 6.65% -- -- -- 9.62%
Portfolio turnover rate.......................... 239% 209% 236% 301% 289%
</TABLE>

- ---------------
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total returns for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(Table continued on following page)

8
<PAGE> 65

<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------------------------------------
YEAR ENDED MAY 31 NOV. 15, 1991(1)
----------------------------------------------------- TO MAY 31,
1997 1996 1995 1994 1993(2) 1992(2)
--------- --------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.................... $8.28 $8.30 $9.04 $9.09 $9.43
--------- --------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Investment income...................................... .68 .71 .90 .98 .605
Expenses............................................... (.19) (.18) (.21) (.20) (.055)
--------- --------- --------- --------- --------- --------
Net investment income................................... .49 .53 .69 .78 .55
Net realized and unrealized gain (loss) on securities... (.318) (.006) (.5435) (.12) (.5005)
--------- --------- --------- --------- --------- --------
Total from investment operations........................ .172 .524 .1465 .66 .0495
--------- --------- --------- --------- --------- --------
LESS DISTRIBUTIONS FROM
Net investment income.................................. (.492) (.544) (.654) (.71) (.3895)
Excess of book-basis net realized gain on securities... -- -- (.2325) -- --
--------- --------- --------- --------- --------- --------
Total distributions..................................... (.492) (.544) (.8865) (.71) (.3895)
--------- --------- --------- --------- --------- --------
Net asset value, end of period.......................... $7.96 $8.28 $8.30 $9.04 $9.09
========= ========= ========= ========= ========= ========
TOTAL RETURN(3)......................................... 2.06% 6.69% 1.07% 7.95% .53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).................... $ 97.7 $123.4 $147.5 $56.7 $22.5
Average Net Assets (millions)........................... 110.1 133.3 107.1 39.6 11.0
Ratio to average net assets (annualized)
Expenses............................................... 2.27% 2.18% 2.22% 2.19% 1.02%
Expense, without expense reimbursement................. 2.27% -- -- -- 1.82%
Net investment income.................................. 5.91% 6.41% 7.30% 8.66% 9.86%
Net investment income, without expense reimbursement... 5.91% -- -- -- 9.07%
Portfolio turnover rate................................. 239% 209% 236% 301% 289%
</TABLE>

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

(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total returns for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.

9
<PAGE> 66

<TABLE>
<CAPTION>
CLASS C SHARES
-------------------------------------------------------------
YEAR ENDED MAY 31 APRIL 12, 1993(1)
----------------------------------------- TO MAY 31,
1997 1996 1995 1994(2) 1993(2)
--------- -------- --------- ------- -----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period........................ $8.22 $8.25 $8.99 $9.00
--------- -------- --------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment income.......................................... .64 .69 .83 .12
Expenses................................................... (.18) (.18) (.20) (.025)
--------- -------- --------- --------- -------
Net investment income....................................... .46 .51 .63 .095
Net realized and unrealized gain (loss) on securities....... (.278) .004 (.4835) .011
--------- -------- --------- --------- -------
Total from investment operations............................ .182 .514 .1465 .106
--------- -------- --------- --------- -------
LESS DISTRIBUTIONS FROM
Net investment income...................................... (.492) (.544) (.654) (.116)
Excess of book-basis net realized gain on securities
......................................................... -- -- (.2325) --
--------- -------- --------- --------- -------
Total distributions......................................... (.492) (.544) (.8865) (.116)
--------- -------- --------- --------- -------
Net asset value, end of period.............................. $7.91 $8.22 $8.25 $8.99
========= ======== ========= ========= =======
TOTAL RETURN(3)............................................. 2.20% 6.60% 1.19% 8.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)........................ $9.5 $18.5 $23.5 $1.4
Average Net Assets (millions)............................... 14.1 21.2 14.1 .4
Ratio to average net assets (annualized)
Expenses................................................... 2.27% 2.18% 2.22% 2.63%
Expense, without expense reimbursement..................... 2.27% -- -- --
Net investment income...................................... 5.91% 6.42% 7.13% 10.06%
Net investment income, without expense reimbursement....... 5.91% -- -- --
Portfolio turnover rate..................................... 239% 209% 236% 301%
</TABLE>

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

10
<PAGE> 67

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

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 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 Commu-

11
<PAGE> 68

nity, a partnership of 12 European countries created to establish a common
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 and other authorized officers, is responsible
for recommending an optimal asset allocation and currency exposure of the Fund's
assets and is responsible for providing advice with respect to specific
investments. The Adviser and the Subadviser are sometimes referred to as the
Advisers.

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.

12
<PAGE> 69

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

13
<PAGE> 70

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,

14
<PAGE> 71

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

15
<PAGE> 72

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

16
<PAGE> 73

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.

17
<PAGE> 74

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. However, the Fund
will not purchase and deliver new securities to satisfy its short order if such
purchase and sale would cause such Fund to derive more than 30% of its gross
income from the sale of securities held for less than three months.

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

18
<PAGE> 75

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
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.

19
<PAGE> 76

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

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

20
<PAGE> 77

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 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

21
<PAGE> 78

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). 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.

22
<PAGE> 79

- ------------------------------------------------------------------------------
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 $57 billion under management or supervision. Van Kampen American Capital's
more than 40 open-end and 38 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.

23
<PAGE> 80

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.
This fee is higher than that charged by most other mutual funds but the Fund's
Trustees believe it is justified by the special international nature of the Fund
and it is not necessarily higher than the fees charged by certain mutual funds
with investment objectives and policies similar to those of the Fund. 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 may utilize, at its own expense, credit analysis, research and
trading support services provided by its affiliate, Van Kampen American Capital
Investment Advisory Corp.

24
<PAGE> 81

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
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 (Valedictorian) 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

25
<PAGE> 82

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 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."

26
<PAGE> 83

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 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.

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.

27
<PAGE> 84

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.
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."

28
<PAGE> 85

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

29
<PAGE> 86

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 acceptance by ACCESS.

30
<PAGE> 87

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 total daily net assets of the Fund on an annual basis. These
programs will not change the price an investor will pay for shares or the amount
that a Fund will receive from such sale.

31
<PAGE> 88

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.

32
<PAGE> 89

QUANTITY DISCOUNTS

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.

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.

33
<PAGE> 90

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.

34
<PAGE> 91

(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.

(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.

(8) Trusts created under pension, profit sharing or other employee benefit
plans qualified under Section 401(a) of the Code, or custodial accounts
held by a

35
<PAGE> 92

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 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.

36
<PAGE> 93

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.

CLASS B SHARES

37
<PAGE> 94

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

<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>

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

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, 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

38
<PAGE> 95

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

39
<PAGE> 96

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.

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.

40
<PAGE> 97

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 or of any Participating Fund, other
than Van Kampen American Capital Government Target Fund ("Government Target"),
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund") or Van
Kampen American Capital Reserve Fund ("Reserve Fund"), may be exchanged for
shares of the same class of any other Fund without sales charge, provided that
shares of certain Van Kampen American Capital fixed-income funds are subject to
a 30-day holding period requirement before exchange. Shares of the Government
Target may be exchanged for Class A shares of the Fund without sales charge.
Class A shares of Tax Free Money Fund or Reserve Fund that were not acquired in
exchange for Class B shares or Class C shares of a Participating Fund may be
exchanged for Class A shares of the Fund 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. Shares of Tax Free Money Fund or Reserve Fund
acquired through an exchange of Class B shares or Class C shares may be
exchanged only for the same class of shares of a Participating Fund without
incurring a CDSC. 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. Additional funds may be added from time to time as
determined by the Fund's Board of Trustees as Participating Funds.

41
<PAGE> 98

Class B shareholders and Class C shareholders of the Fund have the ability to
exchange their shares ("original shares") for the same class of shares of any
other Participating Fund that offers shares ("new shares") in an amount equal to
the aggregate net asset value of the original shares, without the payment of any
CDSC otherwise due upon redemption of the original shares. For purposes of
computing the CDSC payable upon a disposition of the new shares, the holding
period for the original shares is added to the holding period of the new shares.
Class B shareholders or Class C shareholders would remain subject to the CDSC
imposed by the original fund upon their redemption from the Van Kampen American
Capital complex of funds.

Shares of the fund to be acquired must be registered for sale in the
investor's state. Exchanges of shares are sales and may result in a gain or loss
for federal income tax purposes, although if the shares exchanged have been held
for less than 91 days, the sales charge paid on such shares is not included in
the tax basis of the exchanged shares, but 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 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 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.

42
<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 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.

43
<PAGE> 100

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

44
<PAGE> 101

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.

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, usually a period of fifteen days. A
taxable gain or loss will be recognized by the shareholder upon redemption of
shares.

45
<PAGE> 102

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 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.

46
<PAGE> 103

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.

REINSTATEMENT PRIVILEGE. A Class A shareholder or Class B shareholder who has
redeemed shares of the Fund may reinstate any portion or all of the net proceeds
of such redemption in Class A shares of the Fund. A Class C shareholder who has
redeemed shares of the Fund may reinstate any portion or all of the net proceeds
of such redemption in Class C shares of the Fund with credit given for any 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
- ------------------------------------------------------------------------------

47
<PAGE> 104

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 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.

48
<PAGE> 105

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 $ and $ of unreimbursed distribution expenses
with respect to Class B shares and Class C shares, respectively, representing
% and % 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.

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

49
<PAGE> 106

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

50
<PAGE> 107

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.

51
<PAGE> 108

(assuming such shares are held as a capital asset). Tax-exempt shareholders not
subject to federal income tax on their income generally will not be taxed on
distributions from the Fund.

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.

52
<PAGE> 109

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

53
<PAGE> 110

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

54
<PAGE> 111

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 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.

55
<PAGE> 112

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
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

56
<PAGE> 113

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.

- ------------------------------------------------------------------------------
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 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> 114

information concerning the Fund is set forth in the Statement of Additional
Information.

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

Shareholder inquiries should be directed to the Van Kampen American Capital
Global Government Securities Fund, One Parkview Plaza, Oakbrook Terrace,
Illinois 60181, Attn: Correspondence.

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> 115

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> 116

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

GLOBAL GOVERNMENT
SECURITIES FUND

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

P R O S P E C T U S

SEPTEMBER , 1997

------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 117

SUBJECT TO COMPLETION

DATED JULY 28, 1997

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 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 at (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-10
Trustees and Officers....................................... B-12
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-27
Tax Status of the Fund...................................... B-28
Fund Performance............................................ B-28
Other Information........................................... B-29
Report of Independent Accountants........................... B-
Financial Statements........................................ B-
Notes to Financial Statements............................... B-
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER , 1997.

B-1
<PAGE> 118

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 -- and is currently the nation's 5th largest broker-sold mutual fund
group according to Strategic Insight, July 1995. VKAC manages or supervises more
than $57 billion in 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, with more than 80 analysts devoted to various
specializations.

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 $[ ] at the end of 1996, compared to
$1,113.92 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.

Blended Investment Style: Market conditions are constantly changing, which
means the stocks that perform well should be expected to change. A rigid
investment style might cause an investor to suffer when certain types of stocks
lose favor with the market. The two most common investment styles are growth,
which emphasizes companies that are projected to experience rapid growth in
earnings, and value, which focuses on companies whose stock is selling for less
than the company's trust worth. At VKAC, our style is blended between growth and
value on a fund-specific basis. The results of our approach are constantly
evaluated and compared to other similar funds. Although past performance is no
guarantee of future results, VKAC remains committed to our belief that this
approach should help maximize potential for long-term returns.

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As of September , 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, 1997 OF SHARES OWNERSHIP
-------------------------- --------------- --------- ----------
<S> <C> <C> <C>
Van Kampen American Capital Trust Company [] [ ]%
2800 Post Oak Blvd. [] [ ]%
Houston, TX 77056 [] [ ]%
</TABLE>

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

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. Readers must also refer to this caption in
the Prospectus for a complete presentation of the matters disclosed below.

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.

B-3
<PAGE> 120

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.

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.

Each of the United States exchanges has established limitations governing
the maximum number of call or put options on the same underlying security
(whether or not covered) that may be written by a single investor, whether
acting alone or in concert with others, regardless of whether such options are
written on one or more accounts or through one or more brokers. An exchange may
order the liquidation of positions found to be in violation of those limits and
it may impose other sanctions or restrictions. These position limits may
restrict the number of options the Fund may be able to write.

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.

B-4
<PAGE> 121

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.

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.

B-5
<PAGE> 122

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 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.

B-6
<PAGE> 123

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.

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 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 judged over
a very short time frame.

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

B-7
<PAGE> 124

related futures contract. In such event, the Fund would lose the benefit of the
appreciation in value of the securities.

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

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

B-8
<PAGE> 125

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 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.

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 five 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.

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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.

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.

B-10
<PAGE> 127

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, 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.

B-11
<PAGE> 128

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

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 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 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 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 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 of each of the funds
in the Fund Complex.

</TABLE>

B-12
<PAGE> 129

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
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 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 since 1997.
Downers Grove, IL 60515 Director, Illinois Tool Works, Inc., a manufacturing
Date of Birth: 07/08/44 company. Director, Urban Shopping Centers Inc., a retail
mall management company; Director, 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 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 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 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.

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 and Trustee 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> 130

<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.

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> 131

<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 Assistant Vice President and Senior
Date of Birth: 03/01/65 Attorney of VKAC. Assistant 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> 132

<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 of the trustees holds the same position with each of the funds in the
Fund Complex. As of December 31, 1996, there were 51 funds in the Fund Complex.
Each trustee 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 to defer receipt of
their compensation and earn a return on such deferred amounts based upon the
return of the common shares of the funds in the Fund Complex as more fully
described below. Each fund in the Fund Complex also 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 each fund in the Fund
Complex advised by Advisory Corp. (each a "VK Fund" and collectively the "VK
Funds") includes an annual retainer in an amount equal to $2,500 per calendar
year, due in four quarterly installments on the first business day of each
calendar quarter. Each Non-Affiliated Trustee receives a per meeting fee from
each VK Fund in the amount of $125 per regular quarterly meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee. Each Non-Affiliated Trustee receives a per meeting fee
from each VK Fund in the amount of $125 per special meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee, provided that no compensation will be paid in connection
with certain telephonic special meetings.

The compensation of each Non-Affiliated Trustee from the funds in the Fund
Complex advised by Asset Management (each an "AC Fund" or collectively 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.

B-16
<PAGE> 133

The trustees 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 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
trustee's 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 fund in the Fund Complex has adopted a retirement plan. Under the
Fund's retirement plan, a Non-Affiliated Trustee who is receiving trustee's
compensation from the 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 trustee's retirement from the Fund. 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 the Fund. Each
trustee 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.

B-17
<PAGE> 134

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* $104,875
Linda Hutton Heagy* 104,875
Dr. Roger Hilsman 103,750
R. Craig Kennedy* 104,875
Donald C. Miller 104,875
Jack E. Nelson* 97,875
Jerome L. Robinson* 101,625
Dr. Fernando Sisto* 104,875
Wayne W. Whalen* 104,875
William S. Woodside 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. 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.

(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.

(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, $ ; Ms. Heagy, $ ; Mr.
Kennedy, $ ; Mr. Miller, $ ; Mr. Nelson, $ ; Mr. Robinson, $ ;
and Mr. Whalen, $ . 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 Trust as of May 31, 1997 is as follows: Mr. Branagan, $ ; Ms. Heagy,
$ ; Mr. Kennedy, $ ; Mr. Miller, $ ; Mr. Nelson, $ ; Mr.
Robinson, $ ; Mr. Sisto, $ ; and Mr. Whalen, $ . 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) 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 less if the trustee is subject to the
Fund Complex retirement benefit cap or if the

B-18
<PAGE> 135

trustee is not fully vested at the time of retirement. Each incumbent nominee to
the Board of Trustees has served as a member of the Board of Trustees since he
or she was first appointed or elected in the year set forth in the Compensation
Table.

(5) The amounts shown in this column represent the aggregate compensation paid
by all 51 of the investment companies in the Fund Complex as of December 31,
1996 before deferral by the trustees under the deferred compensation plan.
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 , 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 will be primarily responsible for
recommending the allocation of investments among various international markets
and currencies and recommendation and selection of particular securities in the
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 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 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

B-19
<PAGE> 136

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 $[ ], respectively, in advisory
fees from the Fund. For such periods the Fund paid $28,800, $31,987 and
$[ ], respectively, for accounting services.

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

B-20
<PAGE> 137

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.............................. $ [] $ []
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 $[ ] or [ ]% of the Class B shares' average net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $[ ] for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B shares of the Fund and $[ ]
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 $[ ] or [ ]%
of the Class C shares' average net assets. Such expenses were paid to reimburse
the Distributor for the following payments: $[ ] for commissions and
transaction fees paid to financial intermediaries in respect of sales of Class C
shares of the Fund and $[ ] for fees paid to financial intermediaries for
servicing Class C shareholders and administering the Class C Plan.

B-21
<PAGE> 138

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, $183,170 and $ , 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.

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.

B-22
<PAGE> 139

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, 199 , 1996 and 1997, the Fund paid
$937,870, $666,564 and $[ ], respectively, in brokerage commissions on
portfolio transactions.

Effective October 31, 1996, Morgan Stanley Group Inc. became an affiliate
of the Adviser. For the fiscal year ended May 31, 1997, the Fund paid Morgan
Stanley Group Inc. or its affiliates $[ ] in brokerage commission
representing [ ]% 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.

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.

B-23
<PAGE> 140

PURCHASE AND REDEMPTION OF SHARES

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

PURCHASE OF SHARES

Class A shares, Class B shares and Class C shares of the Fund are sold in a
continuous offering and may be purchased on any business day through authorized
dealers.

ALTERNATIVE SALES ARRANGEMENTS

The Fund offers three classes of shares: Class A shares, Class B shares and
Class C shares. The three classes of shares each represent interests in the same
portfolio of investments of the Fund, have the same rights and are identical in
all respects, except that Class B shares and Class C shares bear the expenses of
the deferred sales arrangements, distribution fees, and any expenses (including
higher transfer agency costs) resulting from such sales arrangements, and except
that each class has exclusive voting rights with respect to the Rule 12b-1
distribution plan pursuant to which its distribution fees are paid.

During special promotions, the entire sales charge on Class A shares may be
reallowed to dealers, and at such times dealers may be deemed to be underwriters
for purposes of the 1933 Act.

INVESTMENTS BY MAIL

A Shareholder Investment Account may be opened by completing the
application accompanying the Prospectus and forwarding the application, through
the authorized dealer, to ACCESS, at P.O. Box 419319, Kansas City, Missouri
64141-6319. The account is opened only upon acceptance of the application by the
shareholder service agent. The minimum initial investment of at least $500 per
class of shares, in the form of a check payable to the Fund, must accompany the
application. This minimum may be waived by the Distributor for plans involving
continuing investments. Minimum subsequent investments of at least $25 per class
of shares may be mailed directly to ACCESS. All such investments are made at the
public offering price of Fund shares next computed following receipt of payment
by ACCESS. Confirmations of the opening of an account and of all subsequent
transactions in the account are forwarded by ACCESS to the investor's authorized
dealer.

In processing applications and investments, ACCESS acts as agent for the
investor and for the authorized dealer named thereon, and also as agent for the
Distributor, in accordance with the terms of the Prospectus. If ACCESS ceases to
act as such, a successor company named by the Fund will act in the same
capacities so long as the account remains open.

CUMULATIVE PURCHASE DISCOUNT

The reduced sales charges reflected in the sales charge table as shown in
the Prospectus under "Purchase of Shares -- Class A Shares" apply to purchases
of Class A shares of the Fund where the aggregate investment is $50,000 or more.
For purposes of determining eligibility for volume discounts, spouses and their
children under 21 years of age are treated as a single purchaser, as is a
trustee or other fiduciary of a single trust estate or a single fiduciary
account. An aggregate investment includes all shares of the Fund and all shares
of certain other participating Van Kampen American Capital mutual funds
described in the Prospectus (the "Participating Funds") which have been
previously purchased and are still owned, plus the shares being purchased. The
current offering price is used to determine the value of all such shares. The
same reduction is applicable to purchases under a Letter of Intent as described
in the next paragraph. 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.

B-24
<PAGE> 141

LETTER OF INTENT

Purchases of Class A shares of the Participating Funds described above
under "Cumulative Purchase Discount," made pursuant to the Letter of Intent and
the value of all shares of such Funds previously purchased and still owned are
also included in determining the applicable quantity discount. A Letter of
Intent permits an investor to establish a total investment goal to be achieved
by any number of investments over a thirteen-month period. Each investment made
during the period receives the reduced sales charge applicable to the amount
represented by the goal as if it were a single investment. Escrowed shares
totalling 5% of the dollar amount of the Letter of Intent are held by ACCESS in
the name of the shareholder. The effective date of a Letter of Intent may be
back-dated up to 90 days in order that any investments made during this 90-day
period, valued at the investor's cost, can become subject to the Letter of
Intent. 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 investments in the amount of $1,000,000 or more of Class A shares of
the Fund ("Qualified Purchaser"), the front-end sales charge will be waived and
a contingent deferred sales charge ("CDSC -- Class A") of 1.00% is imposed in
the event of certain redemptions within one year of the purchase. If a
CDSC -- Class A is imposed upon redemption, the amount of the CDSC -- Class A
will be equal to the lesser of one percent of the net asset value of the shares
at the time of purchase or one percent of the net asset value of the shares at
the time of redemption.

The CDSC -- Class A will be imposed only if a Qualified Purchaser redeems
an amount which causes the value of the account to fall below the total dollar
amount of purchase payments made by the Qualified Purchaser without an initial
sales charge during the one year period prior to the redemption. No CDSC --
Class A will be imposed on exchanges between funds. 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.

Cumulative Purchase Discounts and Letters of Intent will apply to the net
asset value privilege. Also, in order to establish an amount of $1,000,000 or
more, a Qualified Purchaser may aggregate shares of the Participating Funds
described in the Prospectus.

B-25
<PAGE> 142

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-26
<PAGE> 143

(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
120 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 120 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.

B-27
<PAGE> 144

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

The Trust and any of its series, including the Fund, will be treated as
separate corporations for federal income tax purposes. The Fund intends 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
ending May 31, 1997 was [ ]%; (ii) the five year peirod ending May 31, 1997 was
%; and (iii) the 5 year, 9 1/2 month period ending May 31, 1997 was [ ]%.
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 [ ]%; (ii) the five year peirod ending May 31, 1997 was
%; and (iii) the 5 year, 6 1/2 month period ending May 31, 1997 was [ ]%.
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 [ ]% and (ii) the 3 year, 11 1/2
month period ending May 31, 1997 was [ ]%. 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.

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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 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.

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<PAGE> 146

SUBJECT TO COMPLETION

DATED JULY 28, 1997

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 at (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-21
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-29
Tax Status of the Fund...................................... B-30
Fund Performance............................................ B-30
Other Information........................................... B-31
Report of Independent Accountants........................... B-
Financial Statements........................................ B-
Notes to Financial Statements............................... B-
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER , 1997.

B-1
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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 senior: 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 , 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 , CLASS
OF HOLDER 1997 OF SHARES PERCENT OWNERSHIP
---------------- ------------ --------- -----------------
<S> <C> <C> <C>
Van Kampen American Capital Trust A %
Company B %
2800 Post Oak Blvd. C %
Houston, TX 77056
AM Council on Education Inc. C %
One DuPont Circle
Washington, DC 20036
</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.

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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> 149

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.

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.

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> 150

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.

Futures Strategies. When the Fund anticipates a significant market or
market sector advance, the purchase of a futures contract affords a hedge
against not participating in the advance at a time when the Fund is otherwise
fully invested ("anticipatory hedge"). Such purchase of a futures contract
serves 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

B-5
<PAGE> 151

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.

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> 152

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.

Pursuant to regulations of the Commodity Futures Trading Commission, 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> 153

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.

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> 154

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> 155

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> 156

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. 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> 157

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> 158

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> 159

TRUSTEES AND OFFICERS

TRUSTEES

</TABLE>

B-14
<PAGE> 160

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
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 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,
Downers Grove, IL 60515 Illinois Tool Works, Inc., a manufacturing company;
Date of Birth: 07/08/44 Director, Urban Shopping Centers Inc., a retail mall
management company; Director, 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 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 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 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>

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

OFFICERS

</TABLE>

B-15
<PAGE> 161

<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.

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.

B-16
<PAGE> 162

B-17
<PAGE> 163

<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
Date of Birth: 06/15/56 and 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.
Date of Birth: 10/16/64 Assistant 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.
Date of Birth: 03/30/33 Assistant 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> 164

B-19
<PAGE> 165

1996 COMPENSATION TABLE

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

(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, $ ; Ms. Heagy, $ ; Mr.
Kennedy, $ ; Mr. Miller, $ ; Mr. Nelson, $ ; Mr. Robinson,
$ ; and Mr. Whalen, $ . 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 Trust as of May 31, 1997 is as follows: Mr. Branagan, $ ; Mr.
Gaughan, $ ; Ms. Heagy, $ ; Mr. Kennedy, $ ; Mr. Miller, $ ;
Mr. Nelson, $ ; Mr. Robinson, $ ; Mr. Sisto, $ ; and Mr. Whalen,
$ . 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.

B-20
<PAGE> 166

served as a member of the Board of Trustees since he or she was first appointed
or elected in the year set forth in the Compensation Table.

As of , 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 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.

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.

B-21
<PAGE> 167

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.

The most restrictive applicable limitation is 2 1/2% of the first $30
million, 2% of the next $70 million, and 1 1/2% of the remaining average net
assets. The Advisory Agreement also limits the extent to which the Adviser shall
be liable to the Trust for acts or omissions.

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 $ , respectively, in advisory fees
from the Fund. For such periods the Fund paid $28,800, $31,987 and $ ,
respectively, for accounting services.

Pursuant to the Advisory Agreement and the Sub-advisory Agreement, the
Trust has agreed to indemnify the Adviser and the Adviser has agreed to
indemnify the Subadviser, respectively, against any taxes imposed by the United
Kingdom on the Trust for its investment related activities as contemplated in
each Agreement. Neither the Adviser nor the Subadviser may 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
Agreements or to the Trust.

DISTRIBUTOR

B-22
<PAGE> 168

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.

For the fiscal years ending May 31, 1995, 1996 and 1997, total underwriting
commissions on the sale of shares of the Fund were $148,018, $178,914 and
$ , respectively, of such total, the amount retained by the Distributor
was $16,151, $100,311 and $ , respectively, and the remainder was
reallowed to dealers.

DISTRIBUTION AND SERVICE PLANS

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 $ or %, 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 $ or % of the Class B
shares' average net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $ for commissions and transaction fees paid to
financial intermediaries in respect of sales of Class B shares of the Fund and
$ 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
$ or % of the Class C shares' average net assets. Such expenses were
paid to reimburse the Distributor for the following payments: $ for
commissions and transaction fees paid to financial

B-23
<PAGE> 169

intermediaries in respect of sales of Class C shares of the Fund and $ 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 $ , respectively, for these
services. These services are provided at cost plus a profit.

PORTFOLIO TRANSACTIONS AND BROKERAGE

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 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.

B-24
<PAGE> 170

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 $ , in brokerage commissions on portfolio
transactions.

Effective October 31, 1996 Morgan Stanley Group Inc. became an affiliate of
the Adviser. For the fiscal year ended May 31, 1997, the Fund paid Morgan
Stanley Group Inc. or its affiliates $ in brokerage commission representing
% 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.

PURCHASE AND REDEMPTION OF SHARES

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

B-25
<PAGE> 171

PURCHASE OF SHARES

Class A shares, Class B shares and Class C shares of the Fund are sold in a
continuous offering and may be purchased on any business day through authorized
dealers.

ALTERNATIVE SALES ARRANGEMENTS

During special promotions, the entire sales charge on Class A shares may be
reallowed to dealers, and at such times dealers may be deemed to be underwriters
for purposes of the Securities Act of 1933.

INVESTMENTS BY MAIL

CUMULATIVE PURCHASE DISCOUNT

The reduced sales charges reflected in the Sales Charge Table as shown in
the Prospectus under "Purchase of Shares -- Class A Shares" apply to purchases
of Class A shares of the Fund where the aggregate investment is $100,000 or
more. For purposes of determining eligibility for volume discounts, spouses and
their children under 21 years of age are treated as a single purchaser, as is a
trustee or other fiduciary of a single trust estate or for a single fiduciary
account. An aggregate investment includes all shares of the Fund and all shares
of certain other participating Van Kampen American Capital mutual funds
described in the Prospectus (the "Participating Funds") which have been
previously purchased and are still owned, plus the shares being purchased. The
current offering price is used to determine the value of all such shares. The
same reduction is applicable to purchases under a Letter of Intent as described
in the next paragraph. 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

B-26
<PAGE> 172

included in determining the applicable quantity discount. A Letter of Intent
permits an investor to establish a total investment goal to be achieved by any
number of investments over a thirteen-month period. Each investment made during
the period receives the reduced sales charge applicable to the amount
represented by the goal as if it were a single investment. Escrowed shares
totalling 5% of the dollar amount of the Letter of Intent are held by ACCESS in
the name of the shareholder. The effective date of a Letter of Intent may be
back-dated up to 90 days in order that any investments made during this 90-day
period, valued at the investor's cost, can become subject to the Letter of
Intent. 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 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

For investments in the amount of $1,000,000 or more of Class A shares of
the Fund ("Qualified Purchaser"), the front-end sales charge will be waived and
a contingent deferred sales charge ("CDSC -- Class A") of 1.00% is imposed in
the event of certain redemptions within one year of the purchase. If a
CDSC -- Class A is imposed upon redemption, the amount of the CDSC -- Class A
will be equal to the lesser of one percent of the net asset value of the shares
at the time of purchase or 1.00% of the net asset value of the shares at the
time of redemption.

Cumulative Purchase Discounts and Letters of Intent apply to the net asset
value privilege. Also, in order to establish an amount of $1,000,000 or more, a
Qualified Purchaser may aggregate shares of the Participating Funds described in
the Prospectus.

B-27
<PAGE> 173

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-28
<PAGE> 174

(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
120 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 120 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:

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 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.

B-29
<PAGE> 175

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 %; (ii) the five year period ended May 31, 1997 was %;
and (iii) the five year and six and one-half month period ending May 31, 1997
was %. 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 %; (ii) the five year period ended May 31, 1997 was
%; and (iii) the five year and six and one-half month periods ending May 31,
1997 was %. 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 %; (ii) the three year and one and one-half month
period (the initial offering of Class C shares) ending May 31, 1997 was %.
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, 1996, was %, % and
%, respectively. The yield for Class A shares, 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.

The following information is not included in the Annual Report. This
example assumes a purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth in the Prospectus at
a price based upon the initial net asset value of Class A shares of the Fund.

<TABLE>
<CAPTION>
MAY 31,
1997
-------
<S> <C>
Net Asset Value Per Class A Share $ --
Class A Per Share Sales Charge -- 4.75%
of offering price (4.99% of net asset value per share) $ --
-----
Class A Per Share Offering Price to the Public $ --
</TABLE>

B-30
<PAGE> 176

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, over a ten year period: 1985 -- Austria - 173.50%,
US - 27.28%, Singapore - (-24.15%); 1986 -- Spain - 112.89%, US - 13.38%,
Norway - (-5.14%); 1987 -- Japan - 41.26%, U.S. - .61%, Germany - (-26.28%);
1988 -- Indonesia - 227.82%, U.S. - 11.64%, Turkey - (-62.73%);
1989 -- Turkey - 471.59%, US - 26.90%, Jordan - (-19.28%);
1990 -- Mexico - 46.02%, US - (-5.57%), Brazil - (-65.53%);
1991 -- Argentina - 401.59%, US - 27.14%, Indonesia - (-46.43%);
1992 -- Philippines - 37.09%, US - 4.17%, Turkey - (-49.86%);
1993 -- Turkey - 207.75%, US - 7.02%; 1994 -- Brazil - 63.82%, US - (-.85%),
Turkey - (-52.56%).

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-31
<PAGE> 177

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements (to be included by further amendment)

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(8)
(b) Certificate of Amendment(8)
(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(8)
(4) Specimen Certificate of Share of Beneficial Interest of:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government Securities Fund+
(5)(a) Investment Advisory Agreement for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government Securities Fund+
(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+
(c) Form of Broker Fully Disclosed Selling Agreement+
(d) Form of Bank Fully Disclosed Selling Agreement+
(8)(a) Custodian Agreement(6)
(b) Transfer Agency and Service Agreement(8)
(9)(a) Data Access Services Agreement(7)
Fund Accounting Agreement
(10) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois) for:
(i) Van Kampen American Capital Global Equity Fund+
(ii) Van Kampen American Capital Global Government Securities Fund+
(11) Consent of Price Waterhouse LLP for:
(i) Van Kampen American Capital Global Equity Fund+
</TABLE>

C-1
<PAGE> 178

<TABLE>
<S> <C>
(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+
(ii) Van Kampen American Capital Global Government Securities Fund+
(16) Computation Measure for Performance Information+
(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+
(19) Powers of Attorney++
(27) Financial Data Schedules++
</TABLE>

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

(1) Incorporated herein by reference to Post Effective Amendment No. 61, filed
on March 27, 1991.

(2) Incorporated herein by reference to Form N-1A of Registrant's Pre-Effective
No. 2, filed on July 19, 1991.

(3) Incorporated herein by reference to Post-Effective Amendment No. 30, filed
on September 24, 1992.

(4) Incorporated herein by reference to Post-Effective Amendment No. 31, filed
on September 24, 1993.

(5) Incorporated herein by reference to Post-Effective Amendment No. 18, filed
on February 25, 1994.

(6) Incorporated herein by reference to Pre-Effective Amendment No. 2, filed on
May 6, 1994.

(7) Incorporated herein by reference to Post-Effective Amendment No. 1, filed on
May 19, 1994.

(8) Incorporated herein by reference to Post-Effective Amendment No. 12, filed
on September 27, 1996.

+ To be filed by further amendment

++ Filed herewith

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

C-2
<PAGE> 179

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

AS OF JUNE 30, 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 25,802 17,265 3,043
Van Kampen American Capital Global Government
Securities Fund
Shares of Beneficial Interest, par value $0.01
per share 3,046 5,188 746
</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 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

C-3
<PAGE> 180

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> 181

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, 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 28th day of July,
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 July 28, 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 July 28, 1997
- -----------------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>

<PAGE> 182

VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST

INDEX TO EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 13 TO FORM N-1A

AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

ON JULY 28, 1997

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------

(19) Power of Attorney
(27) Financial Data Schedules

<PAGE> 1

(EXHIBIT 19)

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

<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
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 011
<NAME> GLOBAL EQUITY CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 180,003,626
<INVESTMENTS-AT-VALUE> 206,146,954
<RECEIVABLES> 4,137,114
<ASSETS-OTHER> 1,808,230
<OTHER-ITEMS-ASSETS> 944,017
<TOTAL-ASSETS> 213,036,315
<PAYABLE-FOR-SECURITIES> 3,282,645
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,071,804
<TOTAL-LIABILITIES> 4,354,449
<SENIOR-EQUITY> 151,612
<PAID-IN-CAPITAL-COMMON> 175,275,338
<SHARES-COMMON-STOCK> 7,632,191
<SHARES-COMMON-PRIOR> 5,094,280
<ACCUMULATED-NII-CURRENT> (297,886)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,810,832
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,741,970
<NET-ASSETS> 208,681,866
<DIVIDEND-INCOME> 2,642,255
<INTEREST-INCOME> 411,302
<OTHER-INCOME> 0
<EXPENSES-NET> (4,205,615)
<NET-INVESTMENT-INCOME> (1,152,058)
<REALIZED-GAINS-CURRENT> 14,354,171
<APPREC-INCREASE-CURRENT> 18,388,865
<NET-CHANGE-FROM-OPS> 31,590,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,775,643)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,966,925
<NUMBER-OF-SHARES-REDEEMED> (2,565,199)
<SHARES-REINVESTED> 136,185
<NET-CHANGE-IN-ASSETS> 77,316,853
<ACCUMULATED-NII-PRIOR> (69,365)
<ACCUMULATED-GAINS-PRIOR> (3,732,923)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,311,980)
<GROSS-ADVISORY-FEES> 1,605,816
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,210,815
<AVERAGE-NET-ASSETS> 77,558,810
<PER-SHARE-NAV-BEGIN> 11.79
<PER-SHARE-NII> (.040)
<PER-SHARE-GAIN-APPREC> 2.561
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.98
<EXPENSE-RATIO> 2.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 012
<NAME> GLOBAL EQUITY CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,857,163
<SHARES-COMMON-PRIOR> 5,624,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,920,148)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,370,872
<NUMBER-OF-SHARES-REDEEMED> (1,288,844)
<SHARES-REINVESTED> 150,464
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,438,472)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 75,619,492
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> (.140)
<PER-SHARE-GAIN-APPREC> 2.501
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.53
<EXPENSE-RATIO> 2.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 013
<NAME> GLOBAL EQUITY CLASS C

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 671,872
<SHARES-COMMON-PRIOR> 571,734
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (187,369)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 268,622
<NUMBER-OF-SHARES-REDEEMED> (181,673)
<SHARES-REINVESTED> 13,189
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (155,182)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 7,403,301
<PER-SHARE-NAV-BEGIN> 11.61
<PER-SHARE-NII> (.140)
<PER-SHARE-GAIN-APPREC> 2.521
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.66
<EXPENSE-RATIO> 3.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 021
<NAME> GLOBAL GOVERNMENT CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 146,840,525
<INVESTMENTS-AT-VALUE> 145,144,964
<RECEIVABLES> 26,909,787
<ASSETS-OTHER> 2,945,234
<OTHER-ITEMS-ASSETS> 56,385
<TOTAL-ASSETS> 175,056,370
<PAYABLE-FOR-SECURITIES> 25,510,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,972,772
<TOTAL-LIABILITIES> 31,483,631
<SENIOR-EQUITY> 180,588
<PAID-IN-CAPITAL-COMMON> 176,425,841
<SHARES-COMMON-STOCK> 4,595,368
<SHARES-COMMON-PRIOR> 5,806,674
<ACCUMULATED-NII-CURRENT> (355,254)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29,171,823)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,506,613)
<NET-ASSETS> 143,572,739
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,679,934
<OTHER-INCOME> 0
<EXPENSES-NET> (3,472,820)
<NET-INVESTMENT-INCOME> 10,207,114
<REALIZED-GAINS-CURRENT> 543,929
<APPREC-INCREASE-CURRENT> (6,367,840)
<NET-CHANGE-FROM-OPS> 4,383,203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,860,078)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 863,668
<NUMBER-OF-SHARES-REDEEMED> (2,290,621)
<SHARES-REINVESTED> 215,647
<NET-CHANGE-IN-ASSETS> (46,206,877)
<ACCUMULATED-NII-PRIOR> 186,959
<ACCUMULATED-GAINS-PRIOR> (30,285,888)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,254,494
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,478,020
<AVERAGE-NET-ASSETS> 43,068,161
<PER-SHARE-NAV-BEGIN> 8.24
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> (.328)
<PER-SHARE-DIVIDEND> (.552)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.92
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 022
<NAME> GLOBAL GOVERNMENT SECURITIES - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 12,261,711
<SHARES-COMMON-PRIOR> 14,898,886
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,497,549)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,568,183
<NUMBER-OF-SHARES-REDEEMED> (4,655,689)
<SHARES-REINVESTED> 450,331
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 110,055,837
<PER-SHARE-NAV-BEGIN> 8.28
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> (.318)
<PER-SHARE-DIVIDEND> (.492)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.96
<EXPENSE-RATIO> 2.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 023
<NAME> GLOBAL GOVERNMENT SECURITIES - CLASS C

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,201,697
<SHARES-COMMON-PRIOR> 2,254,823
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (822,565)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 271,697
<NUMBER-OF-SHARES-REDEEMED> (1,382,547)
<SHARES-REINVESTED> 57,724
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 14,141,913
<PER-SHARE-NAV-BEGIN> 8.22
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> (.278)
<PER-SHARE-DIVIDEND> (.492)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.91
<EXPENSE-RATIO> 2.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> VKAC GLOBAL EQUITY FUND - CLASS A
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 201530315<F1>
<INVESTMENTS-AT-VALUE> 240177762<F1>
<RECEIVABLES> 2914073<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 60412<F1>
<TOTAL-ASSETS> 243152263<F1>
<PAYABLE-FOR-SECURITIES> 466193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 739561<F1>
<TOTAL-LIABILITIES> 1205754<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 99005202
<SHARES-COMMON-STOCK> 8338931
<SHARES-COMMON-PRIOR> 7632191
<ACCUMULATED-NII-CURRENT> 501233<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 8322113<F1>
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38699082<F1>
<NET-ASSETS> 124220603
<DIVIDEND-INCOME> 1324450<F1>
<INTEREST-INCOME> 376787<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2721977)<F1>
<NET-INVESTMENT-INCOME> (1020740)<F1>
<REALIZED-GAINS-CURRENT> 4331140<F1>
<APPREC-INCREASE-CURRENT> 10957112<F1>
<NET-CHANGE-FROM-OPS> 14267512<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2646605
<NUMBER-OF-SHARES-REDEEMED> (1939865)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17513217
<ACCUMULATED-NII-PRIOR> (297886)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1088889<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2729777<F1>
<AVERAGE-NET-ASSETS> 111120766
<PER-SHARE-NAV-BEGIN> 13.98
<PER-SHARE-NII> (.043)
<PER-SHARE-GAIN-APPREC> .959
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.896
<EXPENSE-RATIO> 2.12
<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> 032
<NAME> VKAC GLOBAL EQUITY FUND - CLASS B
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 201530315<F1>
<INVESTMENTS-AT-VALUE> 240177762<F1>
<RECEIVABLES> 2914073<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 60412<F1>
<TOTAL-ASSETS> 243152263<F1>
<PAYABLE-FOR-SECURITIES> 466193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 739561<F1>
<TOTAL-LIABILITIES> 1205754<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 86355867
<SHARES-COMMON-STOCK> 7434188
<SHARES-COMMON-PRIOR> 6857163
<ACCUMULATED-NII-CURRENT> 501233<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 8322113<F1>
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38699082<F1>
<NET-ASSETS> 106777477
<DIVIDEND-INCOME> 1324450<F1>
<INTEREST-INCOME> 376787<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2721977)<F1>
<NET-INVESTMENT-INCOME> (1020740)<F1>
<REALIZED-GAINS-CURRENT> 4331140<F1>
<APPREC-INCREASE-CURRENT> 10957112<F1>
<NET-CHANGE-FROM-OPS> 14267512<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1207809
<NUMBER-OF-SHARES-REDEEMED> (630784)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13978566
<ACCUMULATED-NII-PRIOR> (297886)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1088889<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2729777<F1>
<AVERAGE-NET-ASSETS> 96883008
<PER-SHARE-NAV-BEGIN> 13.53
<PER-SHARE-NII> (.078)
<PER-SHARE-GAIN-APPREC> .911
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.363
<EXPENSE-RATIO> 2.89
<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> 033
<NAME> VKAC GLOBAL EQUITY FUND - CLASS C
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 201530315<F1>
<INVESTMENTS-AT-VALUE> 240177762<F1>
<RECEIVABLES> 2914073<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 60412<F1>
<TOTAL-ASSETS> 243152263<F1>
<PAYABLE-FOR-SECURITIES> 466193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 739561<F1>
<TOTAL-LIABILITIES> 1205754<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 9063012
<SHARES-COMMON-STOCK> 755464
<SHARES-COMMON-PRIOR> 671872
<ACCUMULATED-NII-CURRENT> 501233<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 8322113<F1>
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38699082<F1>
<NET-ASSETS> 10948429
<DIVIDEND-INCOME> 1324450<F1>
<INTEREST-INCOME> 376787<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2721977)<F1>
<NET-INVESTMENT-INCOME> (1020740)<F1>
<REALIZED-GAINS-CURRENT> 4331140<F1>
<APPREC-INCREASE-CURRENT> 10957112<F1>
<NET-CHANGE-FROM-OPS> 14267512<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 151189
<NUMBER-OF-SHARES-REDEEMED> (67597)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1772860
<ACCUMULATED-NII-PRIOR> (297886)<F1>
<ACCUMULATED-GAINS-PRIOR> 5810832<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1088889<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2729777<F1>
<AVERAGE-NET-ASSETS> 9774011
<PER-SHARE-NAV-BEGIN> 13.66
<PER-SHARE-NII> (.077)
<PER-SHARE-GAIN-APPREC> .909
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.492
<EXPENSE-RATIO> 2.90
<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> 041
<NAME> VKAC GLOBAL GOVERNMENT SECURITIES FUND - CLASS A
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 209140899<F1>
<INVESTMENTS-AT-VALUE> 211165331<F1>
<RECEIVABLES> 3163161<F1>
<ASSETS-OTHER> 439797<F1>
<OTHER-ITEMS-ASSETS> 1281988<F1>
<TOTAL-ASSETS> 216050277<F1>
<PAYABLE-FOR-SECURITIES> 83780397<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 970813<F1>
<TOTAL-LIABILITIES> 84751210<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 41909961
<SHARES-COMMON-STOCK> 4076639
<SHARES-COMMON-PRIOR> 4595368
<ACCUMULATED-NII-CURRENT> (171737)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (29956751)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1591681<F1>
<NET-ASSETS> 33380979
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 5767454<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> 1457264<F1>
<NET-INVESTMENT-INCOME> 4310190<F1>
<REALIZED-GAINS-CURRENT> (784928)<F1>
<APPREC-INCREASE-CURRENT> 1591681<F1>
<NET-CHANGE-FROM-OPS> 8623556<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (1147580)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 250294
<NUMBER-OF-SHARES-REDEEMED> 859462
<SHARES-REINVESTED> 90439
<NET-CHANGE-IN-ASSETS> (3031370)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171825)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 513420<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 1457264<F1>
<AVERAGE-NET-ASSETS> 34781605
<PER-SHARE-NAV-BEGIN> 7.92
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.270
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.19
<EXPENSE-RATIO> 1.56
<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> 042
<NAME> VKAC GLOBAL GOVERNMENT SECURITIES FUND - CLASS B
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 209140899<F1>
<INVESTMENTS-AT-VALUE> 211165331<F1>
<RECEIVABLES> 3163161<F1>
<ASSETS-OTHER> 439797<F1>
<OTHER-ITEMS-ASSETS> 1281988<F1>
<TOTAL-ASSETS> 216050277<F1>
<PAYABLE-FOR-SECURITIES> 83780397<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 970813<F1>
<TOTAL-LIABILITIES> 84751210<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 106474109
<SHARES-COMMON-STOCK> 10887014
<SHARES-COMMON-PRIOR> 12261711
<ACCUMULATED-NII-CURRENT> (171737)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (29956751)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1591681<F1>
<NET-ASSETS> 89611070
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 5767454<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> 1457264<F1>
<NET-INVESTMENT-INCOME> 4310190<F1>
<REALIZED-GAINS-CURRENT> (784928)<F1>
<APPREC-INCREASE-CURRENT> 1591681<F1>
<NET-CHANGE-FROM-OPS> 8623556<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (2716261)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 431684
<NUMBER-OF-SHARES-REDEEMED> 2010214
<SHARES-REINVESTED> 203833
<NET-CHANGE-IN-ASSETS> (8049724)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171825)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 513420<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 1457264<F1>
<AVERAGE-NET-ASSETS> 93160365
<PER-SHARE-NAV-BEGIN> 7.96
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.23
<EXPENSE-RATIO> 2.32
<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> 043
<NAME> VKAC GLOBAL GOVERNMENT SECURITIES FUND - CLASS C
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 209140899<F1>
<INVESTMENTS-AT-VALUE> 211165331<F1>
<RECEIVABLES> 3163161<F1>
<ASSETS-OTHER> 439797<F1>
<OTHER-ITEMS-ASSETS> 1281988<F1>
<TOTAL-ASSETS> 216050277<F1>
<PAYABLE-FOR-SECURITIES> 83780397<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 970813<F1>
<TOTAL-LIABILITIES> 84751210<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 11291999
<SHARES-COMMON-STOCK> 1016897
<SHARES-COMMON-PRIOR> 1201697
<ACCUMULATED-NII-CURRENT> (171737)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (29956751)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1591681<F1>
<NET-ASSETS> 8307018
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 5767454<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> 1457264<F1>
<NET-INVESTMENT-INCOME> 4310190<F1>
<REALIZED-GAINS-CURRENT> (784928)<F1>
<APPREC-INCREASE-CURRENT> 1591681<F1>
<NET-CHANGE-FROM-OPS> 8623556<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (262832)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16674
<NUMBER-OF-SHARES-REDEEMED> 218808
<SHARES-REINVESTED> 17334
<NET-CHANGE-IN-ASSETS> (1194012)
<ACCUMULATED-NII-PRIOR> (355254)<F1>
<ACCUMULATED-GAINS-PRIOR> (29171825)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 513420<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 1457264<F1>
<AVERAGE-NET-ASSETS> 8969897
<PER-SHARE-NAV-BEGIN> 7.91
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.17
<EXPENSE-RATIO> 2.32
<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>