VAN KAMPEN U S GOVERNMENT TRUST FOR INCOME, 485BPOS, 2000-01-27

VAN KAMPEN U S GOVERNMENT TRUST FOR INCOME
485BPOS, 2000-01-27

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 2000

REGISTRATION NOS. 33-49358
811-6724
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 12 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 14 [X]
</TABLE>

VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
1 PARKVIEW PLAZA, PO BOX 5555, OAKBROOK TERRACE, IL 60181-5555
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(630) 684-6000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

A. THOMAS SMITH III

EXECUTIVE VICE PRESIDENT,

GENERAL COUNSEL AND SECRETARY

VAN KAMPEN INVESTMENTS INC.
1 PARKVIEW PLAZA
PO BOX 5555
OAKBROOK TERRACE, IL 60181-5555
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------

Copies to:

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

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

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b)

[X] on January 28, 2000 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

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

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

[VAN KAMPEN FUNDS LOGO]

VAN KAMPEN
U.S. GOVERNMENT TRUST FOR INCOME

Van Kampen U.S. Government Trust for Income is
a mutual fund with the investment objective to
provide investors with a high level of current
income. The Fund's investment adviser seeks to
achieve the Fund's investment objective by
investing primarily in debt securities issued
or guaranteed by the U.S. government, its
agencies or its instrumentalities, including
mortgage-related securities issued or
guaranteed by instrumentalities of the U.S.
government.

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

This prospectus is dated JANUARY 28, 2000.

<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 6
Investment Objective, Policies and Risks........... 7
Investment Advisory Services....................... 13
Purchase of Shares................................. 14
Redemption of Shares............................... 20
Distributions from the Fund........................ 22
Shareholder Services............................... 22
Federal Income Taxation............................ 24
Financial Highlights............................... 26
</TABLE>

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus, in connection with the offer contained in this prospectus and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund, the Fund's investment adviser or the
Fund's distributor. This prospectus does not constitute an offer by the Fund or
by the Fund's distributor to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful for the Fund to make such an offer in such jurisdiction.
<PAGE> 4

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Fund is a mutual fund with the investment objective to provide investors
with a high level of current income.

INVESTMENT STRATEGIES

The Fund's investment adviser seeks to achieve the Fund's investment objective
by investing primarily in debt securities issued or guaranteed by the U.S.
government, its agencies or its instrumentalities, including mortgage-related
securities issued or guaranteed by instrumentalities of the U.S. government.
Under normal circumstances, at least 65% of the Fund's total assets are invested
in these securities and in repurchase agreements fully collateralized by U.S.
government securities. The Fund may invest up to 35% of its total assets in
high-quality debt securities issued by foreign governments and their political
subdivisions, agencies and instrumentalities or supranational issuers and
certain other high-quality debt securities that are not U.S. government
securities. The Fund's investment adviser purchases and sells securities for the
Fund's portfolio with a view to seeking a high level of current income based on
the investment adviser's analysis and expectations on interest rates and yield
spreads between types of securities. The Fund may purchase or sell certain
derivative instruments (such as options, futures, options on futures, and
interest rate swaps or other interest rate-related transactions) for various
portfolio management purposes. The Fund may purchase or sell securities on a
when-issued or delayed delivery basis.

INVESTMENT RISKS

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

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. The prices of debt securities tend to fall as
interest rates rise, and such declines tend to be greater among debt securities
with longer maturities. While the Fund has no policy limiting the maturities of
its investments, the Fund's investment adviser seeks to maintain a portfolio
duration of two to six years. This means that the Fund will be subject to
greater market risk than a fund investing solely in shorter-term securities but
lesser market risk than a Fund investing solely in longer-term securities (see
sidebar on "Understanding Maturities" and "Understanding Duration"). The yields
and market prices of U.S. government securities may move differently and
adversely compared to the yields and market prices of the overall securities
markets. These securities, while backed by the U.S. government, are not
guaranteed against declines in their market prices.

The prices of mortgage-related securities, like those of traditional debt
securities, tend to fall as interest rates rise. Mortgage-related securities may
be more susceptible to further price declines than traditional debt securities
in periods of rising interest rates because of extension risk (described below).
In addition, mortgage-related securities may benefit less than traditional debt
securities during periods of declining interest rates because of prepayment risk
(described below).

Market risk is often greater among certain types of debt securities, such as
zero-coupon bonds which do not make regular interest payments but are instead
bought at a discount to their face values and paid in full upon maturity. As
interest rates change, these securities often fluctuate more in price than
securities that make regular interest payments and therefore subject the Fund to
greater market risk than a fund that does not own these types of securities.

When-issued and delayed delivery transactions are subject to changes in market
conditions from the time of the commitment until settlement. This may adversely
affect the prices or yields of the securities being purchased, as well as any
portfolio securities held for payment of such commitments. The greater the
Fund's outstanding commitments for these securities, the greater the Fund's
exposure to market price fluctuation.

3
<PAGE> 5

UNDERSTANDING
MATURITIES

A debt security can be categorized according to its maturity, which is the
length of time before the issuer must repay the principal.

<TABLE>
<CAPTION>
Term Maturity Level
- --------------------------------------------------
<C> <S>
1-3 years Short
..................................................
4-10 years Intermediate
..................................................
More than 10 years Long
..................................................
</TABLE>

UNDERSTANDING
DURATION

Duration provides an alternative approach to assessing a security's market
risk. Duration measures the expected life of a security by incorporating the
security's yield, coupon interest payments, final maturity and call features
into one measure. While maturity focuses only on the final principal
repayment date of a security, duration looks at the timing and present value
of all of a security's principal, interest or other payments. Typically, a
debt security with interest payments due prior to maturity has a duration
less than maturity. A zero-coupon bond, which does not make interest payments
prior to maturity, would have the same duration and maturity.

CREDIT RISK. Credit risk refers to an issuer's ability to make timely payments
of interest and principal. Credit risk should be low for the Fund because it
invests primarily in U.S. government securities.

INCOME RISK. The income you receive from the Fund is based primarily on interest
rates, which can vary widely over the short- and long-term. If interest rates
drop, your income from the Fund may drop as well. The more the Fund invests in
adjustable, variable or floating rate securities or in securities susceptible to
prepayment risk, the greater the Fund's income risk.

PREPAYMENT RISK. If interest rates fall, the principal on debt securities held
by the Fund may be paid earlier than expected. If this happens, the proceeds
from a prepaid security would likely be reinvested by the Fund in securities
bearing the new, lower interest rates, resulting in a possible decline in the
Fund's income and distributions to shareholders.

The Fund may invest in pools of mortgages issued or guaranteed by private
organizations or U.S. government agencies. These mortgage-related securities are
especially sensitive to prepayment risk because borrowers often refinance their
mortgages when interest rates drop.

EXTENSION RISK. The value of debt securities tends to fall as interest rates
rise. For mortgage-related securities, if interest rates rise, property owners
may prepay mortgages more slowly than originally expected which may further
reduce the market value of such securities and lengthen the duration of the
securities.

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

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

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

4
<PAGE> 6

INVESTOR PROFILE

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

- - Seek current income

- - Wish to add to their personal investment portfolio a fund that invests
primarily in debt securities issued or guaranteed by the U.S. government, its
agencies or its instrumentalities

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

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

ANNUAL PERFORMANCE

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

BAR GRAPH

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1993 6.69
1994 -3.99
1995 15.51
1996 2.23
1997 7.94
1998 6.85
1999 -1.47
</TABLE>

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

During the seven-year period shown in the bar chart, the highest quarterly
return was 4.79% (for the quarter ended March 31, 1995) and the lowest quarterly
return was -3.18% (for the quarter ended March 31, 1994).

5
<PAGE> 7

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows how the Fund's performance compares with the Merrill Lynch U.S.
Treasuries/Agencies, 1-10 yrs. Index* a broad-based market index that the Fund's
investment adviser believes is an appropriate benchmark for the Fund. The Fund's
performance figures include the maximum sales charge paid by investors. The
index's performance figures do not include any commissions or sales charges that
would be paid by investors purchasing the securities represented by the index.
Average annual total returns are shown for the periods ended December 31, 1999
(the most recently completed calendar year prior to the date of this
prospectus). Remember that the past performance of the Fund is not indicative of
its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns Past
for the 10 Years
Periods Ended Past Past or Since
December 31, 1999 1 Year 5 Years Inception
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Van Kampen U.S.
Government Trust for
Income Fund -- Class
A Shares -6.14% 5.03% 4.02% (1)
Merrill Lynch U.S.
Treasuries/Agencies,
1-10 Yrs. Index* .60% 6.98% 5.90% (1)
.......................................................................
Van Kampen U.S.
Government Trust for
Income Fund -- Class
B Shares -5.90% 5.03% 4.02% (1)**
Merrill Lynch U.S.
Treasuries/Agencies,
1-10 Yrs. Index .60% 6.98% 5.90% (1)
.......................................................................
Van Kampen U.S.
Government Trust for
Income Fund -- Class
C Shares -3.14% 5.26% 3.44% (2)
Merrill Lynch U.S.
Treasuries/Agencies,
1-10 Yrs. Index .60% 6.98% 5.45% (2)
.......................................................................
</TABLE>

Inception dates: (1) 11/2/92 (2) 4/12/93.

* The Merrill Lynch U.S. Treasuries/Agencies, 1-10 Yrs. Index is an index which
represents any securities issued or guaranteed by the U.S. government, its
agencies or its instrumentalities with maturities of one to ten years.

** The "Since Inception" performance for Class B Shares reflects the conversion
of such shares into Class A Shares six years after purchase. Class B Shares
purchased on or after June 1, 1996 will convert to Class A Shares eight years
after purchase. See "Purchase of Shares."

The current yield for the thirty-day period ended September 30, 1999 is 4.79%
for Class A Shares, 4.27% for Class B Shares and 4.28% for Class C Shares.
Investors can obtain the current yield of the Fund for each class of shares by
calling (800) 341-2911.

FEES AND EXPENSES
OF THE FUND

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

<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>

SHAREHOLDER FEES
(fees paid directly from your investment)
- ---------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering 4.75%(1) None None
price)
...............................................................
Maximum deferred
sales charge (load)(as a
percentage of the lesser
of
original purchase price
or
redemption proceeds)
None(2) 4.00%(3) 1.00%(4)
...............................................................
Maximum sales charge
(load) imposed on
reinvested dividends
None None None
...............................................................
Redemption fees None None None
...............................................................
Exchange fee None None None
...............................................................
</TABLE>

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------
Management fees 0.60% 0.60% 0.60%
...............................................................
Distribution and/or
service
(12b-1) fees(5)
0.25% 1.00%(6) 1.00%(6)
...............................................................
Other expenses 0.37% 0.36% 0.37%
...............................................................
Total annual fund
operating expenses
1.22% 1.96% 1.97%
...............................................................
</TABLE>

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

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

6
<PAGE> 8

(3) The maximum deferred sales charge is 4.00% in the first and second year
after purchase, declining thereafter as follows:

Year 1-4.00%

Year 2-4.00%

Year 3-3.00%

Year 4-2.50%

Year 5-1.50%

After-None

See "Purchase of Shares -- Class B Shares."

(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter.

See "Purchase of Shares -- Class C Shares."

(5) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and Class C Shares are each subject to a combined annual distribution
and service fee of up to 1.00% of the average daily net assets attributable
to such class of shares. See "Purchase of Shares."

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

Example:

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

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $593 $844 $1,113 $1,882
......................................................................
Class B Shares $599 $915 $1,207 $2,094*
......................................................................
Class C Shares $300 $618 $1,062 $2,296
......................................................................
</TABLE>

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

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $593 $844 $1,113 $1,882
......................................................................
Class B Shares $199 $615 $1,057 $2,094*
......................................................................
Class C Shares $200 $618 $1,062 $2,296
......................................................................
</TABLE>

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

INVESTMENT OBJECTIVE,

POLICIES AND RISKS

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

The Fund's investment adviser seeks to achieve the Fund's investment objective
by investing primarily in debt securities issued or guaranteed by the U.S.
government, its agencies or its instrumentalities, including mortgage-related
securities issued or guaranteed by instrumentalities of the U.S. government.
Under normal circumstances, at least 65% of the Fund's total assets are invested
in such securities and in repurchase agreements fully collateralized by U.S.
government securities. The Fund may invest up to 35% of its total assets in
high-quality debt securities issued by foreign governments and their political
subdivisions, agencies and instrumentalities or supranational issuers and
certain other high-quality debt securities which are not U.S. government
securities but which are rated at the time of purchase within the two highest
grades assigned by Standard and Poor's ("S&P") or Moody's Investors Service,
Inc. ("Moody's") or another nationally recognized statistical rating
organization ("NRSRO") or unrated debt securities considered by the Fund's
investment adviser to be of comparable quality. While securities purchased for
the Fund's portfolio may be issued or guaranteed by the U.S. government, the
shares issued by the Fund to investors are not insured or guaranteed by the U.S.
government, its agencies or instrumentalities or any other person or entity.

The prices of debt securities generally vary inversely with interest rates. If
interest rates rise, debt security prices generally fall; if interest rates
fall, debt security prices generally rise. Debt securities with longer
maturities generally offer higher yields than debt securities with shorter
maturities assuming all other factors, including credit quality, being equal.
For a given change in interest rates, the market prices of longer-maturity debt
securities generally fluctuate more than the market prices of shorter-maturity
debt

7
<PAGE> 9

securities. This potential for a decline in prices of debt securities due to
rising interest rates is referred to herein as "market risk." While the Fund has
no policy limiting the maturities of the individual debt securities in which it
may invest, the Fund's investment adviser seeks to moderate market risk by
generally maintaining a portfolio duration of two to six years. Duration is a
measure of the expected life of a debt security that was developed as an
alternative to the concept of "term to maturity." Duration incorporates a debt
security's yield, coupon interest payments, final maturity and call features
into one measure. A duration calculation looks at the present value of a
security's entire payment stream whereas term to maturity is based solely on the
date of a security's final principal repayment. The Fund invests in
mortgage-related securities. The values of such securities tend to vary
inversely with changes in prevailing interest rates, but also are more
susceptible to prepayment risk and extension risk than other debt securities.

The Fund may purchase debt securities at a premium over the principal or face
value in order to obtain higher current income. The amount of any premium
declines during the term of the security to zero at maturity. Such decline
generally is reflected in the market price of the security and thus in the
Fund's net asset value. Any such decline is realized for accounting purposes as
a capital loss at maturity or upon resale. Prior to maturity or resale, such
decline in value could be offset, in whole or part, or increased by changes in
the value of the security due to changes in interest rate levels.

In order to hedge against changes in interest rates, the Fund may purchase or
sell options, futures, options on futures, and interest rate swaps or other
interest rate-related transactions. By using such instruments, the Fund seeks to
limit its exposure to adverse interest rate changes, but the Fund also reduces
its potential for capital appreciation on debt securities if interest rates
decline. The purchase and sale of such instruments may result in a higher
portfolio turnover rate than if the Fund had not purchased or sold such
instruments.

U.S. GOVERNMENT SECURITIES

Debt securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities include: (1) U.S. Treasury obligations, which differ in their
interest rates, maturities and times of issuance: U.S. Treasury bills (maturity
of one year or less), U.S. Treasury notes (maturity of one to ten years), and
U.S. Treasury bonds (generally maturities of greater than ten years), including
the principal components or the interest components issued by the U.S.
government under the Separate Trading of Registered Interest and Principal
Securities program (i.e., "STRIPS"), all of which are backed by the full faith
and credit of the United States; and (2) obligations issued or guaranteed by
U.S. government agencies or instrumentalities, including government guaranteed
mortgage-related securities, some of which are backed by the full faith and
credit of the U.S. Treasury, some of which are supported by the right of the
issuer to borrow from the U.S. government and some of which are backed only by
the credit of the issuer itself.

U.S. government securities include obligations issued or guaranteed by the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
GNMA is a wholly owned corporate instrumentality of the United States whose
securities and guarantees are backed by the full faith and credit of the United
States. FNMA, a federally chartered and privately owned corporation, and FHLMC,
a federal corporation, are instrumentalities of the United States. The
securities and guarantees of FNMA and FHLMC are not backed, directly or
indirectly, by the full faith and credit of the United States. Although the
Secretary of the Treasury of the United States has discretionary authority to
lend amounts to FNMA up to certain specified limits, neither the United States
nor any agency thereof is obligated to finance FNMA's or FHLMC's operations or
to assist FNMA or FHLMC in any other manner. Securities of GNMA, FNMA and FHLMC
may include, but are not limited to, collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") which are
described below under "Mortgage-Related Securities."

MORTGAGE-RELATED SECURITIES

Mortgage loans made by banks, savings and loan institutions, and other lenders
are often assembled into pools. Interests in such pools may then be issued by
private entities or also may be issued or guaranteed by an agency or
instrumentality of the U.S. government. Interests in such pools are what this
prospectus calls "Mortgage-Related Securities."

8
<PAGE> 10

The yield and payment characteristics of mortgage-related securities differ from
traditional debt securities. Mortgage-related securities are characterized by
monthly payments to the holder, reflecting the monthly payments made by the
borrowers who received the underlying mortgage loans less fees paid to the
guarantor and their servicer of such mortgage loans. The payments to the holders
of mortgage-related securities (such as the Fund), like the payments on the
underlying mortgage loans, represent both principal and interest. Although the
underlying mortgage loans are for specified periods of time, such as 20 or 30
years, the borrowers can, and typically do, pay them off sooner. Thus, the
holders of mortgage-related securities frequently receive prepayments of
principal, in addition to the principal which is part of the regular monthly
payment. Faster or slower prepayments than expected on underlying mortgage loans
can dramatically alter the valuation and yield-to-maturity of mortgage-related
securities. The value of most mortgage-related securities, like traditional debt
securities, tends to vary inversely with changes in prevailing interest rates.
Mortgage-related securities, however, may benefit less than traditional debt
securities from declining interest rates because a property owner is more likely
to refinance a mortgage which bears a relatively high rate of interest during a
period of declining interest rates. This means some of the Fund's higher
yielding securities might be converted to cash, and the Fund will be forced to
accept lower interest rates when that cash is used to purchase new securities at
prevailing interest rates. The increased likelihood of prepayment when interest
rates decline also limits market price appreciation of mortgage-related
securities. If the Fund buys mortgage-related securities at a premium, mortgage
foreclosures or mortgage prepayments may result in a loss to the Fund of up to
the amount of the premium paid since only timely payment of principal and
interest is guaranteed. Alternatively, during periods of rising interest rates,
mortgage-related securities are often more susceptible to extension risk (i.e.
rising interest rates could cause property owners to prepay their mortgage loans
more slowly than expected when the security was purchased by the Fund which may
further reduce the market value of such security and lengthen the duration of
such security) than traditional debt securities.

The Fund may invest in private Mortgage-Related Securities ("Private
Pass-Throughs") as opposed to Mortgage-Related Securities issued or guaranteed
by GNMA, FNMA, and FHLMC only if such Private Pass-Throughs are rated at the
time of purchase in the two highest grades by a NRSRO or if unrated are
considered by the Fund's investment adviser to be of comparable quality.

CMOs are debt obligations collateralized by mortgage loans or Mortgage-Related
Securities which generally are held under an indenture issued by financial
institutions or other mortgage lenders or issued or guaranteed by agencies or
instrumentalities of the U.S. government. REMICs are private entities formed for
the purpose of holding a fixed pool of mortgages secured by an interest in real
property. CMOs and REMICs generally are issued in a number of classes or series
with different maturities. The classes or series are retired in sequence as the
underlying mortgages are repaid. Prepayment may shorten the stated maturity of
the obligation and can result in a loss of premium, if any has been paid.
Certain of these securities may have variable or floating interest rates and
others may be stripped (securities which provide only the principal or interest
feature of the underlying security). CMOs or REMICs issued or guaranteed by
agencies or instrumentalities of the U.S. government are treated as U.S.
government securities. CMOs and REMICs issued by private entities and not
directly guaranteed by any government agency are secured by the underlying
collateral of the private issuer and the Fund will treat such privately issued
securities as U.S. government securities only if they are 100% collateralized at
the time of issuance by securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities. The Fund intends to invest in privately
issued CMOs and REMICs only if they are rated at the time of purchase in the two
highest grades by a NRSRO.

Additional information regarding Mortgage-Related Securities, CMOs and REMICs is
contained in the Fund's Statement of Additional Information which may be
obtained by investors free of charge as described on the back cover of this
prospectus.

ZERO COUPON AND STRIPPED SECURITIES

The Fund may also invest in the interest only or principal only components of
debt securities described above. This includes "zero coupon" Treasury securities
and stripped securities.

A "zero coupon" security pays no interest in cash to its holder during its life
although interest is accrued during that period. The price for a zero coupon
security is generally an amount significantly less than

9
<PAGE> 11

its face value (sometimes referred to as a "deep discount" price) and the
investment return is based on the difference between the face value (or resale
value prior to maturity) and the investor's price to purchase the security.

Currently the principal U.S. Treasury security issued without coupons is the
Treasury bill. The Treasury also has wire transferable "zero coupon" Treasury
securities available. Certain agencies or instrumentalities of the U.S.
government and a number of banks and brokerage firms separate ("strip") the
principal portions from the coupon portions of the U.S. Treasury bonds and notes
and sell them separately in the form of receipts or certificates representing
undivided interests in these instruments (which instruments are often held by a
bank in a custodial or trust account). Such custodial receipts or certificates
of private issuers are not considered by the Fund to be U.S. government
securities.

"Zero coupon" securities usually trade at a deep discount from their face or par
value and are subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities which
make periodic distributions of interest. Such securities do not entitle the
holder to any periodic payments of interest prior to maturity which prevent
reinvestment of such interest payments if interest rates rise. On the other
hand, because there are no periodic interest payments to be reinvested prior to
maturity, "zero coupon" securities eliminate the reinvestment risk and lock in a
rate of return to maturity if interest rates drop. Current federal tax law
requires that a holder (such as the Fund) of a "zero coupon" security accrue a
portion of the discount at which the security was purchased as income each year
even though the Fund receives no interest payment in cash on the security during
the year. The Fund is required to distribute substantially all of its investment
company taxable income each year, and, in order to generate sufficient cash to
make distributions of such income, the Fund may have to dispose of securities
that it would otherwise continue to hold, which, in some cases may be
disadvantageous to the Fund.

Stripped mortgage-related securities (hereinafter referred to as "Stripped
Mortgage Securities") are derivative multiclass mortgage securities. Stripped
Mortgage Securities usually are structured with two classes that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. Stripped Mortgage Securities may be issued by agencies or
instrumentalities of the U.S. government, or by private originators of, or
investors in, mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose subsidiaries of
the foregoing. A common type of Stripped Mortgage Securities will have one class
receiving some of the interest and most of the principal from the mortgage
assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest-only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The yield to
maturity on an IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on the securities'
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the security is rated the highest
quality by a NRSRO. Holders of PO securities are not entitled to any periodic
payments of interest prior to maturity. Accordingly, such securities usually
trade at a deep discount from their face or par value and are subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make current distributions of
interest. Current federal tax law requires that a holder (such as the Fund) of
such securities accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment in cash on the certificate during the year. The Fund is required to
distribute substantially all of its investment company taxable income each year
and, in order to generate sufficient cash to make distributions of such income,
the Fund may have to dispose of securities that it would otherwise continue to
hold, which, in some cases may be disadvantageous to the Fund. Such securities
may involve greater risk than securities issued directly by the U.S. Government,
its agencies or instrumentalities.

Although the market for stripped securities is increasingly liquid, certain of
such securities may not be readily marketable and will be considered illiquid
for purposes of the Fund's limitation on investments in illiquid securities. The
Fund follows established guidelines and standards for determining whether a
particular stripped security is liquid. Generally, such a security may be deemed
liquid if it can be disposed

10
<PAGE> 12

of promptly in the ordinary course of business at a value reasonably close to
that used in the calculation of the net asset value per share. Stripped Mortgage
Securities, other than government-issued IO and PO securities backed by
fixed-rate mortgages, are presently considered by the staff of the SEC to be
illiquid securities and thus subject to the Fund's limitation on investment in
illiquid securities.

RISKS OF INVESTING IN

SECURITIES OF FOREIGN ISSUERS

The Fund may invest in high quality, U.S. dollar-denominated debt obligations
issued by foreign governments and their political subdivisions, agencies and
instrumentalities or other issuers. The Fund may invest in high quality debt
obligations of supranational lending entities organized or supported by several
national governments. The Fund's investment adviser believes that in many
instances such foreign debt securities may provide higher yields than securities
of domestic issuers which have similar maturities.

Investment in foreign securities present certain risks not ordinarily associated
with investment in securities of U.S. issuers. These risks include political,
economic or legal developments (including war or other instability of the issuer
or the country of issue) expropriation of assets, nationalization and
confiscatory taxation, withholding taxes on dividend or interest payments or
capital transactions or other restrictions, higher transaction costs (including
higher brokerage, custodial and settlement costs and currency conversion costs)
and possible difficulty in enforcing contractural obligations or taking judicial
action. Also, foreign securities may not be as liquid and may be more volatile
than comparable domestic securities.

In addition, there often is less publicly available information about many
foreign issuers, and issuers of foreign securities are subject to different,
often less comprehensive auditing, accounting, and financial reporting
disclosure requirements than domestic issuers. Because there is usually less
supervision and governmental regulation of exchanges, brokers and dealers than
there is in the U.S., the Fund may experience settlement difficulties or delays
not usually encountered in the U.S.

Delays in making trades in foreign securities relating to volume constraints,
limitations or restrictions, clearance or settlement procedures, or otherwise
could impact yields and result in temporary periods when assets are not fully
invested or attractive investment opportunities are foregone.

Investments in securities of developing or emerging market countries are subject
to greater risks than investments in securities of developed markets since
emerging market countries tend to have economic structures that are less diverse
and mature and political systems that are less stable than developed markets.

In addition to the increased risks of investing in foreign issuers, there are
often increased transactions costs associated with investing in foreign
securities including the costs incurred in connection with converting
currencies, higher foreign brokerage or dealer costs, and higher settlement
costs or custodial costs.

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

USING OPTIONS, FUTURES CONTRACTS

AND RELATED OPTIONS

The Fund may, but is not required to, use various investment strategic
transactions, including options, futures and options on futures, depending upon
the status of the Fund's portfolio and the Fund's investment adviser's
expectations concerning the securities markets. Although the Fund's investment
adviser seeks to use the practices to further the Fund's investment objectives,
no assurance can be given that the use of these practices will achieve this
result.

The Fund can engage in options transactions on securities, indices or on futures
to attempt to manage the portfolio's risk in advancing or declining markets. For
example, the value of a put option generally increases as the value of the
underlying security declines below a specified level. Value is protected against
a market decline to the degree the performance of the put 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.

The Fund is authorized to purchase and sell listed and over-the-counter options
("OTC Options"). OTC Options are subject to certain additional risks including
default by the other party to the transaction and the liquidity of the
transactions.

11
<PAGE> 13

The Fund may enter into contracts for the purchase or sale for future delivery
of debt securities or contracts based on financial indices including any index
of U.S. 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
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 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 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 and the price at which
the contract was originally struck. No physical delivery of the debt securities
underlying the index is made. These investment techniques generally are used to
protect against anticipated future changes in interest 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.

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. However, such transactions involve
risks different from the direct investment in underlying securities. For
example, there may be imperfect correlation between the value of the instruments
and the underlying assets. In addition, the risks of such instruments include
the risks of default by the other party to certain transactions. The Fund may
incur losses in using these instruments that partially or completely offset
gains in portfolio positions. These transactions may not be liquid and involve
manager risk. In addition, such transactions may involve commissions and other
costs, which may increase the Fund's expenses and reduce its return. A more
complete discussion of options, futures contracts and related options and their
risks is contained in the Fund's Statement of Additional Information.

Eurodollar Instruments. The Fund may invest in Eurodollar instruments for
hedging purposes. Eurodollar instruments are essentially U.S. dollar-
denominated futures contracts or options thereon that are linked to the London
Interbank Offered Rate ("LIBOR"). Eurodollar futures contracts enable purchasers
to obtain a fixed-rate for the lending of funds and sellers to obtain a
fixed-rate for borrowings. The Fund intends to use Eurodollar futures contracts
and options thereon to hedge against changes in LIBOR to which many short-term
borrowings and floating rate securities are linked. Eurodollar instruments are
subject to the same limitations and risks as other futures contracts and options
thereon as described above and in the Statement of Additional Information.

INTEREST RATE TRANSACTIONS

The Fund may, but is not required to, enter into interest rate swaps and may
purchase or sell interest rate caps, floors and collars. The Fund expects to
enter into these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio. The Fund may also enter into
these transactions to protect against any increase in the price of securities
the Fund anticipates purchasing at a later date. Interest rate swaps, caps,
floors and collars will be treated as illiquid securities for the purposes of
the Fund's investment restriction limiting investment in illiquid securities.
Besides liquidity, such transactions include market risk, risk of default by the
other party to the transaction, risk of imperfect correlation and manager risk.
Such transactions may involve commissions or other costs. A more complete
discussion of interest rate transactions and their risks is contained in the
Statement of Additional Information.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Fund may purchase or sell debt 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 take 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
either settle a Forward Commitment by taking delivery of the securities or may
either resell or repurchase a Forward Commitment on or before the settlement
date in which event

12
<PAGE> 14

the Fund may reinvest the proceeds in another Forward Commitment. 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. The Fund maintains a segregated
account (which is marked to market daily) of cash or liquid portfolio securities
with the Fund's custodian in an aggregate amount equal to the amount of its
commitment as long as the obligation to purchase or sell continues.

OTHER INVESTMENTS AND RISK FACTORS

For cash management purposes, the Fund may engage in repurchase agreements with
broker-dealers, banks and other financial institutions in order to earn a return
on temporarily available cash. Such transactions are subject to the risk of
default by the other party.

In order to generate additional income, the Fund may lend its portfolio
securities in an amount up to 33 1/3% of the Fund's total assets to
broker-dealers, banks or other recognized domestic institutional borrowers of
securities. The borrower at all times during the loan must maintain cash, cash
equivalent or high-grade liquid debt securities as collateral or provide to the
Fund an irrevocable letter of credit equal in value to at least 100% of the
value of the securities loaned. During the time portfolio securities are on
loan, the Fund receives any dividends or interest paid on such securities and
may invest the collateral itself or receive an agreed-upon amount of interest
income from the borrower who has delivered the collateral or a letter of credit.
There are risks of delay in recovery and in some cases even loss of rights in
the collateral should the borrower of the securities fail financially.

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

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

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

INVESTMENT ADVISORY SERVICES

THE ADVISER. Van Kampen Asset Management Inc. is the Fund's investment adviser
(the "Adviser" or "Asset Management"). The Adviser is a wholly owned subsidiary
of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company with more than two million
retail investor accounts, extensive capabilities for managing institutional
portfolios, and more than $90 billion under management or supervision as of
December 31, 1999. Van Kampen Investments' more than 50 open-end and 39
closed-end funds and more than 2,700 unit investment trusts are professionally
distributed by leading authorized dealers nationwide. Van Kampen Funds Inc., the
distributor of the Fund (the "Distributor") and the sponsor of the funds
mentioned above, is also a wholly owned subsidiary of Van Kampen Investments.
Van Kampen Investments is an indirect wholly owned subsidiary of Morgan Stanley
Dean Witter & Co. The Adviser's principal office is located at 1 Parkview Plaza,
Oakbrook Terrace, Illinois 60181-5555.

ADVISORY AGREEMENT. The Fund retains the Adviser to manage the investment of its
assets and to place orders for the purchase and sale of its portfolio
securities. Under an investment advisory agreement between the Adviser and the
Fund (the "Advisory Agreement"), the Fund pays the Adviser a monthly

13
<PAGE> 15

fee computed based upon an annual rate of 0.60% applied to the Fund's average
daily net assets. The Fund's average daily net assets are determined by taking
the average of all of the determinations of the net assets during a given
calendar month. Such fee is payable for each calendar month as soon as
practicable after the end of that month.

Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment and provides administrative services to the Fund. The
Fund also pays all charges and expenses of its day-to-day operations, including
service fees, distribution fees, custodial fees, legal and independent
accountant fees, the costs of reports and proxies to shareholders, compensation
of trustees of the Trust (other than those who are affiliated persons of the
Adviser, Distributor or Van Kampen Investments) and all other ordinary business
expenses not specifically assumed by the Adviser.

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

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

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

PORTFOLIO MANAGEMENT. Ted V. Mundy has been primarily responsible for the
day-to-day management of the Fund's investment portfolio since June 1994. Since
1994, Mr. Mundy has been a Vice President of the Adviser. Since June 1995, Mr.
Mundy has been a Vice President of Advisory Corp. From September 1990 to June
1994, Mr. Mundy was a portfolio manager with AMR Investment Services, Inc.

PURCHASE OF SHARES

GENERAL

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

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

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

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

The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on

14
<PAGE> 16

any day on which no purchase or redemption orders are received or there is not
sufficient degree of trading in the Fund's portfolio securities such that the
Fund's net asset value per share might be materially affected. The Fund's Board
of Trustees reserves the right to calculate the net asset value per share and
adjust the offering price based thereon more frequently than once daily if
deemed desirable. Net asset value per share for each class is determined by
dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest) attributable to such class, less all liabilities
(including accrued expenses) attributable to such class, by the total number of
shares of the class outstanding. U.S. government securities and agency
obligations are valued at the mean between the last reported bid and asked
prices. Listed options are valued at the last reported sale price on the
exchange on which such option is traded, or, if no sales are reported, at the
mean between the last reported bid and asked prices. Options for which market
quotations are not readily available are valued at a fair value as determined in
good faith by the Adviser based on procedures approved by the Board of Trustees
of the Fund. Short-term investments with a maturity of 60 days or less when
purchased are valued at cost plus interest earned (amortized cost), which
approximates market value. Short-term investments with a maturity of more than
60 days when purchased are valued based on market quotations until the remaining
days to maturity becomes less than 61 days. From such time, until maturity, the
investments are valued at amortized cost using the value of the investment on
the 61st day. See the notes to financial statements in the Fund's Statement of
Additional Information.

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

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

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

The offering price for shares is based upon the next calculation of net asset
value per share (plus sales charges, where applicable) after an order is
received by Investor Services. Orders received by authorized dealers prior to
the close of the Exchange are priced based on the date of receipt provided such
order is transmitted to Investor Services prior to Investor Services' close of
business on such date. Orders received by authorized dealers after the close of
the Exchange or transmitted to Investor Services after its

15
<PAGE> 17

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

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

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

CLASS A SHARES

Class A Shares of the Fund are sold at net asset value plus an initial maximum
sales charge of up to 4.75% of the offering price (or 4.99% of the net amount
invested), reduced on investments of $100,000 or more as follows:

CLASS A SHARES

SALES CHARGE SCHEDULE

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

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

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

Under the Distribution Plan and Service Plan, the Fund may spend up to a total
of 0.25% per year of the Fund's average daily net assets with respect to the
Class A Shares of the Fund. From such amount, under the Service Plan, the Fund
may spend up to 0.25% per year of the Fund's average daily net assets with
respect to the Class A Shares of the Fund.

CLASS B SHARES

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

CLASS B SHARES

SALES CHARGE SCHEDULE

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

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

The amount of the contingent deferred sales charge, if any, varies depending on
the number of years from

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<PAGE> 18

the time of payment for the purchase of Class B Shares until the time of
redemption of such shares.

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

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
Fund's average daily net assets with respect to the Class B Shares of the Fund.
In addition, under the Service Plan, the Fund may spend up to 0.25% per year of
the Fund's average daily net assets with respect to the Class B Shares of the
Fund.

CLASS C SHARES

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

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

Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
Fund's average daily net assets with respect to the Class C Shares of the Fund.
In addition, under the Service Plan, the Fund may spend up to 0.25% per year of
the Fund's average daily net assets with respect to the Class C Shares of the
Fund.

CONVERSION FEATURE

Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment
plan Class B Shares received on such shares, automatically convert to Class A
Shares eight years after the end of the calendar month in which the shares were
purchased. Class B Shares purchased before June 1, 1996, and any dividend
reinvestment plan Class B Shares received on such shares, automatically convert
to Class A Shares six years after the end of the calendar month in which the
shares were purchased. Class C Shares purchased before January 1, 1997, and any
dividend reinvestment plan Class C Shares received on such shares, automatically
convert to Class A Shares ten years after the end of the calendar month in which
such shares were purchased. Such conversion will be on the basis of the relative
net asset values per share, without the imposition of any sales load, fee or
other charge. The conversion schedule applicable to a share of the Fund acquired
through the exchange privilege from another Van Kampen fund participating in the
exchange program is determined by reference to the Van Kampen fund from which
such share was originally purchased.

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

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The contingent deferred sales charge is waived on redemptions of Class B Shares
and Class C Shares (i) within one year following the death or disability (as
disability is defined by federal income tax law) of a shareholder, (ii) for
required minimum distributions from an individual retirement account ("IRA") or
certain other retirement plan distributions, (iii) for withdrawals under the
Fund's systematic withdrawal plan but limited to 12% annually of the initial
value of the account, (iv) if no commission or transaction fee is paid to
authorized dealers at the time of purchase of such shares and (v) if made by
involuntary liquidation by the Fund of a shareholder's

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<PAGE> 19

account as described under the heading "Redemption of Shares." Subject to
certain limitations, a shareholder who has redeemed Class C Shares of the Fund
may reinvest in Class C Shares at net asset value with credit for any contingent
deferred sales charge if the reinvestment is made 180 days after the redemption.
For a more complete description of contingent deferred sales charge waivers,
please refer to the Fund's Statement of Additional Information or contact your
authorized dealer.

QUANTITY DISCOUNTS

Investors purchasing Class A Shares may, under certain circumstances described
below, be entitled to pay reduced or no sales charges. Investors, or their
authorized dealers, must notify the Fund at the time of the purchase order
whenever a quantity discount is applicable to purchases. Upon such notification,
an investor will pay the lowest applicable sales charge. Quantity discounts may
be modified or terminated at any time. For more information about quantity
discounts, investors should contact their authorized dealer or the Distributor.

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

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

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

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

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

OTHER PURCHASE PROGRAMS

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

UNIT INVESTMENT TRUST REINVESTMENT PROGRAM. The Fund permits unitholders of unit
investment trusts to reinvest distributions from such trusts in Class A Shares
of the Fund, at net asset value per share and with no minimum initial or
subsequent investment requirement, if the administrator of an investor's unit
investment trust program meets certain uniform

18
<PAGE> 20

criteria relating to cost savings by the Fund and the Distributor. The total
sales charge for all other investments made from unit investment trust
distributions will be 1.00% of the offering price (1.01% of net asset value). Of
this amount, the Distributor will pay to the authorized dealer, if any, through
which such participation in the qualifying program was initiated 0.50% of the
offering price as a dealer concession or agency commission. Persons desiring
more information with respect to this program, including the terms and
conditions that apply to the program, should contact their authorized dealer or
the Distributor.

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

In order to obtain these special benefits, all dividends and other distributions
by the Fund must be reinvested in additional shares and there cannot be any
systematic withdrawal program. There will be no minimum for reinvestments from
unit investment trusts. The Fund will send account activity statements to such
participants on a quarterly basis only, even if their investments are made more
frequently. The Fund reserves the right to modify or terminate this program at
any time.

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

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

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

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

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

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

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

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

(8) Trusts created under pension, profit sharing or other employee benefit plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), or custodial accounts held by a bank created pursuant
to Section 403(b) of the Code and sponsored by 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

19
<PAGE> 21

for purchases at net asset value provided, for plans initially establishing
accounts with the Distributor in the Participating Funds after January 1,
2000, that (1) the total plan assets are at least $1 million 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
January 1, 2000 based on net asset value purchase privileges previously in
effect will be qualified to purchase shares of the Participating Funds at
net asset value. Section 403(b) and similar accounts for which Van Kampen
Trust Company serves as custodian will not be eligible for net asset value
purchases based on the aggregate investment made by the plan or the number
of eligible employees, except under certain uniform criteria established by
the Distributor from time to time. For purchases on February 1, 1997 and
thereafter, a commission will be paid as follows: 1.00% on sales to $2
million, plus 0.80% on the next $1 million, plus 0.50% on the next $47
million, plus 0.25% on the excess over $50 million.

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

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

Purchase orders made pursuant to clause (4) may be placed either through
authorized dealers as described above or directly with Investor Services by the
investment adviser, trust company or bank trust department, provided that
Investor Services receives federal funds for the purchase by the close of
business on the next business day following acceptance of the order. An
authorized dealer may charge a transaction fee for placing an order to purchase
shares pursuant to this provision or for placing a redemption order with respect
to such shares. Authorized dealers will be paid a service fee as described above
on purchases made under options (3) through (9) above. The Fund may terminate,
or amend the terms of, offering shares of the Fund at net asset value to such
groups at any time.

REDEMPTION OF
SHARES

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

Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the request and any other necessary documents in
proper form as described below. Such payment may be postponed or the right of
redemption suspended as provided by the rules of the SEC. Such payment may,
under certain circumstances, be paid wholly or in part by a distribution-in-kind
of portfolio securities

20
<PAGE> 22

which may result in brokerage costs and a gain or loss for federal income tax
purposes when such securities are sold. If the shares to be redeemed have been
recently purchased by check, Investor Services may delay the payment of
redemption proceeds until it confirms the purchase check has cleared, which may
take up to 15 days. A taxable gain or loss will be recognized by the shareholder
upon redemption of shares.

WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor Services
Inc., PO Box 218256, Kansas City, MO 62141-8256. The request for redemption
should indicate the number of shares to be redeemed, the class designation of
such shares and the shareholder's account number. The redemption request must be
signed by all persons in whose names the shares are registered. Signatures must
conform exactly to the account registration. If the proceeds of the redemption
exceed $50,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the record address has changed within the previous 30
days, signature(s) must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national securities exchange,
registered securities association or clearing agency; a savings and loan
association; or a federal savings bank. Generally, a properly signed written
request with any required signature guarantee is all that is required for a
redemption request to be in proper form. In some cases, however, other
additional documents may be necessary. In the case of shareholders holding
certificates, the certificates for the shares being redeemed must be properly
endorsed for transfer and must accompany the redemption request. In the event
the redemption is requested by a corporation, partnership, trust, fiduciary,
executor or administrator, and the name and title of the individual(s)
authorizing such redemption is not shown in the account registration, a copy of
the corporate resolution or other legal documentation appointing the authorized
signer and certified within the prior 120 days must accompany the redemption
request. IRA redemption requests should be sent to the IRA custodian to be
forwarded to Investor Services. Contact the IRA custodian for further
information.

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

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

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. A shareholder
automatically has telephone redemption privileges unless the shareholder
indicates otherwise by checking the applicable box on the application form
accompanying the prospectus. For accounts that are not established with
telephone redemption privileges, a shareholder may call the Fund at (800)
341-2911 to request that a copy of the Telephone Redemption Authorization form
be sent to the shareholder for completion. To redeem shares, contact the
telephone transaction line at (800) 421-5684. Shares may also be redeemed by
phone through FundInfo(R) (automated phone system) to the shareholder's bank
account of record 24 hours a day, seven days a week at (800) 847-2424. Van
Kampen Investments and its subsidiaries, including Investor Services, and the
Fund employ procedures considered by them to be reasonable to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting upon
telephone instructions, tape-recording telephone communications and providing
written confirmation of instructions communicated by telephone. If reasonable
procedures are employed, none of Van Kampen Investments, Investor Services or
the Fund will be liable for following telephone instructions which it reasonably
believes to be genuine. Telephone redemptions may not be available if the
shareholder cannot reach Investor Services by telephone, whether because all
telephone lines are busy or for any other reason; in such case, a shareholder
would have to use the Fund's other redemption procedure previously described.
Requests

21
<PAGE> 23

received by Investor Services prior to 4:00 p.m., New York time, will be
processed at the next determined net asset value per share. These privileges are
available for most accounts other than retirement accounts or accounts with
shares represented by certificates. If an account has multiple owners, Investor
Services may rely on the instructions of any one owner.

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

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

DISTRIBUTIONS FROM
THE FUND

In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive distributions from the Fund of dividends and capital
gain dividends.

DIVIDENDS. Interest earned from investments is the Fund's main source of income.
The Fund's present policy, which may be changed at any time by the Fund's Board
of Trustees, is to declare daily and distribute monthly all, or substantially
all, of its net investment income as dividends to shareholders. Dividends are
automatically applied to purchase additional shares of the Fund at the next
determined net asset value unless the shareholder instructs otherwise.

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

CAPITAL GAIN DIVIDENDS. The Fund may realize capital gains or losses when it
sells securities, depending on whether the sales prices for the securities are
higher or lower than purchase prices. The Fund distributes any capital gains to
shareholders at least annually. As in the case of dividends, capital gain
dividends are automatically reinvested in additional shares of the Fund at the
next determined net asset value unless the shareholder instructs otherwise.

SHAREHOLDER SERVICES

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

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gain dividends in shares of the
Fund. Such shares are acquired at net asset value per share (without sales
charge) on the applicable payable date of the dividend or capital gain
dividends. Unless the shareholder instructs otherwise, the reinvestment plan is
automatic. This instruction may be made by telephone by calling (800) 341-2911
((800) 421-2833 for the hearing impaired) or by writing to Investor Services.
The investor may, on the initial application or prior to any declaration,
instruct that dividends

22
<PAGE> 24

and/or capital gains be paid in cash, be reinvested in the Fund at net asset
value, or be invested in another Van Kampen fund at net asset value.

AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under which
a shareholder can authorize Investor Services to debit the shareholder's bank
account on a regular basis to invest predetermined amounts in the Fund.
Additional information is available from the Distributor or your authorized
dealer.

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

When a check is presented to the 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 Shares account by Investor Services at the next determined
net asset value per share. Check writing redemptions represent the sale of Class
A Shares. Any gain or loss realized on the redemption of shares is a taxable
event.

Checks will not be honored for redemption of Class A Shares held less than 15
calendar days, unless such Class A Shares have been paid for by bank wire. Any
Class A Shares for which there are outstanding certificates may not be redeemed
by check. If the amount of the check is greater than the proceeds of all
uncertificated shares held in the shareholder's Class A 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 by
the Bank. Retirement plans and accounts that are subject to backup withholding
are not eligible for the privilege.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next computed net asset value per
share of each fund after requesting the exchange without any sales charge,
subject to certain limitations. Shares of the Fund may be exchanged for shares
of any Participating Fund only if shares of that Participating Fund are
available for sale; however, during periods of suspension of sales, shares of a
Participating Fund may be available for sale only to existing shareholders of a
Participating Fund. Shareholders seeking an exchange into a Participating Fund
should obtain and read the current prospectus for such fund prior to
implementing an exchange. A prospectus of any of the participating Funds may be
obtained from any authorized dealer or the Distributor.

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

When shares that are subject to a contingent deferred sales charge are exchanged
among Participating Funds, the holding period for purposes of computing the
contingent deferred sales charge is based upon the date of the initial purchase
of such shares from a Participating Fund. When such shares are redeemed and not
exchanged for shares of another Participating Fund, the shares are subject to
the contingent deferred sales charge schedule imposed by the Participating Fund
from which such shares were originally purchased.

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

A shareholder wishing to make an exchange may do so by sending a written request
to Investor Services or by contacting the telephone transaction line at (800)
421-5684, through FundInfo(R) (automated phone system) at (800) 847-2424 or
through the internet at www.vankampen.com. A shareholder automatically has these
telephone exchange privileges

23
<PAGE> 25

unless the shareholder indicates otherwise by checking the applicable box on the
application form accompanying the prospectus. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions,
tape-recording telephone communications, and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services nor the Fund will be liable
for following telephone instructions which it reasonably believes to be genuine.
If the exchanging shareholder does not have an account in the fund whose shares
are being acquired, a new account will be established with the same
registration, dividend and capital gain dividend options (except dividend
diversification) and authorized dealer of record as the account from which
shares are exchanged, unless otherwise specified by the shareholder. In order to
establish a systematic withdrawal plan for the new account or reinvest dividends
from the new account into another fund, however, an exchanging shareholder must
submit a specific request. The Fund reserves the right to reject any order to
acquire its shares through exchange. In addition, the Fund and other
Participating Funds may restrict exchanges by shareholders engaged in excessive
trading by limiting or disallowing the exchange privilege to such shareholders.
For further information on these restrictions, see the Statement of Additional
Information. The Fund may modify, restrict or terminate the exchange privilege
at any time on 60 days' notice to its shareholders of any termination or
material amendment.

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

Exchange requests received on a business day prior to the time shares of the
funds involved in the request are priced will be processed on the date of
receipt. "Processing" a request means that shares of the fund which the
shareholder is redeeming will be redeemed at the net asset value per share next
determined on the date of receipt. Shares of the fund that the shareholder is
purchasing 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.

INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instruction. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated
through the internet are genuine. Such procedures include requiring use of a
personal identification number prior to acting upon internet instructions and
providing written confirmation of instructions communicated through the
internet. If reasonable procedures are employed, none of Van Kampen Investments,
Investor Services or the Fund will be liable for following instructions received
through the internet which it reasonably believes to be genuine. If an account
has multiple owners, Investor Services may rely on the instructions of any one
owner.

FEDERAL INCOME TAXATION

Distributions of the Fund's investment company taxable income (consisting
generally of taxable income and net short-term capital gain) are taxable to
shareholders as ordinary income. Distributions of the Fund's net capital gain
(which is the excess of net long-term capital gain over net short-term capital
loss) as capital gain dividends, if any, are taxable to shareholders as
long-term capital gains, whether paid in cash or reinvested in additional
shares, and regardless of how long the shares of the Fund have been held by such
shareholders. The Fund expects

24
<PAGE> 26

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

The sale or exchange of shares may be a taxable transaction for federal income
tax purposes. Shareholders who sell their shares will generally recognize gain
or loss in an amount equal to the difference between their adjusted tax basis in
the shares sold and the amount received. If the shares are held as a capital
asset, the gain or loss will be a capital gain or loss. Any recognized capital
gains may be taxed at different rates depending on how long the shareholder held
such shares.

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

Foreign shareholders, including shareholders who are non-resident aliens, may be
subject to U.S. withholding tax on certain distributions (whether received in
cash or in shares) at a rate of 30% or such lower rate as prescribed by an
applicable treaty. Accordingly, investment in the Fund is likely to be
appropriate for such shareholders only if they can utilize a foreign tax credit
or corresponding tax benefit in respect of such federal withholding taxes.
Prospective foreign investors should consult their tax advisers concerning the
tax consequences to them of an investment in shares.

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

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

25
<PAGE> 27

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
Class A Shares Class B Shares
Year Ended September 30, Year Ended September 30,
1999 1998 1997 1996 1995 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period.................................... $8.422 $8.193 $8.108 $ 8.38 $ 8.17 $8.412 $8.187 $8.104
------ ------ ------ ------ ------- ------ ------ ------
Net Investment Income................... .540 .595 .567 .565 .63 .490 .529 .505
Net Realized and Unrealized Gain/Loss... (.656) .184 .073 (.274) .23 (.666) .186 .073
------ ------ ------ ------ ------- ------ ------ ------

Total from Investment Operations.......... (.116) .779 .640 .291 .86 (.176) .715 .578
------ ------ ------ ------ ------- ------ ------ ------

Less:
Distributions from Net Investment
Income.................................. .538 .550 .555 .563 .645 .478 .490 .495
Distributions from Net Realized Gain-0- -0- -0- -0- .005 -0- -0- -0- -0-
------ ------ ------ ------ ------- ------ ------ ------
Total Distributions....................... .538 .550 .555 .563 .65 .478 .490 .495
------ ------ ------ ------ ------- ------ ------ ------

Net Asset Value, End of the Period........ $7.768 $8.422 $8.193 $8.108 $ 8.38 $7.758 $8.412 $8.187
====== ====== ====== ====== ======= ====== ====== ======

Total Return(a)........................... (1.34%) 9.87% 8.09% 3.57% 10.97% (2.07%) 8.96% 7.43%
Net Assets at End of the Period (In
millions)............................... $ 69.2 $ 37.2 $ 38.3 $ 45.2 $ 70.2 $ 40.4 $101.2 $121.7
Ratio of Expenses to Average Net Assets... 1.22% 1.16% 1.18% 1.13% 1.09% 1.96% 1.93% 1.94%
Ratio of Net Investment Income to Average
Net Assets.............................. 6.88% 7.19% 6.95% 6.83% 7.67% 6.05% 6.40% 6.20%
Portfolio Turnover........................ 85% 217% 82% 282% 262% 85% 217% 82%

<CAPTION>
Class B Shares Class C Shares
Year Ended September 30, Year Ended September 30,
1996 1995 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period.................................... $ 8.38 $ 8.17 $8.412 $8.186 $8.104 $ 8.38 $ 8.17
------ ------- ------ ------ ------ ------ ------- ---
Net Investment Income................... .504 .57 .489 .529 .503 .502 .57
Net Realized and Unrealized Gain/Loss... (.277) .228 (.665) .187 .074 (.275) .228
------ ------- ------ ------ ------ ------ ------- ---
Total from Investment Operations.......... .227 .798 (.176) .716 .577 .227 .798
------ ------- ------ ------ ------ ------ ------- ---
Less:
Distributions from Net Investment
Income.................................. .503 .583 .478 .490 .495 .503 .583
Distributions from Net Realized Gain-0- .005 -0- -0- -0- -0- .005
------ ------- ------ ------ ------ ------ ------- ---
Total Distributions....................... .503 .588 .478 .490 .495 .503 .588
------ ------- ------ ------ ------ ------ ------- ---
Net Asset Value, End of the Period........ $8.104 $ 8.38 $7.758 $8.412 $8.186 $8.104 $ 8.38
====== ======= ====== ====== ====== ====== ======= ===
Total Return(a)........................... 2.70% 10.14% (2.07%) 8.96% 7.43% 2.70% 10.14%
Net Assets at End of the Period (In
millions)............................... $150.8 $ 200.2 $ 10.1 $ 11.3 $ 13.7 $ 18.6 $ 28.1
Ratio of Expenses to Average Net Assets... 1.89% 1.85% 1.97% 1.93% 1.94% 1.89% 1.85%
Ratio of Net Investment Income to Average
Net Assets.............................. 6.08% 6.92% 6.08% 6.41% 6.20% 6.08% 6.94%
Portfolio Turnover........................ 282% 262% 85% 217% 82% 282% 262%
</TABLE>

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

(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratio would decrease by .01% for the period ended September
30, 1999.

26
<PAGE> 28

BOARD OF TRUSTEES
AND OFFICERS

BOARD OF TRUSTEES

<TABLE>
<S> <C>
J. Miles Branagan Richard F. Powers, III*
Jerry D. Choate Phillip B. Rooney
Linda Hutton Heagy Fernando Sisto
R. Craig Kennedy Wayne W. Whalen*
Mitchell M. Merin* Suzanne H. Woolsey
Jack E. Nelson Paul G. Yovovich
</TABLE>

OFFICERS

Richard F. Powers, III*
President

Dennis J. McDonnell*
Executive Vice President & Chief Investment Officer

A. Thomas Smith III*
Vice President and Secretary

Edward C. Wood III*
Vice President

Michael H. Santo*
Vice President

Peter W. Hegel*
Vice President

Stephen L. Boyd*
Vice President

John L. Sullivan*
Vice President, Chief Financial Officer & Treasurer

Curtis W. Morell*
Vice President & Chief Accounting Officer

Tanya M. Loden*
Controller

* "Interested Persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.

FOR MORE INFORMATION

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

DEALERS
For dealer information, selling agreements, wire orders, or

redemptions, call the Distributor at (800) 421-5666

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

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

WEB SITE
www.vankampen.com

VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME

1 Parkview Plaza

PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser
VAN KAMPEN ASSET MANAGEMENT INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

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

Transfer Agent
VAN KAMPEN INVESTOR SERVICES INC.
PO Box 218256
Kansas City, MO 64121-8256

Attn: Van Kampen U.S. Government Trust for Income

Custodian

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

Attn: Van Kampen U.S. Government Trust for Income

Legal Counsel

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

Independent Accountants
PRICEWATERHOUSECOOPERS LLP
200 East Randolph Drive
Chicago, IL 60601
<PAGE> 29

VAN KAMPEN
U.S. GOVERNMENT TRUST
FOR INCOME

PROSPECTUS

JANUARY 28, 2000

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

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

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

Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC's Public
Reference Room in Washington, DC or on the
EDGAR database on the SEC's internet web site
(http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room
may be obtained by calling the SEC at
1-202-942-8090. You can also request copies of
these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail
address ([email protected]), or by writing
the Public Reference Section of the SEC,
Washington, DC, 20549-0102.

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-6724
GTI PRO 1/00

<PAGE> 30

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
U.S. GOVERNMENT TRUST FOR INCOME

Van Kampen U.S. Government Trust for Income (the "Fund") is a mutual fund
with the investment objective to provide investors with a high level of current
income. The Fund's investment adviser seeks to achieve the Fund's investment
objective by investing primarily in debt securities issued or guaranteed by the
U.S. government, its agencies or its instrumentalities, including
mortgage-related securities issued or guaranteed by instrumentalities of the
U.S. government.

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

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

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

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective, Policies and Risks.................... B-4
Options, Futures Contracts and Related Options.............. B-12
Investment Restrictions..................................... B-19
Trustees and Officers....................................... B-21
Investment Advisory Agreement............................... B-31
Other Agreements............................................ B-32
Distribution and Service.................................... B-33
Transfer Agent.............................................. B-36
Portfolio Transactions and Brokerage Allocation............. B-37
Shareholder Services........................................ B-39
Redemption of Shares........................................ B-42
Contingent Deferred Sales Charge-Class A.................... B-42
Waiver of Class B and Class C Contingent Deferred Sales
Charges................................................... B-43
Taxation.................................................... B-45
Fund Performance............................................ B-49
Other Information........................................... B-53
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-10
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JANUARY 28, 2000.

<PAGE> 31

GENERAL INFORMATION

The Fund was originally organized under the name American Capital U.S.
Government Trust for Income as a Massachusetts business trust on June 24, 1992.
As of August 5, 1995, the Fund was renamed Van Kampen American Capital U.S.
Government Trust for Income and was reorganized as a series of the Trust. The
Trust is a business trust originally organized under the name Van Kampen
American Capital U.S. Government Trust for Income under the laws of the State of
Delaware. On July 14, 1998, the Fund and the Trust adopted their present names.

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

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

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

The Fund currently offers three classes of shares, designated Class A
Shares, Class B Shares and Class C Shares. Other classes may be established from
time to time in accordance with provisions of the Declaration of Trust. Each
class of shares of the Fund generally are identical in all respects except that
each class bears certain distribution expenses and has exclusive voting rights
with respect to its distribution fee.

Shares of the Trust entitle their holders to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series and separate votes are taken by each class of a series on matters
affecting an individual class of such series. For example, a change in
investment policy for a series would be voted upon by shareholders of only the
series involved and a change in the distribution fee for a class of a series
would be voted upon by shareholders of only the class of such series involved.
Except as

B-2
<PAGE> 32

otherwise described in the Prospectus or herein, shares do not have cumulative
voting rights, preemptive rights or any conversion, subscription or exchange
rights.

The Trust does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of a majority of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
Investment Company Act of 1940, as amended (the "1940 Act"), or rules or
regulations promulgated by the Securities and Exchange Commission ("SEC").

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

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

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

As of December 31, 1999, no person was known by the Fund to own
beneficially or to hold of record 5% or more of the outstanding Class A Shares,
Class B Shares or Class C Shares of the Fund, except as follows:

<TABLE>
<CAPTION>
Amount of
Ownership at
December 31, Class Percentage
Name and Address of Record Holder 1999 of Shares Ownership
--------------------------------- ------------ --------- ----------
<S> <C> <C> <C>
MLPF & S ....................................... 551,184.26 A 5.75%
For the Sole benefit of its Customers 362,850.99 B 10.72%
Attn: Fund Administration 97BB4 198,531.85 C 16.32%
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Van Kampen Trust Company........................ 1,131,806.91 A 11.81%
2800 Post Oak Blvd. 392,742.39 B 11.60%
Houston, TX 77056 72,211.35 C 5.93%
</TABLE>

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

B-3
<PAGE> 33

INVESTMENT OBJECTIVE, POLICIES AND RISKS

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

The following investment techniques, subject to the Investment Restrictions
below, may be employed by the Fund. These techniques inherently involve the
assumption of a higher degree of risk than normal and the possibility of more
volatile price fluctuations. Investment in the Fund should not be viewed as a
complete investment program and prospective investors are advised to give full
consideration to the risks inherent in the investment techniques used by the
Fund.

While the Fund has no policy limiting the maturities of the debt securities
in which it may invest, the Adviser seeks to moderate market risk by generally
maintaining a portfolio duration within a range of two to six years. Duration is
a measure of the expected life of a debt security that was developed as an
alternative to the concept of "term to maturity." Duration incorporates a debt
security's yield, coupon interest payments, final maturity and call features
into one measure. Traditionally a debt security's "term to maturity" has been
used as a proxy for the sensitivity of the security's price to changes in
interest rates (which is the "interest rate risk" or "price volatility" of the
security). However, "term to maturity" measures only the time until a debt
security provides its final payment taking no account of the pattern of the
security's payments of interest or principal prior to maturity. Duration is a
measure of the expected life of a debt security on a present value basis
expressed in years. It measures the length of the time interval between the
present and the time when the interest and principal payments are scheduled (or
in the case of a callable bond, expected to be received), weighing them by the
present value of the cash to be received at each future point in time. For any
debt security with interest payments occurring prior to the payment of
principal, duration is always less than maturity, and for zero coupon issues,
duration and term to maturity are equal. In general, the lower the coupon rate
of interest or the longer the maturity, or the lower the yield-to-maturity of a
debt security, the longer its duration; conversely, the higher the coupon rate
of interest, the shorter the maturity or the higher the yield-to-maturity of a
debt security, the shorter its duration. There are some situations where even
the standard duration calculation does not properly reflect the interest rate
exposure of a security. For example, floating and variable rate securities often
have final maturities of ten or more years; however, their interest rate
exposure corresponds to the frequency of the coupon reset. Another example where
the interest rate exposure is not properly captured by duration is the case of
mortgage pass-through securities. The stated final maturity of such securities
is generally 30 years, but current prepayment rates are more critical in
determining the securities' interest rate exposure. In these and other similar
situations, the Adviser will use more sophisticated analytical techniques that
incorporate the economic life of a security into the determination of its
interest rate exposure.

One type of mortgage-related security in which the Fund invests is that
which is issued or guaranteed by an agency or instrumentality of the U.S.
government, though not necessarily by the U.S. government itself. One such type
of mortgage-related security is a

B-4
<PAGE> 34

Government National Mortgage Association ("GNMA") Certificate. GNMA Certificates
are backed as to principal and interest by the full faith and credit of the U.S.
government. Another type is a Federal National Mortgage Association ("FNMA")
Certificate. Principal and interest payments of FNMA Certificates are guaranteed
only by FNMA itself, not by the full faith and credit of the U.S. government. A
third type of mortgage-related security in which the Fund may invest is a
Federal Home Loan Mortgage Association ("FHLMC") Participation Certificate. This
type of security is backed by FHLMC as to payment of principal and interest but,
like a FNMA security, it is not backed by the full faith and credit of the U.S.
government.

GNMA CERTIFICATES

Government National Mortgage Association. The Government National Mortgage
Association is a wholly owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. GNMA's principal
programs involve its guarantees of privately issued securities backed by pools
of mortgages.

Nature of GNMA Certificates. GNMA Certificates are mortgage-backed
securities. The Certificates evidence part ownership of a pool of mortgage
loans. The Certificates which the Fund purchases are of the modified
pass-through type. Modified pass-through Certificates entitle the holder to
receive all interest and principal payments owned on the mortgage pool, net of
fees paid to the GNMA Certificate issuer and GNMA, regardless of whether or not
the mortgagor actually makes the payment.

GNMA Certificates are backed by mortgages and, unlike most bonds, their
principal amount is paid back by the borrower over the length of the loan rather
than in a lump sum at maturity. Principal payments received by the Fund will be
reinvested in additional GNMA Certificates or in other permissible investments.

GNMA Guarantee. The National Housing Act authorizes GNMA to guarantee the
timely payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or the Farmers
Home Administration or guaranteed by the Veterans Administration ("VA"). The
GNMA guarantee is backed by the full faith and credit of the United States. GNMA
is also empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.

Life of GNMA Certificates. The average life of a GNMA Certificate is likely
to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will result in the return of a portion of principal invested before
the maturity of the mortgages in the pool.

As prepayment rates of individual mortgage pools will vary widely, it is
not possible to predict accurately the average life of a particular issue of
GNMA Certificates. However, statistics published by the FHA are normally used as
an indicator of the expected average life of GNMA Certificates. These statistics
indicate that the average life of single-family dwelling mortgages with 25-30
year maturities (the type of mortgages backing the vast majority of GNMA
Certificates) is approximately twelve years. For this reason, it is customary
for pricing purposes to consider GNMA Certificates as 30-year mortgage-backed
securities which prepay fully in the twelfth year.

B-5
<PAGE> 35

Yield Characteristics of GNMA Certificates. The coupon rate of interest of
GNMA Certificates is lower than the interest rate paid on the VA-guaranteed or
FHA-insured mortgages underlying the Certificates, but only by the amount of the
fees paid to GNMA and the GNMA Certificate issuer.

The coupon rate by itself, however, does not indicate the yield which will
be earned on the Certificates for the following reasons:

1. Certificates are usually issued at a premium or discount, rather than at
par.

2. After issuance, Certificates usually trade in the secondary market at a
premium or discount.

3. Interest is paid monthly rather than semi-annually as is the case for
traditional bonds. Monthly compounding has the effect of raising the
effective yield earned on GNMA Certificates.

4. The actual yield of each GNMA Certificate is influenced by the
prepayment experience of the mortgage pool underlying the Certificate.
If mortgagors prepay their mortgages, the principal returned to
Certificate holders may be reinvested at higher or lower rates.

In quoting yields for GNMA Certificates, the customary practice is to
assume that the Certificates will have a twelve-year life. Compared on this
basis, GNMA Certificates have historically yielded roughly 1/4 of 1% more than
high grade corporate bonds and 1/2 of 1% more than U.S. government and U.S.
government agency bonds. As the life of individual pools may vary widely,
however, the actual yield earned on any issue of GNMA Certificates may differ
significantly from the yield estimated on the assumption of a twelve-year life.

Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA Certificates
outstanding has grown rapidly. The size of the market and the active
participation in the secondary market by securities dealers and many types of
investors make GNMA Certificates highly liquid instruments. Quotes for GNMA
Certificates are readily available from securities dealers and depend on, among
other things, the level of market rates, the Certificate's coupon rate and the
prepayment experience of the pool of mortgages backing each Certificate.

FNMA SECURITIES

The Federal National Mortgage Association ("FNMA") was established in 1938
to create a secondary market in mortgages insured by the FHA. FNMA issues
guaranteed mortgage pass-through certificates ("FNMA Certificates"). FNMA
Certificates resemble GNMA Certificates in that each FNMA Certificate represents
a pro rata share of all principal and interest payments made and owed on the
underlying pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full faith and credit
of the United States.

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FHLMC SECURITIES

The Federal Home Loan Mortgage Corporation ("FHLMC") was created in 1970 to
promote development of a nationwide secondary market in conventional residential
mortgages. The FHLMC issues two types of mortgage pass-through securities
("FHLMC Certificates"): mortgage participation certificates ("PCs") and
guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. The FHMLC guarantees timely monthly
payment of interest on PCs and the ultimate payment of principal. GMCs also
represent a pro rata interest in a pool of mortgages. However, these instruments
pay interest semi-annually and return principal once a year in guaranteed
minimum payments. The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith and credit of the
United States.

COLLATERALIZED MORTGAGE OBLIGATIONS

Collateralized mortgage obligations are debt obligations issued generally
by agencies or instrumentalities of the U.S. government, or by private
originators of, or investors in, mortgages which are secured by mortgage-related
securities, including GNMA Certificates, FHLMC Certificates and FNMA
Certificates, together with certain funds and other collateral. Scheduled
distributions on the mortgage-related securities pledged to secure the
collateralized mortgage obligations, together with certain funds and other
collateral and reinvestment income thereon at an assumed reinvestment rate, will
be sufficient to make timely payments of interest on the obligations and to
retire the obligations not later than their stated maturity. Since the rate of
payment of principal of any collateralized mortgage obligation will depend on
the rate of payment (including prepayments) of the principal of the mortgage
loans underlying the mortgage-related securities, the actual maturity of the
obligation could occur significantly earlier than its stated maturity.
Collateralized mortgage obligations may be subject to redemption under certain
circumstances. The rate of interest borne by collateralized mortgage obligations
may be either fixed or floating. In addition, certain collateralized mortgage
obligations do not bear interest and are sold at a substantial discount (i.e., a
price less than the principal amount). Purchases of collateralized mortgage
obligations at a substantial discount involves a risk that the anticipated yield
on the purchase may not be realized if the underlying mortgage loans prepay at a
slower than anticipated rate, since the yield depends significantly on the rate
of prepayment of the underlying mortgages. Conversely, purchases of
collateralized mortgage obligations at a premium involve additional risk of loss
of principal in the event of unanticipated prepayments of the mortgage loans
underlying the mortgage-related securities since the premium may not have been
fully amortized at the time the obligation is repaid. The market value of
collateralized mortgage obligations purchased at a substantial premium or
discount is extremely volatile and the effects of prepayments on the underlying
mortgage loans may increase such volatility.

Although payment of the principal and interest on the mortgage-backed
certificates pledged to secure collateralized mortgage obligations may be
guaranteed by GNMA, FHLMC or FNMA, the collateralized mortgage obligations
represent obligations solely of their issuers and generally are not insured or
guaranteed by GNMA, FHLMC, FNMA or any other governmental agency or
instrumentality, or by any other person or entity. The

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issuers of collateralized mortgage obligations typically have no significant
assets other than those pledged as collateral for the obligations.

LENDING OF SECURITIES

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

If the borrower fails to maintain the requisite amount of collateral, the
loan automatically terminates, and the Fund could use the collateral to replace
the securities while holding the borrower liable for any excess of replacement
cost over collateral. As with any extensions of credit, there are risks of delay
in recovery and in some cases even loss of rights in the collateral should the
borrower of the securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed by the Fund's Adviser to be
creditworthy and when the consideration which can be earned from such loans is
believed to justify the attendant risks. The Fund would not lend any portfolio
securities to brokers affiliated with the Adviser. On termination of the loan,
the borrower is required to return the securities to the Fund; any gain or loss
in the market price during the loan would inure to the Fund.

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

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with broker-dealers, banks and
other financial institutions in order to earn a return on temporarily available
cash. A repurchase agreement is a short-term investment in which the purchaser
(i.e., the Fund) acquires ownership of a security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the holding period. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund may enter into repurchase
agreements with broker-dealers, banks and other financial institutions deemed to
be creditworthy by the Adviser under guidelines approved by the Trustees. The
Fund will not invest in repurchase agreements maturing in more than seven days
if any such investment, together with any other illiquid securities held by the
Fund, would exceed the Fund's limitation on illiquid securities described below.
The Fund does not bear the risk of a decline in value of the underlying security
unless the seller defaults under it's repurchase obligation. In the event of the
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying

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securities and losses including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible lack of access to income on the underlying security during
this period; and (c) expenses of enforcing its rights.

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

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

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
either settle a Forward Commitment by taking delivery of the securities or may
either resell or repurchase a Forward Commitment on or before the settlement
date in which event the Fund may reinvest the proceeds in another Forward
Commitment.

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 subject to the Forward Commitment and the
securities 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 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

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against a decline in value of a security 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 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 foregoes or reduces the potential for both gain and loss in the security
which is being hedged by the Forward Commitment sale.

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. Forward Commitments are
not traded on an exchange and thus may be less liquid than exchange traded
contracts.

INTEREST RATE TRANSACTIONS

The Fund may enter into interest rate swaps and may purchase or sell
interest rate caps, floors and collars. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio. The Fund may also enter into these transactions to
protect against any increase in the price of securities the Fund anticipates
purchasing at a later date. The Fund does not intend to use these transactions
as speculative investments and will not enter into interest rate swaps or sell
interest rate caps or floors where it does not own or have the right to acquire
the underlying securities or other instruments providing the income stream the
Fund may be obligated to pay. Interest rate swaps involve the exchange by the
Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed-rate payments.
The purchase of an interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually-based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor. An interest
rate collar combines the elements of purchasing a cap and selling a floor. The
collar protects against an interest rate rise above the maximum amount but
foregoes the benefit of an interest rate decline below the minimum amount.
Interest rate swaps, caps, floors and collars will be treated as illiquid
securities and will, therefore, be subject to the Fund's investment restriction
limiting investment in illiquid securities.

The Fund may enter into interest rate swaps, caps, floors and collars on
either an asset-based or liability-based basis, and will usually enter into
interest rate swaps on a net basis, i.e., the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments. The net amount of the excess, if any, of the Fund's
obligations over its entitlements with respect to each interest rate swap will
be accrued on a daily basis and an amount of cash or liquid securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's custodian. If the Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap.

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Interest rate transactions do not constitute senior securities under the 1940
Act when the Fund segregates assets to cover the obligations under the
transactions. The Fund will enter into interest rate swap, cap or floor
transactions only with counterparties approved by the Trustees. The Adviser will
monitor the creditworthiness of counterparties to its interest rate swap, cap,
floor and collar transactions on an ongoing basis. If there is a default by the
other party to such a transaction, the Fund will have contractual remedies
pursuant to the agreements related to the transaction. To the extent the Fund
sells (i.e., writes) caps, floors and collars, it will maintain in a segregated
account cash or liquid securities having an aggregate net asset value at least
equal to the full amount, accrued on a daily basis, of the Fund's net
obligations with respect to the caps, floors or collars. The use of interest
rate swaps is a highly specialized activity which involves investment techniques
and risks different from those associated with ordinary portfolio securities
transactions. If the Adviser is incorrect in its forecasts of the market values,
interest rates and other applicable factors, the investment performance of the
Fund would diminish compared with what it would have been if these investment
techniques were not used. The use of interest rate swaps, caps, collars and
floors may also have the effect of shifting the recognition of income between
current and future periods.

These transactions do not involve the delivery of securities or other
underlying assets or principal. Accordingly, the risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that the
Fund is contractually obligated to make. If the other party to an interest rate
swap defaults, the Fund's risk of loss consists of the net amount of interest
payments that the Fund contractually is entitled to receive.

PORTFOLIO TURNOVER

The Fund may experience a high rate of portfolio turnover. The Fund's
portfolio turnover rate is calculated by dividing the lesser of purchases or
sales of portfolio securities for a fiscal year by the average monthly value of
the Fund's portfolio securities during such fiscal year. The turnover rate may
vary greatly from year to year as well as within a year.

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of longer than seven days and generally includes
securities that are restricted from sale to the public without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The sale of such
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of illiquid
securities trading on national securities exchanges or in the over-the-counter
markets. Restricted securities are often purchased at a discount from the market
price of unrestricted securities of the same issuer reflecting the fact that
such securities may not be readily marketable without some time delay.
Investments in securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Adviser in
accordance with procedures approved by the Fund's Trustees. Ordinarily, the Fund
would invest in restricted securities only when it receives the issuer's
commitment to register the securities without expense to the Fund. However,
registration and underwriting expenses (which typically may range from 7% to 15%
of the gross proceeds of the securities sold) may be paid by the Fund.
Restricted securities which can

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<PAGE> 41

be offered and sold to qualified institutional buyers under Rule 144A under the
1933 Act ("144A Securities") and are determined to be liquid under guidelines
adopted by and subject to the supervision of the Fund's Board of Trustees are
not subject to the limitation on illiquid securities. Such 144A Securities are
subject to monitoring and may become illiquid to the extent qualified
institutional buyers become, for a time, uninterested in purchasing such
securities. Factors used to determine whether 144A Securities are liquid
include, among other things, a security's trading history, the availability of
reliable pricing information, the number of dealers making quotes or making a
market in such security and the number of potential purchasers in the market for
such security. For purposes hereof, investments by the Fund in securities of
other investment companies will not be considered investments in restricted
securities to the extent permitted by (i) the 1940 Act, as amended from time to
time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act as amended from time to time.

OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS

The Fund may, but is not required to, use various investment strategies as
described below to earn income, facilitate portfolio management, and mitigate
risks. Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur. Although the Fund's
Adviser seeks to use such transactions to further the Fund's investment
objective, no assurance can be given that the use of these transactions will
achieve this result.

CALL AND PUT OPTIONS

Call and put options on various U.S. Treasury notes and U.S. Treasury bonds
are listed and traded on exchanges, and are written in over-the-counter
transactions. Call and put options on mortgage-related securities are currently
written or purchased only in over-the-counter transactions.

SELLING CALL AND PUT OPTIONS

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

Selling Options. The purchaser of a call option pays a premium to the
seller (i.e., the writer) for the right to buy the underlying security from the
seller at a specified price during a certain period. The Fund sells 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 securities subject to the call option. 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

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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 seller (i.e., the
writer) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would sell 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 seller 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 sold by the Fund. The Fund would realize a
gain (loss) if the premium plus commission paid in the closing purchase
transaction is lesser (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 sell 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 seller 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 seller, but would provide an asset of
equal value to its obligation under the option sold. 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 sold, it will be required to maintain the
securities subject to the call or the collateral securing the option 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.

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

PURCHASING CALL AND PUT OPTIONS

The Fund could purchase call options to protect against anticipated
increases in the prices of securities it wishes to acquire. 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

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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 against anticipated declines in the
market value of either specific portfolio securities or of the Fund's assets
generally.

The Fund will not purchase call or put options on securities if as a
result, more than 10% of its net assets would be invested in premiums on such
options. The Fund may purchase either listed or over-the-counter options.

OVER THE COUNTER OPTIONS

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 of other parties ("Counterparties") through direct
bilateral agreement with the Counterparty. The Fund will sell only OTC Options
(other than OTC 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 illiquid securities.

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 special considerations 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

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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. Should this occur, the Fund will purchase
additional mortgage-related securities from the same pool (if obtainable) or
replacement mortgage-related securities in the cash market in order to maintain
its cover. A mortgage-related security held by the Fund to cover an option
position in any but the nearest expiration month may cease to represent cover
for the option in the event of a decline in the coupon rate at which new pools
are originated under the FHA/VA loan ceiling in effect at any given time. If
this should occur, the Fund will no longer be covered, and the Fund will either
enter into a closing purchase transaction or replace such mortgage-related
security with a mortgage-related security which represents cover. When the Fund
closes its position or replaces such mortgage-related security, it may realize
an unanticipated loss and incur transaction costs.

INTEREST RATE 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."

An interest rate futures contract is an agreement pursuant to which a party
agrees to take or make delivery of a specified debt security (such as U.S.
Treasury bonds, U.S. Treasury notes, U.S. Treasury bills and GNMA Certificates)
or to take or make delivery of cash based upon the changes in value of a basket
or index of securities at a specified future time and at a specified price. The
Fund may also invest in foreign security or index futures traded outside the
United States which involve additional risks including fluctuations in foreign
exchange rates, foreign currency exchange controls, political and economic
instability, differences in financial reporting and securities regulation and
trading, and foreign taxation issues. Interest rate futures contracts also
include cash settlement contracts based upon a specified interest rate such as
the London interbank offering rate for dollar deposits or LIBOR.

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 of 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 not
more than 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 purchases a futures contract and the price of
the underlying security or index rises, that position increases in value, and
the Fund will

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receive 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 would make a variation margin payment to the broker.

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

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

Special Risks Associated with Futures Transactions. There are several
risks connected with the use of futures contracts. These include the risk of
imperfect correlation between movements in the price of the futures contracts
and of the underlying securities or index; the risk of market distortion; the
risk of illiquidity; 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 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 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 underlying the futures contract.
Conversely, the Fund could buy or sell futures contracts in a lesser dollar
amount than the dollar amount of securities being hedged if the historical
volatility of the securities being hedged is less than the historical volatility
of the securities underlying the futures contracts. 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 underlying the futures
contract due to certain market

B-16
<PAGE> 46

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 underlying the futures contract. Second, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the 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 futures contracts and 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 of variation margin. Since
the securities being hedged would not be sold until the related futures contract
is sold, an increase, if any, in the price of the securities may to some extent
offset losses on the related futures contract. In such event, the Fund would
lose the benefit of the appreciation in value of the securities.

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

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
futures 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, 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.

B-17
<PAGE> 47

The Fund will not enter into futures contracts or option transactions
(except for closing transactions) other than for bona fide hedging purposes if
immediately thereafter, the sum of its initial margin and premiums on open
futures contracts and options exceeds 5% of the fair market value of the Fund's
assets; however, in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. 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.

OPTIONS ON FUTURES CONTRACTS

The Fund could also purchase and write options on futures contracts. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (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. 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. 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 price of the underlying security, when the use of an
option on a future would result in a loss to the Fund when the use of a future
would not.

ADDITIONAL RISKS OF OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Each of the exchanges 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.

B-18
<PAGE> 48

In the event of the bankruptcy of a broker through which the Fund engages
in transactions in listed options, futures or related options, the Fund could
experience delays and/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.

INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment restrictions
which may not be changed without shareholder approval by the vote of a majority
of its outstanding voting securities, which is defined by the 1940 Act as the
lesser of (i) 67% or more of the voting securities present at 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 Fund's
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities. With respect to the limitations on illiquid securities and
borrowings, the percentage limitations apply at the time of purchase and on an
ongoing basis. The Fund shall not:

1. 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 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".

2. Borrow in excess of 5% of the market or other fair value of its total
assets; or pledge its assets to an extent greater than 5% of the market
or other fair value of its total assets. Any such borrowings shall be
from banks and shall be undertaken only as a temporary measure for
extraordinary or emergency purposes. Margin deposits or payments in
connection with the writing of options, or in connection with the
purchase or sale of futures contracts and related options, are not
deemed to be a pledge or other encumbrance.

3. Make any investment in real estate except that the Fund may purchase or
sell securities which are secured by real estate.

4. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of
issuers all of which conduct their principal business activities in the
same industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.

5. Invest more than 5% of its assets in the securities of any one issuer
(except the U.S. government, its agencies and instrumentalities) or
purchase more than 10% of the outstanding voting securities of any one
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

B-19
<PAGE> 49

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. Purchase or sell commodities or commodity contracts except that the
Fund may enter into transactions in options, futures contracts or
related options including forward commitments.

7. Underwrite securities of other companies, except insofar as the Fund
might be deemed to be an underwriter for purposes of the 1933 Act in
the resale of any securities owned by the Fund.

8. 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 10% 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 purchase futures contracts or related options if more
than 30% of the Fund's total assets would be so invested.

9. Make loans of money or securities, except (a) by investment in
repurchase agreements in accordance with applicable requirements set
forth in the Fund's Prospectus or herein or (b) by lending its
portfolio securities in amounts not to exceed 33 1/3% of the Fund's
total assets, provided that such loans are secured by cash collateral
that is at least equal to the market value.

The Fund has adopted additional investment restrictions, which may be
changed by the Trustees without a vote of shareholders, as follows:

1. Make short sales of securities, unless at the time of the sale the Fund
owns an equal amount of such securities. Notwithstanding the foregoing,
the Fund may make short sales by entering into forward commitments for
hedging or cross-hedging purposes and engage in transactions in
options, futures contracts and related options.

2. Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities. Transactions in forward commitments, options,
interest rate futures contracts and options on such contracts,
including deposits or payments by the Fund of initial or maintenance
margin in connection with any such transaction, are not considered to
be purchases of securities on margin.

3. Invest in securities of any company if any officer or director of the
Fund or of the Adviser owns more than 1/2 of 1% of the outstanding
securities of such company, and such officers and directors own in the
aggregate more than 5% of the outstanding securities of such issuer.

B-20
<PAGE> 50

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

5. Invest in securities of other investment companies except as part of a
merger, consolidation or other acquisition and except that the Fund may
purchase securities of other investment companies to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act.

6. Purchase an illiquid security if, as a result of such purchase, more
than 15% of the Fund's net assets would be invested in such securities.
Illiquid securities include securities subject to legal or contractual
restrictions on resale, which include repurchase agreements which have a
maturity of longer than seven days.

7. Invest in warrants or rights except where acquired in units or attached
to other securities. This restriction does not apply to options, futures
contracts or related options.

8. Purchase securities of unseasoned issuers, including their predecessors
or sponsors, which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable if by
reason thereof the value of its aggregate investment in such classes of
securities will exceed 5% of its total assets, 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.

TRUSTEES AND OFFICERS

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

B-21
<PAGE> 51

TRUSTEES

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of
1632 Morning Mountain Road the funds in the Fund Complex. Co-founder,
Raleigh, NC 27614 and prior to August 1996, Chairman, Chief
Date of Birth: 07/14/32 Executive Officer and President, MDT
Age: 67 Corporation (now known as Getinge/Castle,
Inc., a subsidiary of Getinge Industrier AB),
a company which develops, manufactures,
markets and services medical and scientific
equipment.

Jerry D. Choate........................... Director of Amgen Inc., a biotechnological
Barrington Place, Building 4 company. Trustee/Director of each of the
18 E. Dundee Road, Suite 101 funds in the Fund Complex. Prior to January
Barrington, IL 60010 1999, Chairman and Chief Executive Officer of
Date of Birth: 09/16/38 The Allstate Corporation ("Allstate") and
Age: 61 Allstate Insurance Company. Prior to January
1995, President and Chief Executive Officer
of Allstate. Prior to August 1994, various
management positions at Allstate.

Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
Age: 51 President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of Chicago
Hospitals Board, Vice Chair of the Board of
The YMCA of Metropolitan Chicago and a member
of the Women's Board of the University of
Chicago. Prior to 1996, Trustee of The
International House Board.

R. Craig Kennedy.......................... President and Director, German Marshall Fund
11 DuPont Circle, N.W. of the United States, an independent U.S.
Washington, D.C. 20016 foundation created to deepen understanding,
Date of Birth: 02/29/52 promote collaboration and stimulate exchanges
Age: 47 of practical experience between Americans and
Europeans. Trustee/Director of each of the
funds in the Fund Complex. Formerly, advisor
to the Dennis Trading Group Inc., a managed
futures and option company that invests money
for individuals and institutions. Prior to
1992, President and Chief Executive Officer,
Director and Member of the Investment
Committee of the Joyce Foundation, a private
foundation.
</TABLE>

B-22
<PAGE> 52

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Mitchell M. Merin*........................ President and Chief Operating Officer of
Two World Trade Center Asset Management of Morgan Stanley Dean
66th Floor Witter since December 1998. President and
New York, NY 10048 Director since April 1997 and Chief Executive
Date of Birth: 08/13/53 Officer since June 1998 of Morgan Stanley
Age: 46 Dean Witter Advisors Inc. and Morgan Stanley
Dean Witter Services Company Inc. Chairman,
Chief Executive Officer and Director of
Morgan Stanley Dean Witter Distributors Inc.
since June 1998. Chairman and Chief Executive
Officer since June 1998, and Director since
January 1998, of Morgan Stanley Dean Witter
Trust FSB. Director of various Morgan Stanley
Dean Witter subsidiaries. President of the
Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series since May 1999.
Trustee/Director of each of the funds in the
Fund Complex, and Vice President of other
investment companies advised by the Advisers
and their affiliates. Previously Chief
Strategic Officer of Morgan Stanley Dean
Witter Advisors Inc. and Morgan Stanley Dean
Witter Services Company Inc. and Executive
Vice President of Morgan Stanley Dean Witter
Distributors Inc. April 1997-June 1998, Vice
President of the Morgan Stanley Dean Witter
Funds and Discover Brokerage Index Series May
1997-April 1999, and Executive Vice President
of Dean Witter, Discover & Co.

Jack E. Nelson............................ President and owner, Nelson Investment
423 Country Club Drive Planning Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser in
Date of Birth: 02/13/36 the State of Florida. President and owner,
Age: 63 Nelson Ivest Brokerage Services Inc., a
member of the National Association of
Securities Dealers, Inc. and Securities
Investors Protection Corp. Trustee/Director
of each of the funds in the Fund Complex.
</TABLE>

B-23
<PAGE> 53

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Richard F. Powers, III*................... Chairman, President and Chief Executive
1 Parkview Plaza Officer of Van Kampen Investments. Chairman,
P.O. Box 5555 Director and Chief Executive Officer of the
Oakbrook Terrace, IL 60181-5555 Advisers, the Distributor, Van Kampen
Date of Birth: 02/02/46 Advisors Inc. and Van Kampen Management Inc.
Age: 53 Director and officer of certain other
subsidiaries of Van Kampen Investments.
Trustee/Director and President of each of the
funds in the Fund Complex. Trustee, President
and Chairman of the Board of other investment
companies advised by the Advisers and their
affiliates, and Chief Executive Officer of
Van Kampen Exchange Fund. Prior to May 1998,
Executive Vice President and Director of
Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and
Dean Witter Realty. Prior to 1996, Director
of Dean Witter Reynolds Inc.

Phillip B. Rooney......................... Vice Chairman (since April 1997) and Director
One ServiceMaster Way (since 1994) of The ServiceMaster Company, a
Downers Grove, IL 60515 business and consumer services company.
Date of Birth: 07/08/44 Director of Illinois Tool Works, Inc., a
Age: 55 manufacturing company and the Urban Shopping
Centers Inc., a retail mall management
company. Trustee, University of Notre Dame.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of
Stone Smurfit Container Corp., a paper
manufacturing company. From May 1996 through
February 1997 he was President, Chief
Executive Officer and Chief Operating Officer
of Waste Management, Inc., an environmental
services company, and from November 1984
through May 1996 he was President and Chief
Operating Officer of Waste Management, Inc.

Fernando Sisto............................ Professor Emeritus. Prior to August 1996, a
155 Hickory Lane George M. Bond Chaired Professor with Stevens
Closter, NJ 07624 Institute of Technology, and prior to 1995,
Date of Birth: 08/02/24 Dean of the Graduate School, Stevens
Age: 75 Institute of Technology. Director, Dynalysis
of Princeton, a firm engaged in engineering
research. Trustee/Director of each of the
funds in the Fund Complex.

Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other investment companies advised by the
Age: 60 Advisers or Van Kampen Management Inc.
Trustee/Director of each of the funds in the
Fund Complex, and Trustee/Managing General
Partner of other investment companies advised
by the Advisers or Van Kampen Management Inc.
</TABLE>

B-24
<PAGE> 54

<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Suzanne H. Woolsey........................ Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution, since 1993. Director of
Date of Birth: 12/27/41 Neurogen Corporation, a pharmaceutical
Age: 58 company, since January 1998. Director of the
German Marshall Fund of the United States,
Trustee of Colorado College, and Vice Chair
of the Board of the Council for Excellence in
Government. Trustee/Director of each of the
funds in the Fund Complex. Prior to 1993,
Executive Director of the Commission on
Behavioral and Social Sciences and Education
at the National Academy of Sciences/National
Research Council. From 1980 through 1989,
Partner of Coopers & Lybrand.

Paul G. Yovovich.......................... Private investor. Director of 3Com
Sears Tower Corporation, which provides information
233 South Wacker Drive access products and network system solutions,
Suite 9700 COMARCO, Inc., a wireless communications
Chicago, IL 60606 products company and APAC Customer Services,
Date of Birth: 10/29/53 Inc., a provider of outsourced customer
Age: 46 contact services. Trustee/Director of each of
the funds in the Fund Complex. Prior to May
1996, President of Advance Ross Corporation,
an international transaction services and
pollution control equipment manufacturing
company.
</TABLE>

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

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

B-25
<PAGE> 55

OFFICERS

Messrs. McDonnell, Smith, Santo, Hegel, Sullivan, and Wood are located at 1
Parkview Plaza, PO Box 5555, Oakbrook Terrace, IL 60181-5555. The Fund's other
officers are located at 2800 Post Oak Blvd., Houston, TX 77056.

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Dennis J. McDonnell.................. Currently Executive Vice President and Director
Date of Birth: 05/20/42 of Van Kampen Investments, and employed by Van
Executive Vice President and Chief Kampen Investments since March 1983. President,
Investment Officer Chief Operating Officer and Director of the
Age: 57 Advisers, Van Kampen Advisors Inc., and Van
Kampen Management Inc. Executive Vice President
and Chief Investment Officer of each of the funds
in the Fund Complex, since 1998. Chief Investment
Officer, Executive Vice President and
Trustee/Managing General Partner of other
investment companies advised by the Advisers or
Van Kampen Management Inc. ("Management Inc."),
since the inception of funds advised by Advisory
Corp. and Management Inc. and since 1998 for
funds advised by Asset Management. Director of
Global Decisions Group LLC, a financial research
firm, and its affiliates MCM Asia Pacific and MCM
Europe. Prior to 1998, President, Chief Operating
Officer and a Director of the Advisers, Van
Kampen American Capital Management, Inc.;
Director of Van Kampen American Capital, Inc.;
and President, Chief Executive Officer and
Trustee of each of the funds advised by Advisory
Corp. Prior to July 1998, Director and Executive
Vice President of VK/AC Holding, Inc.
(predecessor of Van Kampen Investments). Prior to
April 1998, President and Director of Van Kampen
Merritt Equity Advisors Corp. Prior to April
1997, Director of Van Kampen Merritt Equity
Holdings Corp. Prior to September 1996, Chief
Executive Officer and Director of MCM Group, Inc.
and McCarthy, Crisanti & Maffei, Inc., a
financial research firm, and Chairman of MCM Asia
Pacific Company, Limited and MCM (Europe)
Limited. Prior to December 1991, Senior Vice
President of Van Kampen Merritt Inc.
</TABLE>

B-26
<PAGE> 56

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Investments,
Vice President and Secretary the Advisers, Van Kampen Advisors Inc., Van
Age: 43 Kampen Management Inc., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary/Vice President,
Principal Legal Officer and Secretary of other
investment companies advised by the Advisers or
their affiliates. Vice President and Secretary of
each of the funds in the Fund Complex. Prior to
January 1999, Vice President and Associate
General Counsel to New York Life Insurance
Company ("New York Life"), and prior to March
1997, Associate General Counsel of New York Life.
Prior to December 1993, Assistant General Counsel
of The Dreyfus Corporation. Prior to August 1991,
Senior Associate, Willkie Farr & Gallagher. Prior
to January 1989, Staff Attorney at the Securities
and Exchange Commission, Division of Investment
Management, Office of Chief Counsel.

Michael H. Santo..................... Executive Vice President, Chief Administrative
Date of Birth: 10/22/55 Officer and Director of Van Kampen Investments,
Vice President the Advisers, the Distributor, Van Kampen
Age: 44 Advisors Inc., Van Kampen Management Inc. and Van
Kampen Investor Services Inc., and serves as a
Director or Officer of certain other subsidiaries
of Van Kampen Investments. Vice President of each
of the funds in the Fund Complex and certain
other investment companies advised by the
Advisers and their affiliates. Prior to 1998,
Senior Vice President and Senior Planning Officer
for Individual Asset Management of Morgan Stanley
Dean Witter and its predecessor since 1994. From
1990-1994, First Vice President and Assistant
Controller in Dean Witter's Controller's
Department.

Peter W. Hegel....................... Executive Vice President of the Advisers, Van
Date of Birth: 06/25/56 Kampen Management Inc. and Van Kampen Advisors
Vice President Inc. Vice President of each of the funds in the
Age: 43 Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates. Prior to September 1996, Director of
McCarthy, Crisanti & Maffei, Inc, a financial
research company.
</TABLE>

B-27
<PAGE> 57

<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Stephen L. Boyd...................... Vice President and Chief Investment Officer for
Date of Birth: 11/16/40 Equity Investments of the Advisers. Vice
Vice President President of each of the funds in the Fund
Age: 59 Complex and certain other investment companies
advised by the Advisers or their affiliates.
Prior to October 1998, Vice President and Senior
Portfolio Manager with AIM Capital Management,
Inc. Prior to February 1998, Senior Vice
President of Van Kampen American Capital Asset
Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American
Capital Management, Inc.

John L. Sullivan..................... Senior Vice President of Van Kampen Investments
Date of Birth: 08/20/55 and the Advisers. Vice President, Chief Financial
Vice President, Chief Financial Officer and Treasurer of each of the funds in the
Officer and Treasurer Fund Complex and certain other investment
Age: 44 companies advised by the Advisers or their
affiliates.

Curtis W. Morell..................... Senior Vice President of the Advisers, Vice
Date of Birth: 08/04/46 President and Chief Accounting Officer of each of
Vice President and Chief Accounting the funds in the Fund Complex and certain other
Officer investment companies advised by the Advisers or
Age: 53 their affiliates.

Edward C. Wood III................... Senior Vice President of the Advisers, Van Kampen
Date of Birth: 01/11/56 Investments and Van Kampen Management Inc. Senior
Vice President Vice President and Chief Operating Officer of the
Age: 44 Distributor. Vice President of each of the funds
in the Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates.

Tanya M. Loden....................... Vice President of Van Kampen Investments and the
Date of Birth: 11/19/59 Advisers. Controller of each of the funds in the
Controller Fund Complex and other investment companies
Age: 40 advised by the Advisers or their affiliates.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 65 operating funds in the Fund Complex. Each trustee/director who is not an
affiliated person of Van Kampen Investments, the Advisers or the Distributor
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees/directors to defer receipt of their compensation
and earn a return on such deferred amounts. Deferring compensation has the
economic effect as if the Non-Affiliated Trustee reinvested his or her
compensation into the funds. Each fund in the Fund Complex provides a retirement
plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensa-

B-28
<PAGE> 58

tion after retirement, provided that certain eligibility requirements are met as
more fully described below.

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

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

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

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<PAGE> 59

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

COMPENSATION TABLE

<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Aggregate Estimated
Pension or Maximum Total
Aggregate Retirement Annual Compensation
Year Compensation Benefits Benefits from before
Appointment before Accrued as the Fund Deferral from
or Elected to Deferral from Part of Upon Fund
Name(1) the Board the Fund(2) Expenses(3) Retirement(4) Complex(5)
------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan 1991 $1,597 $40,303 $60,000 $126,000
Jerry D. Choate(1) 1999 687 0 60,000 88,700
Linda Hutton Heagy 1995 1,597 5,045 60,000 126,000
R. Craig Kennedy 1995 1,597 3,571 60,000 125,600
Jack E. Nelson 1995 1,597 21,664 60,000 126,000
Phillip B. Rooney 1997 1,397 7,787 60,000 113,400
Fernando Sisto 1978 1,597 72,060 60,000 126,000
Wayne W. Whalen 1995 1,597 15,189 60,000 126,000
Suzanne H. Woolsey(1) 1999 687 0 60,000 88,700
Paul G. Yovovich(1) 1998 1,397 2,845 60,000 126,000
</TABLE>

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

(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Yovovich became a member of the Board of Trustees for the Fund
and other funds in the Fund Complex on October 22, 1998 and therefore does
not have a full fiscal year of information to report. Mr. Choate and Ms.
Woolsey became members of the Board of Trustees for the Fund and other funds
in the Fund Complex on May 26, 1999 and therefore do not have a full year of
information to report.

(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral with respect to the Fund's fiscal year ended September 30, 1999.
The following trustees deferred compensation from the Fund during the fiscal
year ended September 30, 1999: Mr. Branagan, $1,597; Mr. Choate, $441; Ms.
Heagy, $1,597; Mr. Kennedy, $799; Mr. Nelson, $1,597; Mr. Rooney, $1,397;
Mr. Sisto, $799; Mr. Whalen, $1,597; and Mr. Yovovich, $1,138. Amounts
deferred are retained by the Fund and earn a rate of return determined by
reference to either the return on the common shares of the Fund or other
funds in the Fund Complex as selected by the respective Non-Affiliated
Trustee, with the same economic effect as if such Non-Affiliated Trustee had
invested in one or more funds in the Fund Complex. To the extent permitted
by the 1940 Act, each fund may invest in securities of those funds selected
by the Non-Affiliated Trustees in order to match the deferred compensation
obligation. The cumulative deferred compensation (including interest)
accrued with respect to each trustee, including former trustees, from the
Fund as of September 30, 1999 is as follows: Mr. Branagan, $5,271; Mr.
Caruso, $1,252; Mr. Choate, $445; Mr. Gaughan, $130; Ms. Heagy, $5,899; Mr.
Kennedy, $4,043; Mr. Miller, $1,930; Mr. Nelson, $9,148; Mr. Rees, $279; Mr.
Robinson, $3,954; Mr. Rooney, $3,555;

B-30
<PAGE> 60

Mr. Sisto, $7,977; Mr. Whalen, $7,281; and Mr. Yovovich, $1,179. The deferred
compensation plan is described above the Compensation Table.

(3) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating investment companies in the Fund Complex
for each of the trustees for the funds' respective fiscal years ended in
1999. The retirement plan is described above the Compensation Table.

(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
retirement plan is described above the Compensation Table.

(5) The amounts shown in this column represent the aggregate compensation paid
by all of the funds in the Fund Complex as of December 31, 1999 before
deferral by the trustees under the deferred compensation plan. Because the
funds in the Fund Complex have different fiscal year ends, the amounts shown
in this column are presented on a calendar year basis. Certain trustees
deferred all or a portion of their aggregate compensation from the Fund
Complex during the calendar year ended December 31, 1999. The deferred
compensation earns a rate of return determined by reference to the return on
the shares of the funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, the Fund may invest in
securities of those investment companies selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The
Advisers and their affiliates also serve as investment adviser for other
investment companies; however, with the exception of Mr. Whalen, the
Non-Affiliated Trustees were not trustees of such investment companies.
Combining the Fund Complex with other investment companies advised by the
Advisers and their affiliates, Mr. Whalen received Total Compensation of
$279,250 during the calendar year ended December 31, 1999.

As of January 4, 2000, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

INVESTMENT ADVISORY AGREEMENT

The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. The Adviser obtains
and evaluates economic, statistical and financial information to formulate
strategy and implement the Fund's investment objectives. The Adviser also
furnishes offices, necessary facilities and equipment, provides administrative
services to the Fund, renders periodic reports to the Board of Trustees and
permits its officers and employees to serve without compensation as trustees of
the Trust or officers of the Fund if elected to such positions. The Fund,
however, bears the cost of its day-to-day operations, including the compensation
of trustees of the Trust (other than those who are affiliated persons of the
Adviser, Distributor or Van Kampen Investments), the charges and expenses of
legal counsel and independent accountants, distribution fees, service fees,
custodian fees, the cost of providing reports to

B-31
<PAGE> 61

shareholders, and all other ordinary business expenses not specifically assumed
by the Adviser. The Advisory Agreement also provides that the Adviser shall not
be liable to the Fund for any actions or omissions if it acted without willful
misfeasance, bad faith, negligence or reckless disregard of its obligations.

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 Van Kampen
Investments Inc. in connection with the purchase and sale of portfolio
investments less any direct expenses incurred by such subsidiary of Van Kampen
Investments Inc., in connection with obtaining such commissions, fees, brokerage
or similar payments. The Adviser agrees to use its best efforts to recapture
tender solicitation fees and exchange offer fees for the Fund's benefit and to
advise the Trustees of the Fund of any other commissions, fees, brokerage or
similar payments which may be possible for the Adviser or any other direct or
indirect majority owned subsidiary of Van Kampen Investments 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 Fund for any fiscal year exceed the most restrictive
expense limitation [applicable in the states] where the Fund's shares are
qualified for sale, the compensation due the Adviser will be reduced by the
amount of such excess and that, if a reduction in and refund of the advisory fee
is insufficient, the Adviser will pay the Fund monthly an amount sufficient to
make up the deficiency, subject to readjustment during the year. Ordinary
business expenses include the investment advisory fee and other operating costs
paid by the Fund 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 the 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 60 days' written notice.

During the fiscal years ended September 30, 1999, 1998 and 1997, the
Adviser received $823,200, $969,900 and $1,154,038, respectively, in advisory
fees from the Fund.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
supplementary to those provided by the custodian. Such services are expected to
enable the Fund to more closely monitor and maintain its accounts and records.
The Fund pays all costs and expenses related to such services, including all
salary and related benefits of accounting personnel, as well as the overhead and
expenses of office space and the equipment necessary to render such services.
The Fund shares together with the other Van Kampen funds in the cost of
providing such services with 25% of such costs shared proportionately

B-32
<PAGE> 62

based on the respective number of classes of securities issued per fund and the
remaining 75% of such costs based proportionally on their respective net assets
per fund.

During the fiscal years ended August 31, 1999, 1998 and 1997, Advisory
Corp. received approximately $71,100, $57,900 and $43,303, respectively, in
accounting services fees from the Fund.

DISTRIBUTION AND SERVICE

The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized dealers on a continuous basis. The Distributor's obligation is an
agency or "best efforts" arrangement under which the Distributor is required to
take and pay for only such shares of the Fund as may be sold to the public. The
Distributor is not obligated to sell any stated number of shares. The
Distributor bears the cost of printing (but not typesetting) prospectuses used
in connection with this offering and certain other costs including the cost of
supplemental sales literature and advertising. The Distribution and Service
Agreement is renewable from year to year if approved (a) (i) by the Fund's
Trustees or (ii) by a vote of a majority of the Fund's outstanding voting
securities and (b) by the affirmative vote of a majority of Trustees who are not
parties to the Distribution and Service Agreement or interested persons of any
party, by votes cast in person at a meeting called for such purpose. The
Distribution and Service Agreement provides that it will terminate if assigned,
and that it may be terminated without penalty by either party on 90 days'
written notice. Total underwriting commissions on the sale of shares of the Fund
for the last three fiscal periods are shown in the chart below.

<TABLE>
<CAPTION>
Total Amounts
Underwriting Retained by
Commissions Distributor
------------ -----------
<S> <C> <C>
Fiscal Year Ended September 30, 1999.................... $95,385 $7,713
Fiscal Year Ended September 30, 1998.................... $80,322 $3,741
Fiscal Year Ended September 30, 1997.................... $37,964 $4,329
</TABLE>

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

CLASS A SHARES SALES CHARGE TABLE

<TABLE>
<CAPTION>
Total Sales Charge
------------------------- Reallowed
As % of As % of Net To Dealers
Size of Offering Amount As a % of
Investment Price Invested Offering Price
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $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 the Fund may impose a contingent deferred sales
charge of 1.00% on certain redemptions made within one year of the purchase. A
commission or transaction fee will

B-33
<PAGE> 63

be paid by the Distributor at the time of purchase directly out of the
Distributor's assets (and not out of the Fund's assets) to authorized dealers
who initiate and are responsible for purchases of $1 million or more computed
on a percentage of the dollar value of such shares sold as follows: 1.00% on
sales to $2 million, plus 0.80% on the next $1 million and 0.50% on the excess
over $3 million.

With respect to sales of Class B Shares and Class C Shares of the Fund, a
commission or transaction fee generally will be paid by the Distributor at the
time of purchase directly out of the Distributor's assets (and not out of the
Fund's assets) to authorized dealers who initiate and are responsible for such
purchases computed based on a percentage of the dollar value of such shares sold
of 4.00% on Class B Shares and 1.00% on Class C Shares.

Proceeds from any contingent deferred sales charge and any distribution
fees on Class B Shares and Class C Shares of the Fund are paid to the
Distributor and are used by the Distributor to defray its distribution related
expenses in connection with the sale of the Fund's shares, such as the payment
to authorized dealers for selling such shares. With respect to Class C Shares,
the authorized dealers generally are paid the ongoing commission and transaction
fees of up to 0.75% of the average daily net assets of the Fund's Class C Shares
annually commencing in the second year after purchase.

In addition to reallowances or commissions described above, the Distributor
may from time to time implement programs under which an authorized dealer's
sales force may be eligible to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any authorized dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor, or participates in sales programs sponsored by the Distributor, an
amount not exceeding the total applicable sales charges on the sales generated
by the authorized dealer at the public offering price during such programs.
Other programs provide, among other things and subject to certain conditions,
for certain favorable distribution arrangements for shares of the Fund. Also,
the Distributor in its discretion may from time to time, pursuant to objective
criteria established by the Distributor, pay fees to, and sponsor business
seminars for, qualifying authorized dealers for certain services or activities
which are primarily intended to result in sales of shares of the Fund or other
Van Kampen Funds. Fees may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In some instances
additional compensation or promotional incentives may be offered to brokers,
dealers or financial intermediaries that have sold or may sell significant
amounts of shares during specified periods of time. The Distributor may provide
additional compensation to Edward D. Jones & Co. or an affiliate thereof based
on a combination of its sales of shares and increases in assets under
management. The Distributor is sponsoring a sales incentive program for A.G.
Edwards & Sons, Inc. ("A.G. Edwards"). The Distributor will reallow its portion
of the Fund's sales charge to A.G. Edwards on sales of Class A Shares of the
Fund made between January 18, 2000 and April 17, 2000 in connection with the
"rollover" of assets into an Individual Retirement Account ("IRA"), the transfer
of assets into an IRA and contributions to an IRA. 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

B-34
<PAGE> 64

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.

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

Certain financial intermediaries may be prohibited under law from providing
certain underwriting or distribution services. If a financial intermediary 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 financial intermediary would result in any material adverse consequences
to the Fund.

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

The Plans generally provide for the Fund to reimburse the lesser of (i) the
distribution and service fees at the rates specified in the prospectus or (ii)
the amount of the Distributor's actual expenses incurred less any deferred sales
charges it received. For Class A Shares, to the extent the Distributor is not
fully reimbursed in a given year, there is no carryover of such unreimbursed
amounts to succeeding years. For each of the

B-35
<PAGE> 65

Class B Shares and Class C Shares, to the extent the Distributor is not fully
reimbursed in a given year, any unreimbursed expenses for such class will be
carried forward and paid by the Fund in future years so long as such Plans are
in effect. Except as mandated by applicable law, the Fund does not impose any
limit with respect to the number of years into the future that such unreimbursed
expenses may be carried forward (on a Fund level basis). Because such expenses
are accounted 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 September 30, 1999,
there were $17,557,690.37 and $1,879,904.03 of unreimbursed distribution-related
expenses with respect to Class B Shares and Class C Shares, respectively,
representing 43.41% and 18.62% of the Fund's net assets attributable to Class B
Shares and Class C Shares, respectively. If the Plan were terminated or not
continued, the Fund would not be contractually obligated to pay the Distributor
for any expenses not previously reimbursed by the Fund or recovered through
contingent deferred sales charges.

For the fiscal year ended September 30, 1999, the Fund's aggregate expenses
paid under the Plans for Class A Shares were $113,337 or 0.25% of the Class A
Shares' average daily net assets. Such expenses were paid to reimburse the
Distributor for payments made to financial intermediaries for servicing Class A
shareholders and for administering the Class A Share Plans. For the fiscal year
ended September 30, 1999, the Fund's aggregate expenses paid under the Plans for
Class B Shares were $779,948 or 1.00% of the Class B Shares' average daily net
assets. Such expenses were paid to reimburse the Distributor for the following
payments: $568,084 for commissions and transaction fees paid to financial
intermediaries in respect of sales of Class B Shares of the Fund and $211,864
for fees paid to financial intermediaries for servicing Class B shareholders and
administering the Class B Share Plans. For the fiscal year ended September 30,
1999, the Fund's aggregate expenses paid under the Plans for Class C Shares were
$185,832 or 1.00% of the Class C Shares' average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments; $34,915 for
commissions and transaction fees paid to financial intermediaries in respect of
sales of Class C Shares of the Fund and $75,570 for fees paid to financial
intermediaries for servicing Class C shareholders and administering the Class C
Share Plans.

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

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and dividend
disbursing agent is Van Kampen Investor Services Inc., PO Box 218256, Kansas
City, MO 64121-8256. The

B-36
<PAGE> 66

transfer agency prices are determined through negotiations with the Fund's Board
of Trustees and are based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of brokers and dealers to effect the transactions and the
negotiation of prices and any brokerage commissions on such transactions. While
the Adviser will be primarily responsible for the placement of the Fund's
portfolio business, the policies and practices in this regard will at all times
be subject to review by the trustees of the Fund.

As most transactions made by the Fund are principal transactions at net
prices, the Fund generally incurs little or no brokerage costs. The portfolio
securities in which the Fund invests are normally purchased directly from the
issuer or in the over-the-counter market from an underwriter or market maker for
the securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers include a spread or markup to the dealer
between the bid and asked price. Sales to dealers are effected at bid prices.
The Fund may also purchase certain money market instruments directly from an
issuer, in which case no commissions or discounts are paid, or may purchase and
sell listed bonds on a exchange, which are effected through brokers who charge a
commission for their services.

The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser to the Fund and still must be analyzed
and reviewed by its staff, the receipt of research information is not expected
to reduce its expenses materially. The investment advisory fee is not reduced as
a result of the Adviser's receipt of such research services. Services provided
may include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). Research
services furnished by firms through which the Fund effects its securities

B-37
<PAGE> 67

transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund.

The Adviser also may place portfolio transactions, to the extent permitted
by law, with brokerage firms affiliated with the Fund, the Adviser or the
Distributor and with brokerage firms participating in the distribution of the
Fund's shares if it reasonably believes that the quality of execution and the
commission are comparable to that available from other qualified firms.
Similarly, to the extent permitted by law and subject to the same considerations
on quality of execution and comparable commission rates, the Adviser may direct
an executing broker to pay a portion or all of any commissions, concessions or
discounts to a firm supplying research or other services or to a firm
participating in the distribution of the Fund's shares.

The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for the Fund and another advisory account.
In some cases, this procedure could have an adverse effect on the price or the
amount of securities available to the Fund. In making such allocations among the
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of the Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and opinions of the persons responsible
for recommending the investment.

Effective October 31, 1996, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") became an affiliate of the Adviser. Effective May 31, 1997, Dean
Witter Reynolds, Inc. ("Dean Witter") became an affiliate of the Adviser. The
trustees have adopted certain policies incorporating the standards of Rule 17e-1
issued by the SEC under the 1940 Act which require that the commissions paid to
affiliates of the Fund must be reasonable and fair compared to the commissions,
fees or other remuneration received or to be received by other brokers in
connection with comparable transactions involving similar securities during a
comparable period of time. The rule and procedures also contain review
requirements and require the Adviser to furnish reports to the trustees and to
maintain records in connection with such reviews. After consideration of all
factors deemed relevant, the trustees will consider from time to time whether
the advisory fee for the Fund will be reduced by all or a portion of the
brokerage commission given to affiliated brokers.

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The Fund paid the following commissions to all brokers and affiliated
brokers during the periods shown:

Commissions Paid:

<TABLE>
<CAPTION>
Affiliated Brokers
----------------------
Morgan Dean
Brokers Stanley Witter
------- ------- ------
<S> <C> <C> <C>
Commissions paid:
Fiscal year ended September 30, 1999................. $ -- $-- $--
Fiscal period ended September 30, 1998............... $ -- $-- $--
Fiscal year ended September 30, 1997................. $69,434 $0 $0
Fiscal year 1999 Percentages:
Commissions with affiliate to total commissions.... -- -- --
Value of brokerage transactions with affiliate to
total transactions.............................. -- -- --
</TABLE>

During the fiscal year end September 30, 1999, the Fund paid no brokerage
commissions to brokers selected primarily on the basis of research services
provided to the Adviser.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. Below is a
description of such services. The following information supplements the section
in the Fund's Prospectus captioned "Shareholder Services."

INVESTMENT ACCOUNT

Each shareholder has an investment account under which the investor's
shares of the Fund are held by Investor Services, the Fund's transfer agent.
Investor Services performs bookkeeping, data processing and administrative
services related to the maintenance of shareholder accounts. Except as described
in the Prospectus and this Statement of Additional Information, after each share
transaction in an account, the shareholder receives a statement showing the
activity in the account. Each shareholder who has an account in any of the
Participating Funds (as defined in the Prospectus) will receive statements
quarterly from Investor Services showing any reinvestments of dividends and
capital gain dividends 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
gain dividends and systematic purchases or redemptions. Additional shares may be
purchased at any time through authorized dealers or by mailing a check directly
to Investor Services.

SHARE CERTIFICATES

Generally, the Fund will not issue share certificates. However, upon
written or telephone request to the Fund, a share certificate will be issued
representing shares (with the exception of fractional shares) of the Fund. A
shareholder will be required to surrender such certificates upon an exchange or
redemption of the shares represented by the

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<PAGE> 69

certificate. In addition, if such certificates are lost the shareholder must
write to Van Kampen Funds Inc., c/o Investor Services, PO Box 218256 Kansas
City, MO 64121-8256, requesting an "Affidavit of Loss" and obtain a Surety Bond
in a form acceptable to Investor Services. On the date the letter is received,
Investor Services will calculate the fee for replacing the lost certificate
equal to no more than 1.50% of the net asset value of the issued shares, and
bill the party to whom the replacement certificate was mailed.

RETIREMENT PLANS

Eligible investors may establish individual retirement accounts ("IRAs");
SEP; 401(k) plans; Section 403(b)(7) plans in the case of employees of public
school systems and certain non-profit organizations; or other pension or profit
sharing plans. Documents and forms containing detailed information regarding
these plans are available from the Distributor. Van Kampen Trust Company serves
as custodian under the IRA, 403(b)(7) and Money Purchase and Profit Sharing
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

Shareholders can use ACH to have redemption proceeds deposited
electronically into their bank accounts. Redemption proceeds transferred to a
bank account via the ACH plan are available to be credited to the account on the
second business day following normal payment. In order to utilize this option,
the shareholder's bank must be a member of ACH. In addition, the shareholder
must fill out the appropriate section of the account application. The
shareholder must also include a voided check or deposit slip from the bank
account into which redemption proceeds are to be deposited together with the
completed application. Once Investor Services has received the application and
the voided check or deposit slip, such shareholder's designated bank account,
following any redemption, will be credited with the proceeds of such redemption.
Once enrolled in the ACH plan, a shareholder may terminate participation at any
time by writing Investor Services or by calling (800) 341-2911, ((800) 421-2833
for the hearing impaired).

DIVIDEND DIVERSIFICATION

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

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<PAGE> 70

SYSTEMATIC WITHDRAWAL PLAN

A shareholder may establish a monthly, quarterly, semiannual or annual
withdrawal plan if the shareholder owns shares in a single account valued at
$10,000 or more at the next determined net asset value per share at the time the
plan is established. If the shareholder owns shares in a single account valued
at $5,000 or more at the next determined net asset value per share at the time
the plan is established, the shareholder may establish a quarterly, semiannual
or annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each payment
represents the proceeds of a redemption of shares on which any capital gain or
loss will be recognized. The planholder may arrange for monthly, quarterly,
semiannual or annual checks in any amount, not less than $25. Such a systematic
withdrawal plan may also be maintained by an investor purchasing shares for a
retirement plan established on a form made available by the Fund. See
"Shareholder Services--Retirement Plans."

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

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic payment. Dividends and capital gain dividends on shares
held in accounts with systematic withdrawal plans are reinvested in additional
shares at the next determined net asset value per share. If periodic withdrawals
continuously exceed reinvested dividends and capital gains dividends, the
shareholder's original investment will be correspondingly reduced and ultimately
exhausted. Redemptions made concurrently with the purchase of additional shares
ordinarily will be disadvantageous to the shareholder because of the duplication
of sales charges. Any gain or loss realized by the shareholder upon redemption
of shares is a taxable event. The Fund reserves the right to amend or terminate
the systematic withdrawal program upon 30 days' notice to its shareholders.

EXCHANGE PRIVILEGE

All shareholders will be limited to eight exchanges per fund during a
rolling 365-day period.

Exchange privileges will be suspended on a particular fund if more than
eight exchanges out of that fund are made during a rolling 365-day period. If
exchange privileges are suspended, subsequent exchange requests for redemptions
out of that fund during the stated period will not be processed. Exchange
privileges will be restored when the account history shows fewer than eight
exchanges in the rolling 365-day period.

This policy change does not apply to money market funds, systematic
exchange plans, or employer-sponsored retirement plans.

REINSTATEMENT PRIVILEGE

A Class A Shareholder or Class B Shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption in
Class A Shares of the Fund. A Class C Shareholder who has redeemed shares of the
Fund may reinstate

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<PAGE> 71

any portion or all of the net proceeds of such redemption in Class C Shares of
the Fund with credit given for any contingent deferred sales charge paid upon
such redemption. Such reinstatement is made at the net asset value per share
(without sales charge) next determined after the order is received, which must
be made within 180 days after the date of the redemption. Reinstatement at net
asset value per share is also offered to participants in those eligible
retirement plans held or administered by Van Kampen Trust Company for repayment
of principal (and interest) on their borrowings on such plans.

REDEMPTION OF SHARES

Redemptions are not made on days during which the New York Stock Exchange
("the Exchange") is closed. The right of redemption may be suspended and the
payment therefor may be postponed for more than seven days during any period
when (a) the Exchange is closed for other than customary weekends or holidays;
(b) the SEC determines trading on the Exchange is restricted; (c) the SEC
determines an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund to fairly determine the value of its net assets; or (d)
the SEC, by order, so permits.

Additionally, if the Board of Trustees determines that payment wholly or
partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. Shareholders may
incur brokerage charges and a gain or loss for federal income tax purposes upon
the sale of portfolio securities so received in payment of redemptions.

CONTINGENT DEFERRED SALES CHARGE-CLASS A

As described in the Prospectus under "Purchase of Shares -- Class A
Shares," there is no sales charge payable on Class A Shares at the time of
purchase on investments of $1 million or more, but a contingent deferred sales
charge ("CDSC-Class A") may be imposed on certain redemptions made within one
year of purchase. For purposes of the CDSC-Class A, when shares of one fund are
exchanged for shares of another fund, the purchase date for the shares of the
fund exchanged into will be assumed to be the date on which shares were
purchased in the fund from which the exchange was made. If the exchanged shares
themselves are acquired through an exchange, the purchase date is assumed to
carry over from the date of the original election to purchase shares subject to
a CDSC-Class A rather than a front-end load sales charge. In determining whether
a CDSC-Class A is payable, it is assumed that shares being redeemed first are
any shares in the shareholder's account not subject to a contingent deferred
sales charge followed by shares held the longest in the shareholder's account.
The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gain dividends.

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<PAGE> 72

WAIVER OF CLASS B AND CLASS C CONTINGENT

DEFERRED SALES CHARGES

As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge ("CDSC-Class B and C"). The CDSC-Class B and C is waived on redemptions
of Class B Shares and Class C Shares in the circumstances described below:

REDEMPTION UPON DEATH OR DISABILITY

The Fund will waive the CDSC-Class B and C on redemptions following the
death or disability of a Class B shareholder and Class C shareholder. An
individual will be considered disabled for this purpose if he or she meets the
definition thereof in Section 72(m)(7) of the Internal Revenue Code of 1986, as
amended ("the Code"), which in pertinent part defines a person as disabled if
such person "is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite duration."
While the Fund does not specifically adopt the balance of the Code's definition
which pertains to furnishing the Secretary of Treasury with such proof as he or
she may require, the Distributor will require satisfactory proof of death or
disability before it determines to waive the CDSC-Class B and C.

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

REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS

The Fund will waive the CDSC-Class B and C when a total or partial
redemption is made in connection with certain distributions from retirement
plans. The CDSC-Class B and C will be waived upon the tax-free rollover or
transfer of assets to another Retirement Plan invested in one or more
Participating Funds; in such event, as described below, the Fund will "tack" the
period for which the original shares were held on to the holding period of the
shares acquired in the transfer or rollover for purposes of determining what, if
any, CDSC-Class B and C is applicable in the event that such acquired shares are
redeemed following the transfer or rollover. The charge also will be waived on
any redemption which results from the return of an excess contribution pursuant
to Section 408(d)(4) or (5) of the Code, the return of excess deferral amounts
pursuant to Code Section 401(k)(8) or 402(g)(2), the financial hardship of the
employee pursuant to Code Section 401(k)-1(d)(2), or from the death or
disability of the employee (see Code Section 72(m)(7) and 72(t)(2)(A)(ii)). In
addition, the charge will be waived on any minimum distribution required to be
distributed in accordance with Code Section 401(a)(9).

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<PAGE> 73

REDEMPTION PURSUANT TO THE FUND'S SYSTEMATIC WITHDRAWAL PLAN

A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the systematic
withdrawal 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 delivered 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 systematic withdrawal plan. The
CDSC-Class B and C will be waived on redemptions made under the systematic
withdrawal plan.

The amount of the shareholder's investment in the Fund at the time the
election to participate in the systematic withdrawal 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 systematic withdrawal plan and the ability to offer the
systematic withdrawal plan.

NO INITIAL COMMISSION OR TRANSACTION FEE

The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.

INVOLUNTARY REDEMPTIONS OF SHARES

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 value of the
account up to the required minimum balance. The Fund will waive the CDSC-Class B
and C upon such involuntary redemption.

REINVESTMENT OF REDEMPTION PROCEEDS

A shareholder who has redeemed Class C Shares of a Fund may reinvest at net
asset value, with credit for any CDSC-Class C paid on the redeemed shares, any
portion or all of his or her redemption proceeds (plus that amount necessary to
acquire a fractional share to round off his or her purchase to the nearest full
share) in Class C Shares of the Fund, provided that the reinvestment is effected
within 180 days after such redemption and the shareholder has not previously
exercised this reinvestment privilege with respect to Class C Shares of the
Fund. Shares acquired in this manner will be deemed to have the original cost
and purchase date of the redeemed shares for purposes of applying the CDSC-Class
C to subsequent redemptions.

REDEMPTION BY ADVISER

The Fund may waive the CDSC-Class B and C when a total or partial
redemption is made by the Adviser with respect to its investments in the Fund.

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TAXATION

FEDERAL INCOME TAXATION OF THE FUND

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

If the Fund so qualifies and distributes each year to its shareholders at
least 90% of its investment company taxable income (including taxable income and
net short-term capital gain, but not net capital gain, which is the excess of
net long-term capital gain over net short-term capital loss), and meets certain
other requirements, it will not be required to pay federal income taxes on any
income it distributes to shareholders. The Fund intends to distribute at least
the minimum amount of investment company taxable income necessary to satisfy the
90% distribution requirement. The Fund will not be subject to federal income tax
on any net capital gain distributed to shareholders.

In order to avoid a 4% excise tax, the Fund will be required to distribute,
by December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income for such year and (ii) 98% of its capital gain net income
(the latter of which generally is computed on the basis of the one-year period
ending on October 31st of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.

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

Some of the Fund's investment practices are subject to special provisions
of the Code that, among other things, may defer the use of certain losses of the
Fund and affect the holding period of the securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving cash with which
to make distributions in amounts necessary to satisfy the 90% distribution
requirement and the distribution requirements for avoiding income and excise
taxes. The Fund will monitor its transactions and may make certain tax

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<PAGE> 75

elections in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.

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

DISTRIBUTIONS TO SHAREHOLDERS

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

Shareholders receiving distributions in the form of additional shares
issued by the Fund will be treated for federal income tax purposes as receiving
a distribution in an amount equal to the fair market value of the shares
received, determined as of the distribution date. The basis of such shares will
equal the fair market value on the distribution date.

The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. Distributions from
the Fund generally will not be eligible for the corporate dividends received
deduction.

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

Income from investments in foreign securities received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions.

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<PAGE> 76

Such taxes will not be deductible or creditable by shareholders. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.

Certain foreign currency gains or losses attributable to currency exchange
rate fluctuations are 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 gains. Generally, a shareholder's tax basis in
Fund shares will be reduced to the extent that an amount distributed to such
shareholder is treated as a return of capital.

SALE OF SHARES

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

CAPITAL GAINS RATES

The maximum tax rate applicable to net capital gains recognized by
individuals and other non-corporate taxpayers investing in this Fund is (i) the
same as the maximum ordinary income tax rate for capital assets held for one
year or less or (ii) 20% for capital assets held for more than one year. The
maximum long-term capital gains rate for corporations is 35%.

NON-U.S. SHAREHOLDERS

A shareholder who is not (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized under the laws of the
United States or any state thereof, (iii) an estate, the income of which is
subject to United States federal income taxation regardless of its source or
(iv) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States fiduciaries who have
the authority to control all substantial decisions of the trust (a "Non-U.S.
Shareholder") generally will be subject to withholding of United States federal
income tax at a 30% rate (or lower applicable treaty rate) on dividends from the
Fund (other than capital gain dividends) that are not "effectively connected"
with a United States trade or business carried on by such shareholder.
Accordingly, investment in the

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Fund is likely to be appropriate for a Non-U.S. Shareholder only if such person
can utilize a foreign tax credit or corresponding tax benefit in respect of such
U.S. withholding tax.

Non-effectively connected capital gain dividends and gains realized from
the sale of shares will not be subject to United States federal income tax in
the case of (i) a Non-U.S. Shareholder that is a corporation and (ii) a Non-U.S.
Shareholder that is not present in the United States for more than 182 days
during the taxable year (assuming that certain other conditions are met).
However, certain Non-U.S. Shareholders may nonetheless be subject to backup
withholding on capital gain dividends and gross proceeds paid to them upon the
sale of their shares. See "Backup Withholding" below.

If income from the Fund or gains realized from the sale of shares is
effectively connected with a Non-U.S. Shareholder's United States trade or
business, then such amounts will be subject to United States federal income tax
on a net basis at the tax rates applicable to United States citizens or domestic
corporations. Non-U.S. Shareholders that are corporations may also be subject to
an additional "branch profits tax" with respect to income from the Fund that is
effectively connected with a United States trade or business.

Final United States Treasury Regulations effective for payments made after
December 31, 2000, modify the withholding, backup withholding and information
reporting rules, including the procedures to be followed by Non-U.S.
Shareholders in establishing foreign status. Prospective investors should
consult their tax advisors concerning the applicability and effect of such
Treasury Regulations on an investment in shares of the Fund.

The tax consequences to a Non-U.S. Shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described in
this section. Non-U.S. Shareholders may be required to provide appropriate
documentation to establish their entitlement to the benefits of such a treaty.
Foreign investors are advised to consult their tax advisers with respect to the
tax implications of purchasing, holding and disposing of shares of the Fund.

BACKUP WITHHOLDING

The Fund may be required to withhold federal income tax at a rate of 31%
("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) the
shareholder fails to furnish the Fund with its correct taxpayer identification
number, (ii) the Internal Revenue Service ("IRS") notifies the Fund that the
shareholder has failed to properly report certain interest and dividend income
to the IRS and to respond to notices to that effect or (iii) when required to do
so, the shareholder fails to certify that he or she is not subject to backup
withholding. Redemption proceeds may be subject to withholding under the
circumstances described in (i) above.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from payments made to a shareholder may be refunded or
credited against such shareholder's United States federal income tax liability,
if any, provided that the required information is furnished to the IRS.

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<PAGE> 78

INFORMATION REPORTING

The Fund must report annually to the IRS and to each Non-U.S. Shareholder
the amount of dividends paid to such shareholder and the amount, if any, of tax
withheld pursuant to backup withholding rules with respect to such dividends.
This information may also be made available to the tax authorities in the
Non-U.S. Shareholder's country of residence.

GENERAL

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

FUND PERFORMANCE

From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one year, five year and ten year periods. Other total
return quotations, aggregate or average, over other time periods may also be
included.

The total return of the Fund for a particular period represents the
increase (or decrease) in the value of a hypothetical investment in the Fund
from the beginning to the end of the period. Total return is calculated by
subtracting the value of the initial investment from the ending value and
showing the difference as a percentage of the initial investment; the
calculation assumes the initial investment is made at the current maximum public
offering price (which includes the maximum sales charge for Class A Shares);
that all income dividends or capital gain dividends during the period are
reinvested in Fund shares at net asset value; and that any applicable contingent
deferred sales charge has been paid. The Fund's total return will vary depending
on market conditions, the securities comprising the Fund's portfolio, the Fund's
operating expenses and unrealized net capital gains or losses during the period.
Total return is based on historical earnings and asset value fluctuations and is
not intended to indicate future performance. No adjustments are made to reflect
any income taxes payable by shareholders on dividends and capital gain dividends
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.

The Fund may, in supplemental sales literature, advertise non-standardized
total return figures representing the cumulative, non-annualized total return of
each class of shares of the Fund from a given date to a subsequent given date.
Cumulative non-standardized total return is calculated by measuring the value of
an initial investment in a given class of shares of the Fund at a given time,
deducting the maximum initial sales charge, if any, determining the value of all
subsequent reinvested distributions, and dividing the net change in the value of
the investment as of the end of the period by the amount of the initial
investment and expressing the result as a percentage. Non-standardized total
return will be calculated separately for each class of shares.

B-49
<PAGE> 79

Non-standardized total return calculations do not reflect the imposition of
a contingent deferred sales charge, and if any such contingent deferred sales
charge imposed at the time of redemption were reflected, it would reduce the
performance quoted.

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.

Yield and total return are calculated separately for Class A Shares, Class
B Shares and Class C Shares of the Fund. Total return figures for Class A Shares
include the maximum sales charge. Total return figures for Class B Shares and
Class C Shares include any applicable contingent deferred sales charge. Because
of the differences in sales charges and distribution fees, the total returns for
each class of shares will differ.

From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund. Distribution rate is a measure of the level of
income and short-term capital gain dividends, if any, distributed for a
specified period. Distribution rate differs from yield, which is a measure of
the income actually earned by the Fund's investments, and from total return
which is a measure of the income actually earned by the Fund's investments plus
the effect of any realized and unrealized appreciation or depreciation of such
investments during a stated period. Distribution rate is, therefore, not
intended to be a complete measure of the Fund's performance. Distribution rate
may sometimes be greater than yield since, for instance, it may not include the
effect of amortization of bond premiums, and may include non-recurring
short-term capital gains and premiums from futures transactions engaged in by
the Fund. Distribution rates will be computed separately for each class of the
Fund's shares.

From time to time marketing materials may provide a portfolio manager
update, an Adviser update and discuss general economic conditions and outlooks.
The Fund's marketing materials may also show the Fund's asset class
diversification, top sector

B-50
<PAGE> 80

holdings and largest holdings. Materials may also mention how the Distributor
believes the Fund compares relative to other Van Kampen 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 whether shareholders purchased their fund shares 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 may also be marketed on the
internet.

In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds, with the Consumer Price Index, 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 or rating services and by nationally
recognized financial publications. Such comparative performance information will
be stated in the same terms in which the comparative data or indices are stated.
Such advertisements and sales material may also include a yield quotation as of
a current period. In each case, such total return and yield information, if any,
will be calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. For these purposes, the
performance of the Fund, as well as the performance of other mutual funds or
indices, do not reflect sales charges, the inclusion of which would reduce the
Fund's performance. The Fund will include performance data for each class of
shares of the Fund in any advertisement or information including performance
data of the Fund.

The Fund may also utilize performance information in hypothetical
illustrations. For example, the Fund may, from time to time: (1) illustrate the
benefits of tax-deferral by comparing taxable investments to investments made
through tax-deferred retirement plans; (2) illustrate in graph or chart form, or
otherwise, the benefits of dollar cost averaging by comparing investments made
pursuant to a systematic investment plan to investments made in a rising market;
(3) illustrate allocations among different types of mutual funds for investors
of different stages of their lives; and (4) in reports or other communications
to shareholders or in advertising material, illustrate the benefits of
compounding at various assumed rates of return.

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

CLASS A SHARES

The Fund's average annual total return, assuming payment of the maximum
sales charge, for Class A Shares of the Fund for (i) the one-year period ended
September 30, 1999 was -6.03%, (ii) the five-year period ended September 30,
1999 was 5.10% and (iii) the approximately six-year, ten-month period since
November 2, 1992, the

B-51
<PAGE> 81

commencement of distribution for Class A Shares of the Fund, through September
30, 1999 was 4.25%.

The Fund's cumulative non-standardized total return, including payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to September 30, 1999 was 33.35%.

The Fund's cumulative non-standardized total return, excluding payment of
the maximum sales charge, with respect to the Class A Shares from its inception
to September 30, 1999 was 39.96%.

CLASS B SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class B Shares of the Fund for (i) the one-year
period ended September 30, 1999 was -5.76%, (ii) the five-year period ended
September 30, 1999 was 5.10% and (iii) the approximately six-year, ten-month
period since November 2, 1992, the commencement of distribution for Class B
Shares of the Fund, through September 30, 1999 was 4.25%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class B Shares from
November 2, 1992 (commencement of distribution of Class B Shares) to September
30, 1999 was 33.28%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class B Shares from
November 2, 1992 (commencement of distribution of Class B Shares) to September
30, 1999 was 33.28%.

CLASS C SHARES

The Fund's average annual total return, assuming payment of the contingent
deferred sales charge, for Class C Shares of the Fund for (i) the one-year
period ended September 30, 1999 was -3.00%, (ii) the five-year period ended
September 30, 1999 was 5.33% and (iii) the approximately six-year, five-month
period since April 12, 1993, the commencement of distribution for Class C Shares
of the Fund, through September 30, 1999 was 3.69%.

The Fund's cumulative non-standardized total return, including payment of
the contingent deferred sales charge, with respect to the Class C Shares from
April 12, 1993 (commencement of distribution of Class C Shares) to September 30,
1999 was 26.38%.

The Fund's cumulative non-standardized total return, excluding payment of
the contingent deferred sales charge, with respect to the Class C Shares from
April 12, 1993 (commencement of distribution of Class C Shares) to September 30,
1999 was 26.38%.

These results are based on historical earnings and asset value fluctuations
and are not intended to indicate future performance. Such information should be
considered in light of the Fund's investment objective and policies as well as
the risks incurred in the Fund's investment practices.

B-52
<PAGE> 82

OTHER INFORMATION

CUSTODY OF ASSETS

All securities owned by the Fund and all cash, including proceeds from the
sale of shares of the Fund and of securities in the Fund's investment portfolio,
are held by State Street Bank and Trust Company, 225 West Franklin Street,
Boston, Massachusetts 02110, as Custodian. The Custodian also provides
accounting services to the Fund.

SHAREHOLDER REPORTS

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

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 200 East Randolph Drive, Chicago, Illinois
60601, the independent accountants for the Fund, performs an annual audit of the
Fund's financial statements.

LEGAL COUNSEL

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

B-53
<PAGE> 83

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of
Van Kampen U.S. Government Trust for Income

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen U.S. Government Trust
for Income (the "Fund") at September 30, 1999 and the results of its operations,
the changes in its net assets and the financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
November 11, 1999

F-1
<PAGE> 84

PORTFOLIO OF INVESTMENTS

September 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ASSET-BACKED
SECURITIES 7.4%
$ 3,444 Norwest Asset Securities
Corp., Series 1997-19
(a)........................ 7.250% 12/25/27 $ 3,244,072
5,602 Pacific America Home Equity
Loan (a)................... 5.916 12/25/27 5,584,626
------------
TOTAL ASSET-BACKED SECURITIES................................ 8,828,698
------------
COLLATERALIZED MORTGAGE OBLIGATIONS 11.0%
6,932 Residential Funding
Mortgage Securities
Investment, Series 1998-S20
M1 (a)..................... 6.750 09/25/28 6,444,504
7,351 Residential Funding
Mortgage Securities
Investment, Series 1999-S2
M1 (a)..................... 6.500 01/25/29 6,702,970
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS.................... 13,147,474
------------
UNITED STATES GOVERNMENT AGENCY OBLIGATIONS 39.6%
7,540 Federal Home Loan Mortgage
Corp. Gold 30 Year Pool
(a)........................ 6.500 02/01/26 to 05/01/26 7,287,620
2,234 Federal Home Loan Mortgage
Corp. CMO, Series 1992-FB
(a)........................ 5.588 09/15/27 2,236,793
5,440 Federal National Mortgage
Association CMO, Series
94-87F (a)................. 5.638 03/25/09 5,453,210
11,000 Federal National Mortgage
Association Medium Term
Note (a)................... 11.875 05/19/00 11,416,570
906 Federal National Mortgage
Association Pool (a)....... 8.500 01/01/22 to 09/01/24 939,514
11,609 Government National
Mortgage Association Pool
(a)........................ 7.500 06/15/28 to 09/15/28 11,663,717
2,603 Government National
Mortgage Association Pool
(a)........................ 8.000 11/15/21 to 08/15/24 2,666,994
2,960 Government National
Mortgage Association Pool
(a)........................ 8.500 12/15/17 3,110,616
2,549 Government National
Mortgage Association Pool
(a)........................ 9.000 03/15/18 to 12/15/19 2,694,542
------------
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS............ 47,469,576
------------
UNITED STATES TREASURY OBLIGATIONS 50.0%
6,000 United States Treasury
Bonds (a).................. 13.125 05/15/01 6,686,520
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 85
PORTFOLIO OF INVESTMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,300 United States Treasury
Bonds...................... 8.750% 05/15/17 $ 4,087,215
5,000 United States Treasury
Bonds...................... 9.000 11/15/18 6,378,200
4,000 United States Treasury
Notes...................... 8.000 05/15/01 4,144,560
13,000 United States Treasury
Notes...................... 5.500 08/31/01 12,970,490
22,000 United States Treasury
Notes...................... 11.625 11/15/02 25,568,840
------------
TOTAL UNITED STATES TREASURY OBLIGATIONS..................... 59,835,825
------------
TOTAL LONG-TERM INVESTMENTS 108.0%
(Cost $135,551,252).................................................. 129,281,573

REPURCHASE AGREEMENT 0.8%
State Street Bank & Trust Corp. ($1,010,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 09/30/99, to be
sold on 10/01/99 at $1,010,140)........................................ 1,010,000
------------
TOTAL INVESTMENTS 108.8%
(Cost $136,561,252).................................................. 130,291,573
LIABILITIES IN EXCESS OF OTHER ASSETS (8.8%).......................... (10,558,667)
------------
NET ASSETS 100.0%..................................................... $119,732,906
============
</TABLE>

(a) Assets segregated as collateral for open futures and forwards transactions.

See Notes to Financial Statements

F-3
<PAGE> 86

STATEMENT OF ASSETS AND LIABILITIES

September 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $136,561,252)....................... $130,291,573
Cash........................................................ 3,473
Receivables:
Interest.................................................. 2,522,450
Investments Sold.......................................... 301,547
Fund Shares Sold.......................................... 167,758
Forward Commitments......................................... 411,726
Other....................................................... 20,764
------------
Total Assets.......................................... 133,719,291
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 13,042,757
Income Distributions...................................... 406,947
Fund Shares Repurchased................................... 172,865
Distributor and Affiliates................................ 110,396
Investment Advisory Fee................................... 59,696
Variation Margin on Futures............................... 13,656
Accrued Expenses............................................ 95,167
Trustees' Deferred Compensation and Retirement Plans........ 84,901
------------
Total Liabilities..................................... 13,986,385
------------
NET ASSETS.................................................. $119,732,906
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $177,107,271
Accumulated Undistributed Net Investment Income............. 147,133
Net Unrealized Depreciation................................. (5,872,538)
Accumulated Net Realized Loss............................... (51,648,960)
------------
NET ASSETS.................................................. $119,732,906
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $69,191,221 and 8,907,537 shares of
beneficial interest issued and outstanding)........... $ 7.77
Maximum sales charge (4.75%* of offering price)......... .39
------------
Maximum offering price to public........................ $ 8.16
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $40,446,130 and 5,213,567 shares of
beneficial interest issued and outstanding)........... $ 7.76
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $10,095,555 and 1,301,272 shares of
beneficial interest issued and outstanding)........... $ 7.76
============
</TABLE>

* On sales of $100,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

F-4
<PAGE> 87

STATEMENT OF OPERATIONS

For the Year Ended September 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 10,720,315
Fee Income.................................................. 299,922
------------
Total Income............................................ 11,020,237
------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $124,498, $757,445 and $110,261,
respectively)............................................. 992,204
Investment Advisory Fee..................................... 823,170
Shareholder Services........................................ 214,245
Custody..................................................... 31,555
Trustees' Fees and Related Expenses......................... 23,853
Legal....................................................... 10,380
Other....................................................... 218,260
------------
Total Expenses.......................................... 2,313,667
Less Credits Earned on Cash Balances.................... 9,020
------------
Net Expenses............................................ 2,304,647
------------
NET INVESTMENT INCOME....................................... $ 8,715,590
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (393,276)
Futures................................................... (455,879)
Forward Commitments....................................... (1,446,752)
------------
Net Realized Loss........................................... (2,295,907)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 3,283,548
------------
End of the Period:
Investments............................................. (6,269,679)
Futures................................................. (14,585)
Forward Commitments..................................... 411,726
------------
(5,872,538)
------------
Net Unrealized Depreciation During the Period............... (9,156,086)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(11,451,993)
============
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $ (2,736,403)
============
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 88

STATEMENT OF CHANGES IN NET ASSETS

For the Years Ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended Year Ended
September 30, 1999 September 30, 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.......................... $ 8,715,590 $ 10,645,851
Net Realized Loss.............................. (2,295,907) (234,373)
Net Unrealized Appreciation/Depreciation During
the Period................................... (9,156,086) 3,694,028
------------ ------------
Change in Net Assets from Operations........... (2,736,403) 14,105,506
------------ ------------
Distributions from Net Investment Income:
Class A Shares............................... (3,378,179) (2,579,681)
Class B Shares............................... (4,495,665) (6,583,547)
Class C Shares............................... (655,811) (742,528)
------------ ------------
(8,529,655) (9,905,756)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... (11,266,058) 4,199,750
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold...................... 81,626,150 21,122,925
Net Asset Value of Shares Issued Through
Dividend Reinvestment........................ 3,442,192 3,832,141
Cost of Shares Repurchased..................... (103,777,091) (53,196,413)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................. (18,708,749) (28,241,347)
------------ ------------
TOTAL DECREASE IN NET ASSETS................... (29,974,807) (24,041,597)

NET ASSETS:
Beginning of the Period........................ 149,707,713 173,749,310
------------ ------------
End of the Period (Including accumulated
undistributed
net investment income of $147,133 and
$178,742, respectively)...................... $119,732,906 $149,707,713
============ ============
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 89

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------
Class A Shares 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $ 8.422 $8.193 $8.108 $ 8.38 $ 8.17
------- ------ ------ ------ ------
Net Investment Income........... .540 .595 .567 .565 .63
Net Realized and Unrealized
Gain/Loss..................... (.656) .184 .073 (.274) .23
------- ------ ------ ------ ------
Total from Investment
Operations...................... (.116) .779 .640 .291 .86
------- ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............. .538 .550 .555 .563 .645
Distributions from Net Realized
Gain.......................... -0- -0- -0- -0- .005
------- ------ ------ ------ ------
Total Distributions............... .538 .550 .555 .563 .65
------- ------ ------ ------ ------
Net Asset Value, End of the
Period.......................... $ 7.768 $8.422 $8.193 $8.108 $ 8.38
======= ====== ====== ====== ======
Total Return (a).................. (1.34%) 9.87% 8.09% 3.57% 10.97%
Net Assets at End of the Period
(In millions)................... $ 69.2 $ 37.2 $ 38.3 $ 45.2 $ 70.2
Ratio of Expenses to Average Net
Assets (b)...................... 1.22% 1.16% 1.18% 1.13% 1.09%
Ratio of Net Investment Income to
Average Net Assets.............. 6.88% 7.19% 6.95% 6.83% 7.67%
Portfolio Turnover................ 85% 217% 82% 282% 262%
</TABLE>

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

See Notes to Financial Statements

F-7
<PAGE> 90
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------
Class B Shares 1999 (c) 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................... $ 8.412 $8.187 $8.104 $ 8.38 $ 8.17
------- ------ ------ ------ ------
Net Investment Income.................. .490 .529 .505 .504 .57
Net Realized and Unrealized
Gain/Loss............................ (.666) .186 .073 (.277) .228
------- ------ ------ ------ ------
Total from Investment Operations......... (.176) .715 .578 .227 .798
------- ------ ------ ------ ------
Less:
Distributions from Net Investment
Income............................... .478 .490 .495 .503 .583
Distributions from Net Realized Gain... -0- -0- -0- -0- .005
------- ------ ------ ------ ------
Total Distributions...................... .478 .490 .495 .503 .588
------- ------ ------ ------ ------
Net Asset Value, End of the Period....... $ 7.758 $8.412 $8.187 $8.104 $ 8.38
======= ====== ====== ====== ======
Total Return (a)......................... (2.07%) 8.96% 7.43% 2.70% 10.14%
Net Assets at End of the Period
(In millions).......................... $ 40.4 $101.2 $121.7 $150.8 $200.2
Ratio of Expenses to Average Net
Assets (b)............................. 1.96% 1.93% 1.94% 1.89% 1.85%
Ratio of Net Investment Income to Average
Net Assets............................. 6.05% 6.40% 6.20% 6.08% 6.92%
Portfolio Turnover....................... 85% 217% 82% 282% 262%
</TABLE>

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

See Notes to Financial Statements

F-8
<PAGE> 91
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------
Class C Shares 1999 (c) 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $8.412 $8.186 $8.104 $ 8.38 $ 8.17
------ ------ ------ ------ ------
Net Investment Income............ .489 .529 .503 .502 .57
Net Realized and Unrealized
Gain/Loss...................... (.665) .187 .074 (.275) .228
------ ------ ------ ------ ------
Total from Investment Operations... (.176) .716 .577 .227 .798
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .478 .490 .495 .503 .583
Distributions from Net Realized
Gain........................... -0- -0- -0- -0- .005
------ ------ ------ ------ ------
Total Distributions................ .478 .490 .495 .503 .588
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $7.758 $8.412 $8.186 $8.104 $ 8.38
====== ====== ====== ====== ======
Total Return (a)................... (2.07%) 8.96% 7.43% 2.70% 10.14%
Net Assets at End of the Period (In
millions)........................ $ 10.1 $ 11.3 $ 13.7 $ 18.6 $ 28.1
Ratio of Expenses to Average Net
Assets (b)....................... 1.97% 1.93% 1.94% 1.89% 1.85%
Ratio of Net Investment Income to
Average Net Assets............... 6.08% 6.41% 6.20% 6.08% 6.94%
Portfolio Turnover................. 85% 217% 82% 282% 262%
</TABLE>

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

See Notes to Financial Statements

F-9
<PAGE> 92

NOTES TO FINANCIAL STATEMENTS

September 30, 1999
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen U.S. Government Trust for Income (the "Fund") is organized as a
Delaware business trust, and is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek a high level of income by primarily
investing in debt securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund commenced investment operations on
October 6, 1992 with two classes of common shares, Class A and Class B shares.
The distribution of the Fund's Class C shares commenced on April 12, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION--Investments are stated at value using market quotations
or indications of value obtained from an independent pricing service based on
the mean of the bid and asked prices. For those securities where quotations or
prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market value.

B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made.
At September 30, 1999, there were no when issued or delayed delivery purchase
commitments.
The Fund trades certain securities under the terms of forward commitments,
whereby the settlement for payment and delivery occurs at a specified future
date. Forward

F-10
<PAGE> 93
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

commitments are privately negotiated transactions between the Fund and dealers.
Upon executing a forward commitment and during the period of obligation, the
Fund maintains collateral of cash or securities in a segregated account with its
custodian in an amount sufficient to relieve the obligation. If the intent of
the Fund is to accept delivery of a security traded under a forward purchase
commitment, the commitment is recorded as a long-term purchase. For forward
purchase commitments for which security settlement is not intended by the Fund,
changes in the value of the commitment are recognized by marking the commitment
to market on a daily basis. Certain forward commitments are entered into with
the intent of recognizing fee income which results from the difference between
the price of a forward settlement security versus the current cash settlement
price of the same security. Upon the closing of these forward commitments, this
income is recognized and is shown as fee income on the Statement of Operations.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.

C. INCOME AND EXPENSES--Interest income is recorded on an accrual basis.
Original issue discount is amortized over the expected life of each applicable
security. Premiums on debt securities are not amortized. Income and expenses of
the Fund are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and transfer agency costs which are unique to each
class of shares.

D. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At September 30, 1999, for federal income tax purposes, cost of long- and
short-term investments is $136,561,252, the aggregate gross unrealized
appreciation is

F-11
<PAGE> 94
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

$463,577 and the aggregate gross unrealized depreciation is $6,733,256,
resulting in net unrealized depreciation on long- and short-term investments of
$6,269,679.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At September 30, 1999, the Fund had an accumulated capital loss
carryforward for tax purposes of $49,043,409 which will expire between September
30, 2003 and September 30, 2006. Net realized loss differs for financial and tax
reporting purposes primarily as a result of post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year and
losses recognized for tax purposes on open futures positions at September 30,
1999.

E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on forwards and futures
transactions. All short-term capital gains and a portion of futures gains are
included in ordinary income for tax purposes. In January, 2000, the Fund will
provide tax information to shareholders for the 1999 calendar year.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
have been identified and appropriately reclassified. During 1999, permanent book
and tax basis differences relating to the recognition of net realized losses on
paydowns of mortgage pool obligations totaling $217,544 were reclassified from
accumulated undistributed net investment income to accumulated net realized
loss.

F. EXPENSE REDUCTIONS--During the year ended September 30, 1999, the Fund's
custody fee was reduced by $9,020 as a result of credits earned on overnight
cash balances.

2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee, payable
monthly, of .60% of the Fund's average daily net assets.
For the year ended September 30, 1999, the Fund recognized expenses of
approximately $10,400 representing legal services provided by Skadden, Arps,
Slate,

F-12
<PAGE> 95
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund
is an affiliated person.
For the year ended September 30, 1999, the Fund recognized expenses of
approximately $71,100 representing Van Kampen Funds Inc.'s or its affiliates
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
September 30, 1999, the Fund recognized expenses of approximately $141,500.
Transfer agency fees are determined through negotiations with the Fund's Board
of Trustees and are based on competitive benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

F-13
<PAGE> 96
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

3. CAPITAL TRANSACTIONS
At September 30, 1999, capital aggregated $83,464,706, $77,049,994 and
$16,592,571 for Classes A, B and C, respectively. For the year ended September
30, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................... 8,393,826 $ 66,973,779
Class B.................................... 1,471,020 12,001,267
Class C.................................... 324,468 2,651,104
----------- -------------
Total Sales.................................. 10,189,314 $ 81,626,150
=========== =============
Dividend Reinvestment:
Class A.................................... 165,012 $ 1,314,796
Class B.................................... 222,640 1,795,593
Class C.................................... 41,347 331,803
----------- -------------
Total Dividend Reinvestment.................. 428,999 $ 3,442,192
=========== =============
Repurchases:
Class A.................................... (4,072,147) $ (32,336,095)
Class B.................................... (8,511,500) (68,177,773)
Class C.................................... (404,425) (3,263,223)
----------- -------------
Total Repurchases............................ (12,988,072) $(103,777,091)
=========== =============
</TABLE>

F-14
<PAGE> 97
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

At September 30, 1998, capital aggregated $47,512,226, $131,430,907 and
$16,872,887 for Classes A, B and C, respectively. For the year ended September
30, 1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A...................................... 1,317,193 $ 10,837,724
Class B...................................... 1,103,881 9,096,177
Class C...................................... 144,333 1,189,024
---------- ------------
Total Sales.................................... 2,565,407 $ 21,122,925
========== ============
Dividend Reinvestment:
Class A...................................... 106,644 $ 880,219
Class B...................................... 315,137 2,598,342
Class C...................................... 42,886 353,580
---------- ------------
Total Dividend Reinvestment.................... 464,667 $ 3,832,141
========== ============
Repurchases:
Class A...................................... (1,678,538) $(13,853,819)
Class B...................................... (4,256,983) (35,039,788)
Class C...................................... (522,127) (4,302,806)
---------- ------------
Total Repurchases.............................. (6,457,648) $(53,196,413)
========== ============
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996 will automatically convert to Class A shares after the
eighth year following purchase. Class B shares purchased before June 1, 1996
automatically convert to Class A shares after the sixth year following purchase.
For the year ended September 30, 1999, 4,729,905 Class B shares automatically
converted to Class A shares and are shown in the above table. Class C shares
purchased on or after January 1, 1997 do not convert to Class A shares. Class C
shares purchased before January 1, 1997, automatically convert to Class A shares
after the tenth year following purchase. For the year ended September 30, 1999,
no Class C shares converted to Class A shares. The CDSC will be

F-15
<PAGE> 98
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

imposed on most redemptions made within five years of the purchase for Class B
and one year of the purchase for Class C as detailed in the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
- ---------------------------------------------------------------------------
<S> <C> <C>
First........................................ 4.00% 1.00%
Second....................................... 4.00% None
Third........................................ 3.00% None
Fourth....................................... 2.50% None
Fifth........................................ 1.50% None
Sixth and Thereafter......................... None None
</TABLE>

For the year ended September 30, 1999, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $7,200 and CDSC on redeemed shares of approximately $81,400. Sales
charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
including paydowns on mortgage backed securities, and excluding short-term
investments and forward commitment transactions, were $114,385,062 and
$122,120,745, respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when taking delivery of
a security underlying a futures contract or forward commitment. In these
instances, the recognition of gain or loss is postponed until the disposal of
the security underlying the futures contract or forward commitment.
Summarized below are the specific types of derivative financial instruments
used by the Fund.

F-16
<PAGE> 99
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

A. FUTURES CONTRACTS--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange traded futures contracts on U.S. Treasury
Bonds and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin). The potential risk of loss
associated with a futures contract is in excess of the variation margin
reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts, each with a par value of $100,000, for
the year ended September 30, 1999, were as follows:

<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at September 30, 1998......................... 52
Futures Opened............................................ 2,647
Futures Closed............................................ (2,661)
------
Outstanding at September 30, 1999......................... 38
======
</TABLE>

The futures contracts outstanding as of September 30, 1999, and the
descriptions and unrealized appreciation/depreciation are as follows:

<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS (DEPRECIATION)
- ---------------------------------------------------------------------------
<S> <C> <C>
SHORT CONTRACTS
5-Year U.S. Treasury Note Future, December
1999--
(Current Notional Value of $108,469 per
contract)................................. 38 $(14,585)
--- --------
</TABLE>

B. FORWARD COMMITMENTS--The Fund trades certain securities under the terms of
forward commitments, whereby the settlement occurs at a specific future date.
Forward commitments are privately negotiated transactions between the Fund and
dealers. While forward commitments are outstanding, the Fund maintains
sufficient collateral of cash or securities in a segregated account with its
custodian. Forward commitments are marked to market on a daily basis with
changes in value reflected as a component of unrealized
appreciation/depreciation. Purchasing securities on a forward commitment
involves a risk

F-17
<PAGE> 100
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

that the market value at the time of delivery may be lower than the agreed upon
purchase price resulting in an unrealized loss. This potential for loss may be
greater than the amount shown on the Statement of Assets and Liabilities for
forwards that don't intend to settle. Selling securities on a forward commitment
involves different risks and can result in losses more significant than those
arising from the purchase of such securities. The Fund's market exposure from
these positions is equal to the Current Value noted below. The following forward
commitments were outstanding as of September 30, 1999:

<TABLE>
<CAPTION>
UNREALIZED
PAR AMOUNT APPRECIATION/
(000) DESCRIPTION CURRENT VALUE DEPRECIATION
- -------------------------------------------------------------------------
<C> <S> <C> <C>
Long Contracts
$9,000 U.S. T-Note November Forward,
5.875% $9,048,285 $170,955
8,000 FNMA October Forward, 6.50% 7,671,240 28,740
6,500 FNMA October Forward, 7.00% 6,387,258 163,508
8,000 FNMA Dwarf November Forward,
15 Yr., 7.00% 7,982,520 38,145
3,500 GNMA October Forward, 7.50% 3,511,498 44,310
Short Contracts
7,000 GNMA October Forward, 7.50% 7,022,995 (33,932)
--------
$411,726
========
</TABLE>

C. CLOSED BUT UNSETTLED FORWARD COMMITMENTS--In certain situations, the Fund has
entered into offsetting transactions for outstanding forward commitments prior
to settlement of the obligation. In doing so, the Fund realizes a gain or loss
on the transactions at the time the forward commitment is closed. Risks may
result from the potential inability of counterparties to meet the terms of their
contracts. As of September 30, 1999, there were no closed but unsettled forward
commitments outstanding.

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

F-18
<PAGE> 101
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 1999
- --------------------------------------------------------------------------------

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended September 30, 1999, are payments retained by Van Kampen of
approximately $684,700.

F-19
<PAGE> 102

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

<TABLE>
<S> <C>
(a)(1) -- First Amended and Restated Agreement and Declaration of
Trust(1)
(2) -- Certificate of Amendment(1)
(3) -- Second Certificate of Amendment(4)
(4) -- Amended and Restated Certificate of Designation(3)
(5) -- Second Amended and Restated Certificate of Designation(4)
(b) -- Amended and Restated Bylaws(1)
(c)(1) -- Specimen Class A Share Certificate(1)
(2) -- Specimen Class B Share Certificate(1)
(3) -- Specimen Class C Share Certificate(1)
(d) -- Investment Advisory Agreement(3)
(e)(1) -- Distribution and Service Agreement(3)
(2) -- Form of Dealer Agreement(2)
(3) -- Form of Broker Fully Disclosed Selling Agreement(2)
(4) -- Form of Bank Fully Disclosed Selling Agreement(2)
(f)(1) -- Form of Trustee Deferred Compensation Plan+
(2) -- Form of Trustee Retirement Plan+
(g)(1) -- Custodian Contract(3)
(2) -- Transfer Agency and Service Agreement(3)
(h)(1) -- Data Access Services Agreement(2)
(2) -- Fund Accounting Agreement(3)
(i)(1) -- Opinion and Consent of Skadden, Arps, Slate, Meagher &
Flom (Illinois)(2)
(2) -- Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois)+
(j) -- Consent of PricewaterhouseCoopers LLP+
(k) -- Not applicable
(l) -- Investment Letter+
(m)(1) -- Plan of Distribution Pursuant to Rule 12b-1(2)
(2) -- Form of Shareholder Assistance Agreement(2)
(3) -- Form of Administrative Services Agreement(2)
(4) -- Service Plan(2)
(n) -- Not applicable
(o) -- Amended Multi-Class Plan (2)
(p) -- Power of Attorney+
(z)(1) -- List of Investment Companies in response to Item 27(a)+
(z)(2) -- List of Officers and Directors of Van Kampen Funds Inc.
in response to Item 27(b)+
</TABLE>

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

(1) Incorporated herein by reference to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A, File No. 33-49358, filed
January 30, 1996.

(2) Incorporated herein by reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A, File No. 33-49358, filed
January 28, 1997.

(3) Incorporated herein by reference to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A, File No. 33-49358, filed
January 28, 1998.

(4) Incorporated herein by reference to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form N-1A, File No. 33-49358, filed
on November 23, 1998.

+Filed herewith.

C-1
<PAGE> 103

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

See the Statement of Additional Information.

ITEM 25. INDEMNIFICATION.

Pursuant to Del. Code Ann. Title 12 Section 3817, a Delaware business trust
may provide in its governing instrument for the indemnification of its officers
and trustees from and against any and all claims and demands whatsoever.
Reference is made to Article 8, Section 8.4 of the Registrant's First Amended
and Restated Agreement and Declaration of Trust. Article 8; Section 8.4 of the
First Amended and Restated Agreement and Declaration of Trust provides that each
officer and trustee of the Registrant shall be indemnified by the Registrant
against all liabilities incurred in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which the
officer or trustee may be or may have been involved by reason of being or having
been an officer or trustee, except that such indemnity shall not protect any
such person against a liability to the Registrant or any shareholder thereof to
which such person would otherwise be subject by reason of (i) not acting in good
faith in the reasonable belief that such person's actions were not in the best
interests of the Trust, (ii) willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office or
(iii) for a criminal proceeding, not having a reasonable cause to believe that
such conduct was unlawful (collectively, "Disabling Conduct"). Absent a court
determination that an officer or trustee seeking indemnification was not liable
on the merits or guilty of Disabling Conduct in the conduct of his or her
office, the decision by the Registrant to indemnify such person must be based
upon the reasonable determination of independent counsel or non-party
independent trustees, after review of the facts, that such officer or trustee is
not guilty of Disabling Conduct in the conduct of his or her office.

The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such 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 "1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the

C-2
<PAGE> 104

payment by the Registrant of expenses incurred or paid by the trustee, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds Inc. (the
"Distributor") and each of its trustees and officers and each person if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim damages or expense (including the reasonable
cost of investing or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees) arising by reason of any person acquiring
any shares, based upon the ground that the Registration Statement, prospectus,
shareholder reports or other information filed or made public by the Registrant
(as from time to time amended) included an untrue statement of a material fact
or omitted to state a material fact required to be stated or necessary in order
to make the statements not misleading under the 1933 Act, or any other statute
or the common law. The Registrant does not agree to indemnify the Distributor or
hold it harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Registrant
by or on behalf of the Distributor. In no case is the indemnity of the
Registrant in favor of the Distributor or any person indemnified to be deemed to
protect the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or any person against any liability to
the Fund or its security holders to which the Distributor or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under the agreement.

Pursuant to the agreement by which Van Kampen Investor Services Inc.
("Investor Services") is appointed transfer agent of the Fund, the Registrant
agrees to indemnify and hold Investor Services harmless against any losses
damages, costs, charges, payments, liabilities and expenses (including
reasonable counsel fees) arising out of or attributable to:

(1) the performance of Investor Services under the agreement provided that
Investor Services acted in good faith with due diligence and without negligence
or willful misconduct.

(2) reliance by Investor Services on, or reasonable use by, Investor
Services of information, records and documents which have been prepared on
behalf of, or have been furnished by, the Fund, or the carrying out by Investor
Services of any instructions or requests of the Fund.

(3) the offer or sale of the Fund's shares in violation of any federal or
state law or regulation or ruling by any federal agency unless such violation
results from any failure by Investor Services to comply with written
instructions from the Fund that such offers or sales were not permitted under
such law, rule or regulation.

(4) the refusal of the Fund to comply with terms of the agreement, or the
Fund's lack of good faith, negligence or willful misconduct or breach of any
representation or warranty made by the Fund under the agreement provided that if
the reason for such

C-3
<PAGE> 105

failure is attributable to any action of the Fund's investment adviser or
distributor or any person providing accounting or legal services to the Fund,
Investor Services only will be entitled to indemnification if such entity is
otherwise entitled to the indemnification from the Fund.

See also "Investment Advisory Agreement" in the Statement of Additional
Information.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

See "Investment Advisory Services" in the Prospectus and "Investment
Advisory Agreement", "Other Agreements" and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Asset Management, Inc. (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 27. PRINCIPAL UNDERWRITERS.

(a) The sole principal underwriter is Van Kampen Funds Inc. ("the
Distributor"), which acts as principal underwriter for certain investment
companies and unit investment trusts. See Exhibit (z)(1).

(b) Van Kampen Funds Inc. which is an affiliated person of the Registrant,
is the only principal underwriter for the Registrant. The name, principal
business address and positions and offices with Van Kampen Funds Inc. of each of
its directors and officers are disclosed in Exhibit (z)(2). Except as disclosed
under the heading, "Trustees and Officers" in Part B of this Registration
Statement, none of such persons has any position or office with Registrant.

C-4
<PAGE> 106

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents of the Registrant required by
Section 31(a) of the Investment Company Act of 1940 as amended and the Rules
promulgated thereunder to be maintained (i) by Registrant will be maintained at
its offices, located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace,
Illinois 60181-5555, Van Kampen 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 02171; (ii) by the Adviser, will
be maintained at its offices, located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555; and (iii) by the Distributor, the principal
underwriter, will be maintained at its offices located at 1 Parkview Plaza, PO
Box 5555, Oakbrook Terrace, Illinois 60181-5555.

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-5
<PAGE> 107

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME, certifies that it meets all of the
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the 1933 Act and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Oakbrook Terrace and State of Illinois,
on the 27th day of January, 2000.

VAN KAMPEN U.S. GOVERNMENT
TRUST FOR INCOME

By: /s/ A. THOMAS SMITH III

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

A. Thomas Smith III, Secretary

Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed on January 27, 2000 by the following
persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
Principal Executive Officer:

/s/ RICHARD F. POWERS, III* Trustee and President
- ------------------------------------------------
Richard F. Powers

Principal Financial Officer:

/s/ JOHN L. SULLIVAN* Vice President, Chief Financial Officer
- ------------------------------------------------ and Treasurer
John L. Sullivan

Trustees:

/s/ J. MILES BRANAGAN* Trustee
- ------------------------------------------------
J. Miles Branagan

/s/ JERRY D. CHOATE* Trustee
- ------------------------------------------------
Jerry D. Choate

/s/ LINDA HUTTON HEAGY* Trustee
- ------------------------------------------------
Linda Hutton Heagy

/s/ R. CRAIG KENNEDY* Trustee
- ------------------------------------------------
R. Craig Kennedy

/s/ MITCHELL M. MERIN* Trustee
- ------------------------------------------------
Mitchell M. Merin

/s/ JACK E. NELSON* Trustee
- ------------------------------------------------
Jack E. Nelson

/s/ PHILLIP B. ROONEY* Trustee
- ------------------------------------------------
Phillip B. Rooney
</TABLE>

<PAGE> 108

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ FERNANDO SISTO* Trustee
- ------------------------------------------------
Fernando Sisto

/s/ WAYNE W. WHALEN* Trustee
- ------------------------------------------------
Wayne W. Whalen

/s/ SUZANNE H. WOOLSEY* Trustee
- ------------------------------------------------
Suzanne H. Woolsey

/s/ PAUL G. YOVOVICH* Trustee
- ------------------------------------------------
Paul G. Yovovich
</TABLE>

* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.

<TABLE>
<C> <S>
/s/ A. THOMAS SMITH III January 27, 2000
- ------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact
</TABLE>

<PAGE> 109

SCHEDULE OF EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 12 TO

FORM N-1A

AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
(f)(1) Form of Trustee Deferred Compensation Plan
(f)(2) Form of Trustee Retirement Plan
(i)(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(j) Consent of PricewaterhouseCoopers LLP
(l) Investment Letter
(p) Power of Attorney
(z)(1) List of Investment Companies in response to Item 27(a)
(z)(2) List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)
</TABLE>

<PAGE> 1
EXHIBIT (f) (1)

FORM OF
DEFERRED COMPENSATION AGREEMENT

AGREEMENT, made on this ____ day of _______________, _________
by and between each of the funds listed on Schedule A attached hereto as may be
amended from time to time, each a registered investment company having its
principal offices at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois
60181-5555 (collectively the "Funds" or individually the "Fund"), and
Trustee/Director's Name, residing at Trustee/Director's Address (the "Trustee").

WHEREAS, the Fund and the Trustee desire to enter into an
agreement whereby the Fund will provide to the Trustee a vehicle under which the
Trustee can defer receipt of trustees' fees payable by the Fund.

NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Fund and the Trustee hereby agree
as follows:

1. DEFINITION OF TERMS AND CONSTRUCTION

1.1 Definitions. Unless a different meaning is plainly implied
by the context, the following terms as used in this Agreement shall have the
following meanings:

(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death of
the Trustee.

(b) "Board of Trustees" shall mean the Board of Trustees
or Board of Directors, as the case may be, of the Fund.

(d) "Compensation" shall mean the amount of trustee's fees
paid by the Fund to the Trustee during a Deferral Year prior to reduction for
Compensation Deferrals made under this Agreement.

(e) "Compensation Deferral" shall mean the amount or
amounts of the Trustee's Compensation deferred under the provisions of Section 3
of this Agreement.

(f) "Deferral Account" shall mean the account maintained
to reflect the Trustee's Compensation Deferral made pursuant to Section 3 hereof
and any other credits or debits thereto.

<PAGE> 2

(g) "Deferral Year" shall mean each calendar year during
which the Trustee makes, or is entitled to make, a Compensation Deferral under
Section 3 hereof.

(h) "Valuation Date" shall mean any day upon which the
Fund makes a valuation of the Deferral Account and shall, at a minimum, be the
last business day of each calendar quarter.

1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.

1.3 Headings. The headings and subheadings in this Agreement
are inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.

2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED

2.1 Commencement of Compensation Deferrals. The Trustee may
elect, on a form provided by, and submitted to, the President of the Fund, to
commence Compensation Deferrals under Section 3 hereof for the period beginning
on the later of (i) the date this Agreement is executed or (ii) the date such
form is submitted to the President of the Fund.

2.2 Termination of Deferrals. The Trustee shall not be
eligible to make Compensation Deferrals after the earlier of the following
dates:

(a) The date of which he ceases to serve as a Trustee of
the Fund; or

(b) The effective date of the termination of this
Agreement.

3. COMPENSATION DEFERRALS

3.1 Compensation Deferral Elections.

(a) The Trustee may elect, on the form described in
Section 2.1 hereof, to defer the receipt of all or a portion of the Compensation
for such Deferral Year. Such writing shall set forth the amount of such
Compensation Deferral (in whole percentage amounts). Such election shall
continue in effect for all subsequent Deferral Years unless it is canceled or
modified as provided below.

<PAGE> 3

(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Fund to the Trustee based upon the percentage
amount elected by the Trustee under Section 3.1(a) hereof.

(c) The Trustee may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the President of
the Fund a revised Compensation Deferral election form. Such change will be
effective as of the first day following the date such revision is submitted to
the President of the Fund.

3.2 Valuation of Deferral Account.

(a) The Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Trustee's Compensation
Deferrals under this Agreement. Compensation Deferrals shall be allocated to the
Deferral Account on the first business day following the date such Compensation
Deferrals are withheld from the Trustee's Compensation. The Deferral Account
shall be debited to reflect any distributions from such Account. Such debits
shall be debited to the Deferral Account as of the date such distributions are
made.

(b) Any Compensation Deferrals made into a Trustee's
Deferral Account will be valued as if such amounts are invested in the manner
set forth under Section 3.3 beginning as of the close of business on the last
day of the month in which such Compensation Deferrals were credited to such
Trustee's Deferral Account. As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Account is invested in the manner est
forth herein) attributable to the period following the next preceding Valuation
Date shall be credited to and/or deducted from the Trustee's Deferral Account.

3.3 Investment of Deferral Account Balance.

(a) (1) The Trustee may select, from various options made
available by the Fund, the investment media in which all or part of his Deferral
Account shall be deemed to be invested.

(2) The Trustee shall make an investment designation
on a form provided by the President of the Fund which shall remain effective
until another valid direction has been made by the Trustee as herein provided.
On the investment designation form, the Trustee may select from underlying
investment securities from the options made available to the Trustee pursuant to
Section 3.3(a)(1). The Trustee may amend the investment designation only once
each calendar quarter by giving written direction to the President of the Fund.
Unless otherwise specified, a Trustee's amendment to an investment designation
applies only to future compensation Deferrals. A Trustee may amend the
investment designation for existing amounts in the Trustee's Deferral Account
provided, however, that such changes in investment designation will only be
valid and applied to the existing amounts in the Trustee's Deferral Account if
the Trustee provides sufficient instruction regarding amounts to be exchanged. A
change in

<PAGE> 4

investment designation will be valid only if, after giving effect to such change
in investment designation, the Trustee has selected investment securities from
the options made available to the Trustee pursuant to Section 3.3(a)(1). A
timely, valid change in a Trustee's investment designation shall become
effective as of the close of business on the last day of the calendar quarter
following receipt by the President of the Fund.

(3) The investment media deemed to be made available
to the Trustee, and any limitation on the maximum or minimum percentages of the
Trustee's Deferral Account that may be invested in any particular medium, shall
be the same as from time to time communicated to the Trustee by the President of
the Fund.

(b) Except as provided below, the Trustee's Deferral
Account shall be deemed to be invested in accordance with the investment
designations, provided such designations conform to the provisions of this
Section. If:

(1) the Trustee does not furnish the President of the
Fund with written investment instructions,

(2) the written investment instructions from the
Trustee are unclear, or

(3) less than all of the Trustee's Deferral Account is
covered by such written investment instructions,

then the Trustee's Deferral Account shall be deemed to be invested in the Fund
until such time as the Trustee shall provide the President of the Fund with
complete investment instructions. Notwithstanding the above, the Board of
Trustees, in its sole discretion, may disregard the Trustee's election and
determine that all Compensation Deferrals shall be deemed to be invested in the
Fund.

The Fund shall provide an annual statement to the Trustee
showing such information as is appropriate, including the aggregate amount in
the Deferral Account, as of a reasonably current date.

4. DISTRIBUTIONS FROM DEFERRAL ACCOUNT

4.1 In General. Distributions from the Trustee's Deferral Account shall
be paid in cash, in generally equal annual installments over a period of five
(5) years beginning on the date of the Trustee's retirement or disability,
except that the Board of Trustees may, in its sole discretion, accelerate or,
with the consent of the Trustee, extend the distribution of such Deferral
Account. Notwithstanding the foregoing, in the event of the liquidation,
dissolution or winding up of the Fund or the distribution of all or
substantially all of the Fund's assets and property relating to one or more
series of its shares to the shareholders (for this purpose a sale, conveyance or
transfer of the Fund's assets to a trust, partnership, association or
corporation in exchange for cash, shares or other securities with the transfer
being made subject to, or with the assumption by the

<PAGE> 5

transferee of, the liabilities of the Fund shall not be deemed a termination of
the Fund or such a distribution), all unpaid amounts in the Deferral Account as
of the effective date thereof shall be paid in a lump sum on such effective
date.

4.2 Death Prior to Distribution of Deferral Account. Upon the death of
the Trustee prior to the commencement of the distribution of the amounts
credited to the Deferral Account, the Deferral Account shall be distributed to
the Beneficiary over a period of five (5) years beginning as soon as practicable
after the Trustee's death. In the event of the death of the Trustee after the
commencement of such distribution, but prior to the complete distribution of the
Deferral Account, the balance of the amounts in the Deferral Account shall be
distributed to the Beneficiary over the remaining period during which such
amounts were distributable to the Trustee under Section 4.1 hereof. In the event
the Trustee survives the designated Beneficiary, the balance of such Deferral
Account shall be paid in a lump sum to such Trustee's estate. Notwithstanding
the above, the Board of Trustees may, in its sole discretion, accelerate or,
with the consent of the Beneficiary or the Trustee's estate, as applicable,
extend the distribution of the Deferral Account.

4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the
Trustee's Beneficiary shall be the person or persons so designated by the
Trustee in a written instrument submitted to the President of the Fund. In the
event the Trustee fails to properly designate a Beneficiary, the balance of such
Trustee's Deferred Account shall be paid in a lump sum to such Trustee's estate.

4.4 Payments Due Missing Persons. The Fund shall make a reasonable
effort to locate all persons entitled to benefits under this Agreement. However,
notwithstanding any provisions of this Agreement to the contrary, if, after a
period of five (5) years from the date such benefit shall be due, any such
persons entitled to benefits have not been located, their rights under this
Agreement shall stand suspended. Before this provision becomes operative, the
Fund shall send a certified letter to all such persons to their last known
address advising them that their benefits under this Agreement shall be
suspended. Any such suspended amounts shall be held by the Fund for a period of
three (3) additional years (or a total of eight (8) years from the time the
benefits first become payable) and thereafter, if unclaimed, such amounts shall
be forfeited.

5. AMENDMENTS AND TERMINATION

5.1 Amendments.

(a) The Fund and the Trustee may, by a written instrument
signed by both such parties, amend this Agreement at any time and in any manner.

(b) The Fund reserves the right to amend, in whole or in part,
and in any manner, any or all of the provisions of this Agreement by action of
its Board

<PAGE> 6

of Trustees for the purposes of complying with any provision of the Code or any
other technical or legal requirements, provided that:

(1) No such amendment shall make it possible for any
part of the Trustee's Deferral Account to be used for, or diverted to,
purposes other than for the exclusive benefit of the Trustee or the
Beneficiaries, except to the extent otherwise provided in this
Agreement; and

(2) No such amendment may reduce the amount of the
Trustee's Deferral Account as of the effective date of such amendment.

5.2 Termination. The Trustee and the Fund may, by written instrument
signed by both such parties, terminate this Agreement at any time. The rights of
the Trustee to the Deferral Account shall become payable as of the Valuation
Date next following the effective date of the termination of this Agreement.

6. MISCELLANEOUS.

6.1 Rights of Creditors.

(a) This Agreement is unfunded. Neither the Trustee nor any
other persons shall have any interest in any specific asset or assets of the
Fund by reason of any Deferral Account hereunder, nor any rights to receive
distribution of the Deferral Account except and as to the extent expressly
provided hereunder. The Fund shall not be required to purchase, hold or dispose
of any investments pursuant to this Agreement; however, if in order to cover its
obligations hereunder the Fund elects to purchase any investments the same shall
continue for all purposes to be a part of the general assets and property of the
Fund, subject to the claims of its general creditors and no person other than
the Fund shall by virtue of the provisions of this Agreement have any interest
in such assets other than an interest as a general creditor.

(b) The rights of the Trustee and the Beneficiaries to the
amounts held in the Deferral Account are unsecured and shall be subject to the
creditors of the Fund. With respect to the payment of amounts held under the
Deferral Account, the Trustee and the Beneficiaries have the status of unsecured
creditors of the Fund. This Agreement is executed on behalf of the Fund by an
officer of the Fund as such and not individually. Any obligation of the Fund
hereunder shall be an unsecured obligation of the Fund and not of any other
person.

6.2 Agents. The Fund may employ agents and provide for such clerical,
legal, actuarial, accounting, advisory or other services as it deems necessary
to perform its duties under this Agreement. The Fund shall bear the cost of such
services and all other expenses it incurs in connection with the administration
of this Agreement.

<PAGE> 7

6.3 Liability and Indemnification. Except for its own gross negligence,
willful misconduct or willful breach of the terms of this Agreement, the Fund
shall be indemnified and held harmless by the Trustee against liability or
losses occurring by reason of any act or omission of the Fund or any other
person.

6.4 Incapacity. If the Fund shall receive evidence satisfactory to it
that the Trustee or any Beneficiary entitled to receive any benefit under the
Agreement is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such benefit and to give a valid
release therefor, and that another person or an institution is then maintaining
or has custody of the Trustee or Beneficiary and that no guardian, committee or
other representative of the estate of the Trustee or Beneficiary shall have been
duly appointed, the Fund may make payment of such benefit otherwise payable to
the Trustee or Beneficiary to such other person or institution, including a
custodian under the Uniform Gifts to Minors Act or corresponding legislation
(such custodian shall be an adult, a guardian of the minor or a trust company),
and the release of such other person or institution shall be a valid and
complete discharge for the payment of such benefit.

6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.

6.6 Governing Law. This Agreement is made and entered into in the State
of Illinois, and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Illinois.

6.7 Nonguarantee of Trusteeship. Nothing contained in this Agreement
shall be construed as a contract or guarantee of the right of the Trustee to be,
or remain as, a trustee of the Fund or to receive any, or any particular rate
of, Compensation.

6.8 Counsel. The Fund may consult with legal counsel with respect to
the meaning or construction of this Agreement or its obligations or duties
hereunder or with respect to any action or proceeding or any question of law,
and it shall be fully protected with respect to any action taken or omitted by
it in good faith pursuant to the advice of legal counsel.

6.9 Spendthrift Provision. The Trustee's and Beneficiaries' interests
in the Deferral Account may not be anticipated, sold, encumbered, pledged,
mortgaged, charged, transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so by any person
shall render the Deferral Amount immediately forfeitable.

6.10 Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or mailed by United
States

<PAGE> 8

registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight delivery service providing for a signed return
receipt, addressed to the Trustee at the home address set forth in the Fund's
records and to the Fund at the address set forth on the first page of this
Agreement, provided that all notices to the Fund shall be directed to the
attention of the President of the Fund or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

6.11 Entire Agreement. This Agreement contains the entire understanding
between the Fund and the Trustee with respect to the payment of non-qualified
elective deferred compensation by the Fund to the Trustee.

6.12 Interpretation of Agreement. Interpretations of, and
determinations related to, this Agreement made by the Fund in good faith,
including any determinations of the amounts of the Deferral Account, shall be
conclusive and binding upon all parties; and the Fund shall not incur any
liability to the Trustee for any such interpretation or determination so made or
for any other action taken by it in connection with this Agreement in good
faith.

6.13 Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the Fund and its successors and assigns and to
the Trustee and such Trustee's heirs, executors, administrators and personal
representatives.

6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.

6.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

<PAGE> 9

IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the day and year first above
written.

On behalf of the Funds
listed on Schedule A
attached hereto:

By:
------------------------------
Name:
----------------------------
Title:
---------------------------

On behalf of the
Trustee/Director listed on
page 1 hereto:

----------------------------------
Trustee/Director's Signature

<PAGE> 1

EXHIBIT (f) (2)

FORM OF
RETIREMENT PLAN FOR EACH FUND

Van Kampen (Fund Name), a registered investment company
having its principal offices at 1 Parkview Plaza, P.O. Box 5555,Oakbrook
Terrace, Illinois 60181-5555 (the "Fund"), has adopted this Retirement Plan,
effective (date shown on Annex A) (the "Plan"), for its Eligible Trustees (as
defined herein) in order to recognize and reward the valued services provided by
such trustees or directors, as the case may be, to the Fund.

1. DEFINITION OF TERMS AND CONSTRUCTION

1.1 Definitions. Unless a different meaning is plainly implied
by the context, the following terms as used in this Plan shall have the
following meanings:

(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 6.4 hereof to receive benefits after the death of
the Eligible Trustee.

(b) "Board of Trustees" shall mean the Board of Trustees
or the Board of Directors, as the case may be, of the Fund.

(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.

(e) "Compensation" shall mean an amount equal to $2,500.

(f) "Disability" shall have the meaning described in
Section 5.1.

(g) "Early Retirement Benefit" shall have the meaning
described in Section 3.3.

(h) "Effective Date" shall mean.

(i) "Effective Date Trustee" means a person who is a
trustee or director, as the case may be, of the Fund on the Effective Date.

<PAGE> 2

(j) "Eligible Retirement Age" shall have the meaning
described in Section 4.1.

(k) "Eligible Trustee" shall mean a person who: (i) is or
becomes a trustee or director, as the case may be, of the Fund on or after the
Effective Date, and (ii) is, prior to the time of such trustee's or director's,
as the case may be, termination of service, receiving trustee's or director's
fees from the Fund.

(l) "Fund Complex" shall mean the funds listed on Schedule
A attached hereto as may be amended from time to time.

(m) "Mandatory Retirement Age" shall have the meaning
described in Section 4.1.

(n) "Normal Distribution" shall have the meaning described
in Section 6.1.

(o) "Normal Retirement Benefit" shall have the meaning
described in Section 3.2.

(p) "Plan Committee" shall have the meaning described in
Section 8.2.

(q) "Retirement Benefit" shall mean the applicable normal
Retirement Benefit, Early Retirement Benefit or Capped Retirement Benefit due to
such trustee or director, as the case may be.

(r) "Retirement Benefit Cap" shall mean the amount listed
on Schedule A attached hereto as may be amended from time to time.

(s) "Service Requirement" shall have the meaning described
in Section 2.1.

(t) "Years of Service" shall be counted using January 1st
of the year such trustee or director, as the case may be, begins service as a
trustee or director of the Fund and include all completed calendar years of
service prior to such trustee's or director's, as the case may be, termination
of service, including such service performed prior to the adoption of the plan.

2
<PAGE> 3

1.2 Plurals and Gender. Where appearing in this Plan the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
References herein to "trustees" shall include trustees of a fund organized as a
trust or directors of a fund organized as a corporation, as the case may be.

1.3 Headings. The headings and subheadings in this Plan are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.

2. SERVICE REQUIREMENT

2.1 Service Requirement. Each Eligible Trustee that has
completed five (5) Years of Service as a trustee for the Fund shall be entitled
to receive retirement benefits from the Fund. An Eligible Trustee is not
entitled to benefits pursuant to the Plan merely because such trustee is an
Eligible Trustee; a trustee must meet the Years of Service requirement.

3. RETIREMENT BENEFIT

3.1 In General. The retirement benefit amount for an Eligible
Trustee meeting the Service Requirement is determined at the time of such
trustee's termination of service as a trustee. Subject to Sections 3.4 and 5.1,
an Eligible Trustee terminating service as a trustee to the Fund prior to
attaining the Eligible Retirement Age is eligible for the Early Retirement
Benefit as described in Section 3.3. Subject to Section 3.4, an Eligible Trustee
terminating service as a trustee to the fund after attaining the Eligible
Retirement Age is eligible for the Normal Retirement Benefit as described in
Section 3.2. An Eligible Trustee terminating service as a trustee to the Fund
after the Mandatory Retirement Age forfeits and is not entitled to any
retirement benefit under the Plan.

3.2 Normal Retirement Benefit. The Normal Retirement Benefit
shall be 50% of the Compensation and such benefit shall increase by 10% for each
Year of Service by such trustee in excess of five (5) Years of Service up to a
maximum amount of 100% of the Compensation for any trustee who has completed ten
(10) or more Years of Service.

3
<PAGE> 4

<TABLE>
<CAPTION>
=======================================================================
Years of Service Percentage Of Compensation
- -----------------------------------------------------------------------
<S> <C> <C>
Less than 5 0%
- -----------------------------------------------------------------------
5 50%
- -----------------------------------------------------------------------
6 60%
- -----------------------------------------------------------------------
7 70%
- -----------------------------------------------------------------------
8 80%
- -----------------------------------------------------------------------
9 90%
- -----------------------------------------------------------------------
10 or more 100%
- -----------------------------------------------------------------------
</TABLE>

3.3 Early Retirement Benefit. The Early Retirement Benefit
shall be the Normal Retirement Benefit for such trustee based upon such
trustee's Years of Service at the time of such trustee's termination of service
reduced by 3% for each year prior to the Eligible Retirement Age.

3.4 Retirement Benefit Cap. A trustee shall not receive
aggregate retirement benefits per calendar year from the Fund Complex in excess
of the Retirement Benefit Cap in effect at the time of such trustee's
termination of service. When a trustee would otherwise be entitled to aggregate
retirement benefits from the Fund Complex in excess of the Retirement Benefit
Cap but for this provision, the Fund shall only pay a Capped Retirement Benefit
to such trustee based on its pro rata portion of the retirement benefit the Fund
would have paid relative to the aggregate retirement benefits from the Fund
Complex absent such Retirement Benefit Cap.

4. RETIREMENT AGE

4.1 Retirement Age. The Eligible Retirement Age shall be upon
attaining the age of 60. A trustee may elect to continue to serve as a trustee
beyond the Eligible Retirement Age to a Mandatory Retirement Age of December
31st in the year such trustee reaches the age of 72; provided, however, that the
Mandatory Retirement Age shall be the later of the Mandatory Retirement Age as
set forth herein or as set forth in the by-laws of the Fund as may be amended
from time to time.

4
<PAGE> 5

5. DISABILITY

5.1 Disability. Disability shall have the meaning as set forth
in the Code under Section 22(e)(3). An Eligible Trustee who becomes disabled, as
defined herein, prior to reaching the Eligible Retirement Age is not subject to
the Early Retirement Benefit provision in section 3.3 but is instead eligible to
receive the lesser of the Normal Retirement Benefit or Capped Retirement Benefit
calculated as described in Section 3 using the Disability date as the date of
such trustee's termination of service.

6. PAYMENT OF RETIREMENT BENEFITS

6.1 Retirement or Disability Terminating Trustee's Service.
Subject to Sections 6.2 and 6.3, an Eligible Trustee shall receive the amount of
the applicable Retirement Benefit calculated pursuant to Section 3 for each of
the ten (10) years commencing in the fiscal year of such trustee's termination
of service (the "Normal Distribution"). Payment of benefits to an Eligible
Trustee shall commence, and be paid annually thereafter, at the end of the
Fund's fiscal year. In the event of such Eligible Trustee's death prior to
complete distribution under the Plan, such trustee's Beneficiary shall receive
the remaining retirement benefits based upon the Normal Distribution. In the
event the Eligible Trustee survives the Beneficiary or no Beneficiary has been
named, the Fund shall pay a lump sum amount equal to the actuarial present value
of the remaining retirement benefits to the Eligible Trustee's estate.

6.2 Death Terminating Trustee's Service. Subject to Section
6.3, in the event an Eligible Trustee's death causes the termination of service,
the Eligible Trustee's Beneficiary shall receive the amount of the applicable
Retirement Benefit calculated pursuant to Section 3 for each of the ten (10)
years commencing in the fiscal year of such trustee's death. Payment of benefits
to such Beneficiary shall commence, and be paid annually thereafter, at the end
of the Fund's fiscal year. In the event the Eligible Trustee survived the
Beneficiary or no Beneficiary was named, the Fund shall pay a lump sum amount
equal to the actuarial present value of the applicable retirement benefits to
the Eligible Trustee's estate.

6.3 Liquidation, Dissolution, Winding Up or Distribution of
Substantially All of the Assets of the Fund. Notwithstanding Sections 6.1 or
6.2, in the event of a liquidation, dissolution or winding up of the Fund or
distribution of all or substantially all of the Fund's assets and property, the
Fund shall pay to each Eligible Trustee serving as a trustee of the Fund on the
effective date of such liquidation, dissolution, winding up or distribution a
lump sum amount equal to the actuarial present value of the applicable Normal
Retirement Benefit or Early Retirement Benefit calculated pursuant to Section 3
using the effective date of such liquidation, dissolution, winding up or
distribution as the date of such trustee's termination

5
<PAGE> 6

of services. In the event an Eligible Trustee terminates services prior to such
liquidation, dissolution, winding up or distribution and such trustee (or such
trustee's Beneficiary) is then receiving payment of benefits pursuant to either
Section 6.1 or 6.2 at the time of such liquidation, dissolution, winding up or
distribution, the Fund shall pay to such trustee (or Beneficiary) on the
effective date of such liquidation, dissolution, winding up or distribution a
lump sum amount equal to the actuarial present value of the remaining retirement
benefits due to such trustee (or Beneficiary).

6.4 Designation of Beneficiary. The Eligible Trustee's
Beneficiary shall be the person or persons so designated by such trustee in a
written instrument submitted to the President of the Fund. In the event the
Eligible Trustee fails to properly designate a Beneficiary, the Fund shall pay a
lump sum amount equal to the actuarial present value of the applicable
retirement benefits to the Eligible Trustee's estate.

6.5 Payments Due Missing Persons. The Fund shall make a
reasonable effort to locate all persons entitled to benefits under this Plan.
However, notwithstanding any provisions of this Plan to the contrary, if, after
a period of five (5) years from the date such benefit shall be due, any such
persons entitled to benefits have not been located, their rights under this Plan
shall stand suspended. Before this provision becomes operative, the Fund shall
send a certified letter to all such persons to their last known address advising
them that their benefits under this Plan shall be suspended. Any such suspended
amounts shall be held by the Fund for a period of three (3) additional years (or
a total of eight (8) years from the time the benefits first become payable) and
thereafter, if unclaimed, such amounts shall be forfeited.

6.6 Actuarial Present Value Calculations. For purposes of this
Plan, the "actuarial present value" of any benefits shall be computed using
interest factors and other reasonable assumptions chosen by the Plan Committee.
The Plan Committee shall have sole and uncontrolled discretion with respect to
the application of the provisions of this paragraph and such exercise of
discretion shall be conclusive and binding on the Eligible Trustee, any
Beneficiary or other person.

7. AMENDMENTS AND TERMINATION

7.1 Amendments. The Fund anticipates the Plan to be permanent
but the Fund reserves the right to amend any or all of the provisions of this
Plan by action of its Board of Trustees or Board of Directors, as the case may
be, when, in the sole opinion of the Board of Trustees or Board of Directors, as
the case may be, such amendment is advisable, including for the purposes of
complying with any provision of the Code or any other technical or legal
requirements.

6
<PAGE> 7

7.2 Termination. The Fund may by action of its Board of
Trustees or Board of Directors, as the case may be, terminate this Plan at any
time.

8. MISCELLANEOUS.

8.1 Forfeiture of Benefits. Notwithstanding any other
provision of the Plan, future payment of any retirement benefit hereunder to an
Eligible Trustee, Beneficiary or other person will, at the discretion of the
Plan Committee, be discontinued and forfeited, and the Fund will have no further
obligation hereunder to such Eligible Trustee, Beneficiary or other person, if
any of the following circumstances occur:

(a) The Eligible Trustee is discharged from the Fund's
Board of Trustees or Board of Directors, as the case may be, for cause;

(b) The Eligible Trustee engages in competition with the
Fund or other acts considered detrimental or not in the best interests of the
Fund or its shareholders following such trustee's termination of service; or

(c) The Eligible Trustee performs an act or acts of wilful
malfeasance or reckless disregard of duties in connection with the service as a
trustee for the Fund.

The Plan Committee shall have the sole and uncontrolled discretion with respect
to the application of the provisions of this paragraph and such exercise of
discretion shall be conclusive and binding on the Eligible Trustee, any
Beneficiary or other person.

8.2 Administration. The Plan shall be administered by a Plan
Committee which shall be composed of three non-affiliated trustees and the
principal financial or accounting officer as designated by the Board of Trustees
or Board of Directors, as the case may be, of the Fund.

8.3 Agents. The Fund may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform its duties under this Plan. The Fund shall bear the cost of
such services and all other expenses it incurs in connection with the
administration of this Plan.

8.4 Funding and Rights of Creditors. The obligations of the
Fund under this Agreement are unfunded. Neither the Eligible Trustees, the
Beneficiaries nor any other persons shall have any interest in any specific
asset or assets of the Fund for the benefits hereunder, nor any rights to
receive distribution of the benefits except and as to the extent expressly
provided hereunder. The rights of the Eligible Trustees, the Beneficiaries or
any other person to the benefits hereunder are unsecured and shall have no
priority over the

7
<PAGE> 8

other creditors of the Fund. Any obligation of the Fund hereunder shall be an
unsecured obligation of the Fund and not of any other person in relation to this
Plan.

8.5 Liability and Indemnification. Except for its own gross
negligence, willful misconduct or willful breach of the terms of this Plan, the
Fund shall be indemnified and held harmless by the Eligible Trustee against
liability or losses occurring by reason of any act or omission of the Fund or
any other person.

8.6 Incapacity. If the Fund shall receive evidence
satisfactory to it that the Eligible Trustee or any Beneficiary entitled to
receive any benefit under the Plan is, at the time when such benefit becomes
payable, a minor, or is physically or mentally incompetent to receive such
benefit and to give a valid release therefor, and that another person or an
institution is then maintaining or has custody of the Eligible Trustee or
Beneficiary and that no guardian, committee or other representative of the
estate of the Eligible Trustee or Beneficiary shall have been duly appointed,
the Fund may make payment of such benefit otherwise payable to the Trustee or
Beneficiary to such other person or institution, including a custodian under the
Uniform Gifts to Minors Act or corresponding legislation (such custodian shall
be an adult, a guardian of the minor or a trust company), and the release of
such other person or institution shall be a valid and complete discharge for the
payment of such benefit.

8.7 Governing Law. This Plan is established under laws of the
State of Illinois, and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Illinois.

8.8 Nonguarantee of Trusteeship. Nothing contained in this
Plan shall be construed as a contract or guarantee of the right of the Eligible
Trustee to be, or remain as, a trustee of the Fund or to receive any, or any
particular rate of, Compensation.

8.9 Spendthrift Provision. The Eligible Trustee's and
Beneficiaries' interests in the benefits hereunder may not be anticipated, sold,
encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor
become subject to execution, garnishment or attachment, and any attempt to do so
by any person shall render the benefits immediately forfeitable.

8.10 Disclosure and Notices. The rights and benefits of
Eligible Trustees under the Plan shall not be represented or evidenced by any
form of certificate or other instrument. Each Eligible Trustee shall receive a
copy of the Plan and the Plan Committee will make available for inspection by
any Eligible Trustee a copy of the rules and regulations used by the Plan
Committee in administering the Plan. For purposes of this Plan, all notices and
other communications provided for in this Plan shall be in writing and shall be
deemed

8
<PAGE> 9

to have been duly given when delivered personally or mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight delivery service providing for a signed return
receipt, addressed to the Eligible Trustee at the home address set forth in the
Fund's records and to the Fund at the address set forth on the first page of
this Plan, provided that all notices to the Fund shall be directed to the
attention of the President of the Fund or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

8.11 Interpretation of Plan. Interpretations of, and
determinations related to, this Plan made by the Plan Committee in good faith,
including any determinations of the amounts of the benefits, shall be conclusive
and binding upon all parties; and the Fund shall not incur any liability to the
Eligible Trustee for any such interpretation or determination so made or for any
other action taken by it in connection with this Plan in good faith.

8.12 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Fund and its successors and assigns
and to the Eligible Trustees and such trustees' heirs, executors, administrators
and personal representatives.

<PAGE> 1
Exhibit(i)(2)

[Letterhead of Skadden, Arps, Slate, Meagher & Flom (Illinois)]

January 27, 2000

Van Kampen U.S. Government Trust for Income Fund
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

Re: Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A for the
Van Kampen U.S. Government Trust for Income
Fund (the "Registration Statement")
(File Nos. 33-49358 and 811-6724)
--------------------------------

We hereby consent to the reference to our firm under the heading "Legal
Counsel" in the Registration Statement. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder.

Very truly yours,

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

<PAGE> 1

EXHIBIT (j)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
November 11, 1999, relating to the financial statements and financial highlights
of Van Kampen U.S. Government Trust for Income, which appears in such Statement
of Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "Financial Highlights"
and "Independent Accountants" in such Prospectus and to the reference to us
under the heading "Independent Accountants" in such Statement of Additional
Information.

/s/ PRICEWATERHOUSECOOPERS LLP

PRICEWATERHOUSECOOPERS LLP

Chicago, Illinois
January 19, 2000

<PAGE> 1
Exhibit(l)

September 17, 1992

American Capital U.S. Government Trust for Income
2800 Post Oak Blvd.
Houston, TX 77056

Re: Investment Letter

Gentlemen:

We are purchasing 5,302 Class A shares and 5,302 Class B shares of
beneficial interest of American Capital U.S. Government Trust for Income (the
"Trust"), $0.01 par value per share, (the "Shares") at a price of $9.43 per
share upon the terms and conditions set forth below.

We understand that the Shares have not been registered under any state or
federal securities laws and that the Trust is relying on certain exemptions
from such registration requirements including exemption dependent upon our
intent in acquiring the Shares. We also understand that any resale of the
Shares or any portion thereof may be subject to restrictions under state and
federal securities laws. Thus we may be required to bear the economic risk of
an investment in the Shares for an indefinite period of time.

We hereby represent and warrant that we are acquiring the Shares solely
for our own account and solely for investment purposes and not with a view to
the resale, redemption or disposition of all or any part thereof and that we
have no present plan or intention to sell, redeem or otherwise dispose of the
Shares or any part thereof. We also represent that the Shares will not be
resold except through redemption or repurchase.

We understand that your organizational expenses will be capitalized and
charged to operations over a period of five years from the date of commencement
of operations. In the event that we redeem any of the Shares within such
five-year amortization period, we understand that the proceeds payable to us
will be reduced by the pro rata share (based upon the proportion of the Shares
redeemed to the total number of the remaining Shares purchased by us) of the
then unamortized deferred organizational expenses as of the date of any such
redemption.
<PAGE> 2
September 17, 1992
Page 2

We further understand that in the event you liquidate before the deferred
organizational expenses are fully amortized, then the Shares shall bear their
pro rata share (as described above) of such unamortized deferred organizational
expenses.

Very truly yours,

AMERICAN CAPITAL ASSET
MANAGEMENT, INC.

By /s/ Nori L. Gabert
___________________
Nori L. Gabert,
Vice President, Associate
General Counsel and Secretary

<PAGE> 1
EXHIBIT (p)

POWER OF ATTORNEY

The undersigned, being Officers and Trustees of each of the Van Kampen
Open End Trusts (individually, a "Trust") as indicated on Schedule 1 attached
hereto and incorporated by reference, each a Delaware business trust, except for
the Van Kampen Pennsylvania Tax Free Income Fund being a Pennsylvania trust, and
being Officers and Directors of Van Kampen Series Fund, Inc. (the
"Corporation"), a Maryland corporation, do hereby, in the capacities shown
below, appoint Richard F. Powers, III, Dennis J. McDonnell and A. Thomas Smith
III, each of Oakbrook Terrace, Illinois, as agents and attorneys-in-fact with
full power of substitution and resubstitution, for each of the undersigned, to
execute and deliver, for and on behalf of the undersigned, any and all
amendments to the Registration Statement filed by each Trust or the Corporation
with the Securities and Exchange Commission pursuant to the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940.

This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together shall constitute
one instrument.

Dated: December 15, 1999

Signature Title
--------- -----

/s/ Richard F. Powers, III President, Trustee/Director
- ------------------------------------
Richard F. Powers, III

/s/ John L. Sullivan Vice President, Chief Financial
- ------------------------------------ Officer and Treasurer
John L. Sullivan

/s/ J. Miles Branagan Trustee/Director
- ------------------------------------
J. Miles Branagan

/s/ Jerry D. Choate Trustee/Director
- ------------------------------------
Jerry D. Choate

/s/ Linda Hutton Heagy Trustee/Director
- ------------------------------------
Linda Hutton Heagy

/s/ R. Craig Kennedy Trustee/Director
- ------------------------------------
R. Craig Kennedy

/s/ Mitchell M. Merin Trustee/Director
- ------------------------------------
Mitchell M. Merin

/s/ Jack E. Nelson Trustee/Director
- ------------------------------------
Jack E. Nelson

/s/ Phillip B. Rooney Trustee/Director
- ------------------------------------
Phillip B. Rooney

/s/ Fernando Sisto, Sc. D Trustee/Director
- ------------------------------------
Fernando Sisto, Sc. D.

/s/ Wayne W. Whalen Trustee/Director
- ------------------------------------
Wayne W. Whalen

/s/ Suzanne H. Woolsey Trustee/Director
- ------------------------------------
Suzanne H. Woolsey

/s/ Paul G. Yovovich Trustee/Director
- ------------------------------------
Paul G. Yovovich

<PAGE> 2

SCHEDULE 1

VAN KAMPEN U.S. GOVERNMENT TRUST
VAN KAMPEN TAX FREE TRUST
VAN KAMPEN TRUST
VAN KAMPEN EQUITY TRUST
VAN KAMPEN EQUITY TRUST II
VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN TAX FREE MONEY FUND
VAN KAMPEN COMSTOCK FUND
VAN KAMPEN CORPORATE BOND FUND
VAN KAMPEN EMERGING GROWTH FUND
VAN KAMPEN ENTERPRISE FUND
VAN KAMPEN EQUITY INCOME FUND
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
VAN KAMPEN GOVERNMENT SECURITIES FUND
VAN KAMPEN GROWTH AND INCOME FUND
VAN KAMPEN HARBOR FUND
VAN KAMPEN HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN LIFE INVESTMENT TRUST
VAN KAMPEN LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN PACE FUND
VAN KAMPEN REAL ESTATE SECURITIES FUND
VAN KAMPEN RESERVE FUND
VAN KAMPEN TAX-EXEMPT TRUST
VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN WORLD PORTFOLIO SERIES TRUST

<PAGE> 1
EXHIBIT (z)(1)

Item 27(a)
- ----------

Van Kampen U.S. Government Trust
Van Kampen U.S. Government Fund
Van Kampen Tax Free Trust
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen California Tax Free Income Fund*
Van Kampen Michigan Tax Free Income Fund*
Van Kampen Missouri Tax Free Income Fund*
Van Kampen Ohio Tax Free Income Fund*
Van Kampen Trust
Van Kampen High Yield Fund
Van Kampen Strategic Income Fund
Van Kampen Equity Trust
Van Kampen Aggressive Growth Fund
Van Kampen Great American Companies Fund
Van Kampen Growth Fund
Van Kampen Mid Cap Value Fund
Van Kampen Prospector Fund
Van Kampen Small Cap Value Fund
Van Kampen Utility Fund
Van Kampen Equity Trust II
Van Kampen Technology Fund
Van Kampen Pennsylvania Tax Free Income Fund
Van Kampen Tax Free Money Fund
Van Kampen Prime Rate Income Trust
Van Kampen Senior Floating Rate Fund
Van Kampen Comstock Fund
Van Kampen Corporate Bond Fund
Van Kampen Emerging Growth Fund
Van Kampen Enterprise Fund
Van Kampen Equity Income Fund
Van Kampen Exchange Fund
The Explorer Institutional Trust
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 2

Van Kampen Limited Maturity Government Fund
Van Kampen Global Managed Assets Fund
Van Kampen Government Securities Fund
Van Kampen Growth and Income Fund
Van Kampen Harbor Fund
Van Kampen High Income Corporate Bond Fund
Van Kampen Life Investment Trust on behalf of its series
Asset Allocation Portfolio
Comstock Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio
Van Kampen Pace Fund
Van Kampen Real Estate Securities Fund
Van Kampen Reserve Fund
Van Kampen Tax Exempt Trust
Van Kampen High Yield Municipal Fund
Van Kampen U.S. Government Trust for Income
Van Kampen World Portfolio Series Trust
Van Kampen Global Government Securities Fund
Van Kampen Series Fund, Inc.
Van Kampen American Value Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Debt Fund*
Van Kampen Emerging Markets Fund
Van Kampen Equity Growth Fund
Van Kampen European Equity Fund
Van Kampen Focus Equity Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Global Fixed Income Fund
Van Kampen Global Franchise Fund
Van Kampen Growth and Income Fund II*
Van Kampen High Yield & Total Return Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund*
Van Kampen Latin American Fund
Van Kampen Mid Cap Growth Fund
Van Kampen Value Fund
Van Kampen Worldwide High Income Fund

* Funds that have not commenced investment operations.
<PAGE> 3

<TABLE>
<S> <C>
Insured Municipals Income Trust Series 417
California Insured Municipals Income Trust Series 182
FLORIDA INSURED MUNICIPALS INCOME TRUST SERIES 128
MICHIGAN INSURED MUNICIPALS INCOME TRUST SERIES 159
New York Insured Municipals Income Trust Series 149
PENNSYLVANIA INSURED MUNICIPALS INCOME TRUST SERIES 246
Van Kampen Focus Portfolios, Insured Income Trust Series 75
THE DOW(SM) STRATEGIC 10 TRUST January 2000
SERIES
THE DOW(SM) STRATEGIC 10 TRUST January 2000
TRADITIONAL
SERIES
THE DOW(SM) STRATEGIC 5 TRUST January 2000
SERIES
THE DOW(SM) STRATEGIC 5 TRUST January 2000
TRADITIONAL
SERIES
EAFE STRATEGIC 20 TRUST January 2000
SERIES
STRATEGIC PICKS OPPORTUNITY TRUST January 2000
SERIES
NASDAQ Strategic 10 Trust January 2000 Series
Dow 30 Index Trust Series 9
Dow & Tech Strategic 10 Trust Series 1299a
Dow & Tech Strategic 10 Trust Series 1299b
Global Energy Trust Series 12
Financial Institutions Trust Series 3a
Financial Institutions Trust Series 3b
Edward Jones Select Growth Trust November 1999
Series
Internet Trust Series 18A
Internet Trust Series 18B
Morgan Stanley High-Technology 35 Index Trust Series 9A
Morgan Stanley High-Technology 35 Index Trust Series 9B
Pharmaceutical Trust Series 8A
Pharmaceutical Trust Series 8B
Telecommunications & Bandwidth Trust Series 8A
Telecommunications and Bandwidth Trust Series 8B
New Frontier Utility Trust Series 8A
New Frontier Utility Trust Series 8B
Roaring 2000s Trust Series 4a
Roaring 2000s Trust Series 4b
Roaring 2000s Trust Traditional Series 4
Morgan Stanley Multinational Index Trust Series 2A
Morgan Stanley Multinational Index Trust Series 2B
Software Trust Series 2A
Software Trust Series 2B
Natcity - Great American Equities Trust Series 3
Natcity - Great American Value Trust Series 1
Josephthal - The New Millennium Consumer Trust, Retail.com Portfolio 1
</TABLE>

<PAGE> 1
EXHIBIT (z)(2)

Item 27(b)
- ----------

<TABLE>

<S> <C> <C>
Richard F. Powers III Chairman & Chief Executive Officer Oakbrook Terrace, IL
John H. Zimmerman III President Oakbrook Terrace, IL
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary;
Vice President and Secretary of the Funds
William R. Rybak Executive Vice President, Chief
Financial Officer & Treasurer Oakbrook Terrace, IL
Michael H. Santo Executive Vice President & Chief
Operations & Technology Officer Oakbrook Terrace, IL
Colette M. Saucedo Executive Vice President & Houston, TX
Chief Administrative Officer
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary; Vice President
and Secretary of the Funds
Steven M. Massoni Executive Vice President Oakbrook Terrace, IL
David Swanson Executive Vice President and Chief
Marketing Officer Oakbrook Terrace, IL
Laurence J. Althoff Sr. Vice President & Controller Oakbrook Terrace, IL
Don J. Andrews Sr. Vice President & Chief Compliance Oakbrook Terrace, IL
Officer
Sara L. Badler Sr. Vice President, Deputy Oakbrook Terrace, IL
General Counsel & Assistant Secretary;
Assistant Secretary of the Funds
James J. Boyne Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Glenn M. Cackovic Senior Vice President Laguna Niguel, CA
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
John E. Doyle Sr. Vice President Oakbrook Terrace, IL
Richard G. Golod Sr. Vice President Annapolis, MD
Eric J. Hargens Senior Vice President Orlando, FL
Carl Mayfield Senior Vice President Lakewood, CO
Mark R. McClure Senior Vice President Oakbrook Terrace, IL
Robert F. Muller, Jr. Senior Vice President Oakbrook Terrace, IL
Walter E. Rein Sr. Vice President Oakbrook Terrace, IL
James J. Ryan Sr. Vice President Oakbrook Terrace, IL
Frederick Shepherd Sr. Vice President Houston, TX
Weston B. Wetherell Senior Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Asst. Secretary;
Assistant Secretary of the Funds
Robert S. West Sr. Vice President Oakbrook Terrace, IL
Edward G. Wood, III Sr. Vice President,
Chief Operating Officer; Oakbrook Terrace. IL
Vice President of the Funds

James R. Yount Senior Vice President Mercer Island, WA
Patricia A. Bettlach 1st Vice President Chesterfield, MO
Gregory Heffington 1st Vice President Ft. Collins, CO
David S. Hogaboom 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President Danville, CA
Maura A. McGrath 1st Vice President New York, NY
Thomas Rowley 1st Vice President St. Louis, MO
Andrew J. Scherer 1st Vice President Oakbrook Terrace, IL
James D. Stevens 1st Vice President North Andover, MA
</TABLE>

James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Timothy R. Armstrong Vice President Wellington, FL
Matthew Baker Vice President Oakbrook Terrace, IL
Shakeel Anwar Barkat Vice President Annapolis, MD
Scott C. Bernstiel Vice President Plainsboro, NJ
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
William Edwin Bond Vice President New York, NY
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Elizabeth M. Brown Vice President Houston, TX
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Juanita E. Buss Vice President Kennesaw, GA
Christine Cleary Byrum Vice President Tampa, FL
Richard J. Charlino Vice President Oakbrook Terrace, IL
Deanne Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
German Clavijo Vice President Atlanta, GA
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Kevin J. Connors Vice President Oakbrook Terrace, IL
Gina Costello Vice President Oakbrook Terrace, IL
Suzanne Cummings Vice President Oakbrook Terrace, IL
Michael E. Eccleston Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Sarah Kessler Gieser Vice President Oakbrook Terrace, IL
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John G. Hansen Vice President Oakbrook Terrace, IL
Joseph Hays Vice President Cherry Hill, NJ
Michael D. Hibsch Vice President Oakbrook Terrace, IL
Susan J. Hill Vice President Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
Bryn M. Hoggard Vice President Houston, TX
Michelle Huber Vice President Oakbrook Terrace, IL
Michael B. Hughes Vice President Oakbrook Terrace, IL
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Laurie L. Jones Vice President Oakbrook Terrace, IL
Robert Daniel Kendall Vice President Oakbrook Terrace, IL
Dana R. Klein Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
Anne Kochevar Vice President Oakbrook Terrace, IL
Richard D. Kozlowski Vice President Atlanta, GA
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
Tony E. Leal Vice President Daphne, AL
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
S. William Lehew III Vice President Charlotte, NC
Jonathan Linstra Vice President Oakbrook Terrace, IL
Ivan R. Lowe Vice President Houston, TX
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Linda S. MacAyeal Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
Stuart R. Moehlman Vice President Houston, TX
Carin Elizabeth Morgan Vice President Oakbrook Terrace, IL
Ted Morrow Vice President Plano, TX
Peter Nicholas Vice President Beverly, MA
Steven R. Norvid Vice President Oakbrook Terrace, IL
Allyn O' Connor Vice President & Assoc. General Counsel Oakbrook Terrace, IL
Gregory S. Parker Vice President Houston, TX
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Richard J. Poli Vice President Philadelphia, PA
Ronald E. Pratt Vice President Marietta, GA
Daniel D. Reams Vice President Royal Oak, MI
Theresa Marie Renn Vice President Oakbrook Terrace, IL
Kevin Wayne Reszel Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
Jeffrey L. Rose Vice President Houston, TX
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Brett Van Bortel Vice President Oakbrook Terrace, IL
Larry Brian Vickery Vice President Oakbrook Terrace, IL
Diane Saxon Vice President & Assistant Treasurer Oakbrook Terrace, IL
Stephanie Scarlata Vice President Bedford Corners, NY
Christina L. Schmieder Vice President Oakbrook Terrace, IL
Timothy M. Scholten Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Jeffrey M. Scott Vice President Oakbrook Terrace, IL
Gwen L. Shaneyfalt Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorenson Vice President Oakbrook Terrace, IL
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Richard Stefanec Vice President Los Angles, CA
William C. Strafford Vice President Granger, IN
Mark A. Syswerda Vice President Oakbrook Terrace, IL
Charles S. Thompson Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Thomas J. Sauerborn Vice President New York, NY
Daniel B. Waldron Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Robert A. Watson Vice President Oakbrook Terrace, IL
Sharon Wells Coicou Vice President Oakbrook Terrace, IL
Frank L. Wheeler Vice President Oakbrook Terrace, IL
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Joel John Wilczewski Vice President Oakbrook Terrace, IL
Thomas M. Wilson Vice President Oakbrook Terrace, IL
Barbara A. Withers Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
David M. Wynn Vice President Phoenix, AZ
Patrick M. Zacchea Vice President Oakbrook Terrace, IL

Scott F. Becker Asst. Vice President Oakbrook Terrace, IL
Brian E. Binder Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Lynn Chadderton Asst. Vice President Oakbrook Terrace, IL
Phillip Ciulla Asst. Vice President Oakbrook Terrace, IL
Amy Cooper Asst. Vice President Oakbrook Terrace, IL
Paula Duerr Asst. Vice President Oakbrook Terrace, IL
Tammy Echevarria-Davis Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Nancy Johannsen Asst. Vice President Oakbrook Terrace, IL
Thomas Johnson Asst. Vice President New York NY
Tara Jones Asst. Vice President Oakbrook Terrace, IL
Robin R. Jordan Asst. Vice President Oakbrook Terrace, IL
Holly Lieberman Asst. Vice President Oakbrook Terrace, IL
Gregory Mino Asst. Vice President Oakbrook Terrace, IL
Christopher Perozek Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Leah Richardson Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Regina Rosen Asst. Vice President Oakbrook Terrace, IL
Pamela S. Salley Asst. Vice President Houston, TX
David T. Saylor Asst. Vice President Oakbrook Terrace, IL
Lisa Schultz Asst. Vice President Oakbrook Terrace, IL
Katherine Scherer Asst. Vice President Oakbrook Terrace, IL
Heather Schmitt Asst. Vice President Oakbrook Terrace, IL
Laurel Shipes Asst. Vice President Oakbrook Terrace, IL
Lauren B. Sinai Asst. Vice President Oakbrook Terrace, IL
Scott Stevens Asst. Vice President Oakbrook Terrace, IL
Kristen L. Transier Asst. Vice President Houston, TX
Damienne Trippiedi Asst. Vice President Oakbrook Terrace, IL
Michael Trizil Asst. Vice President Oakbrook Terrace, IL
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Judy Wooley Asst. Vice President Houston, TX

Cathy Napoli Assistant Secretary Oakbrook Terrace, IL
William R. Rybak Treasurer Oakbrook Terrace, IL
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Rebecca Newman Officer Houston, TX
Theresa M. Renn Officer Oakbrook Terrace, IL
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
Richard F. Powers III Director Oakbrook Terrace, IL
Michael H. Santo Director Oakbrook Terrace, IL
A. Thomas Smith III Director Oakbrook Terrace, IL
William R. Rybak Director Oakbrook Terrace, IL
John H. Zimmerman III Director Oakbrook Terrace, IL
</TABLE>