Van Kampen American Capital
FOREIGN SECURITIES FUND
Semi-Annual Report
June 30, 1997
<TABLE>
Van Kampen American Capital Foreign Securities Fund
Portfolio of Investments
June 30, 1997 (Unaudited)
<CAPTION>
Description Amortized Cost
<S> <C>
Short-Term Investment 201.8%
United States Government Agency Obligations
Federal Home Loan Bank Discount Note ($175,000 par, $ 175,000
yielding 6.000% 07/01/97 maturity)
Liabilities In Excess of Other Assets (101.8)% (88,263)
--------------
Net Assets 100.0% $ 86,737
==============
</TABLE>
<TABLE>
Van Kampen American Capital Foreign Securities Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
<CAPTION>
ASSETS:
<S> <C>
Total Investments (Cost $175,000) $ 175,000
Dividend Receivable 22,298
Cash 1,443
Unamortized Organizational Costs 52,220
--------------
Total Assets 250,961
--------------
LIABILITIES:
Payables:
Organizational Costs 65,000
Distributor and Affiliates 5,933
Fund Shares Repurchased 1,458
Income Distributions 650
Accrued Expenses 72,402
Deferred Compensation and Retirement Plans 18,781
--------------
Total Liabilities 164,224
--------------
NET ASSETS $ 86,737
==============
NET ASSETS CONSIST OF:
Capital $ 163,307
Accumulated Net Realized Gain 2,606
Net Unrealized Depreciation (2,324)
Accumulated Net Investment Loss (76,852)
--------------
NET ASSETS $ 86,737
==============
Net Asset Value, Offering Price and Redemption Price Per
Share (Based on net assets of $86,737 and 10,000 shares of
beneficial interest issued and outstanding) $ 8.67
==============
</TABLE>
<TABLE>
Van Kampen American Capital Foreign Securities Fund
Statement of Operations
For the Six Months Ended June 30,1997 (Unaudited)
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest $ 47,844
Dividends (Net of foreign withholding taxes of $5,051) 33,304
--------------
Total Income 81,148
--------------
EXPENSES:
Custody 60,986
Trustees Fees and Expenses 12,813
Audit 9,780
Accounting 7,389
Amortization of Organizational Costs 6,444
Legal 1,050
Other 4,599
--------------
Total Expenses 103,061
--------------
NET INVESTMENT LOSS $ (21,913)
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments $ 1,783,372
Foreign Currency Transactions (4,899)
--------------
Net Realized Gain 1,778,473
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period 2,487,779
End of the Period:
Foreign Currency Translation (2,324)
--------------
Net Unrealized Depreciation During the Period (2,490,103)
--------------
NET REALIZED AND UNREALIZED LOSS $ (711,630)
==============
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (733,543)
==============
</TABLE>
<TABLE>
Van Kampen American Capital Foreign Securities Fund
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1997 and the
Period Ended December 31, 1996 (Unaudited)
<CAPTION>
- -------------------------------------------------------------------------------------------------
July 1, 1996
(Commencement
of Investment
Six Months Ended Operations) to
June 30, 1997 December 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income/Loss $ (21,913) $ 252,616
Net Realized Gain 1,778,473 2,224,597
Net Unrealized Appreciation/Depreciation During
the period (2,490,103) 2,487,779
--------------- -----------------
Change in Net Assets from Operations (733,543) 4,964,992
--------------- -----------------
Distributions from Net Investment Income 0 (252,616)
Distributions in Excess of Net Investment Income 0 (61,398)
--------------- -----------------
Distributions from and in Excess of Net Investment
Income 0 (314,014)
--------------- -----------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES (733,543) 4,650,978
--------------- -----------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold 0 80,500,000
Net Asset Value of Shares Issued Through Dividend
Reinvestment 0 313,364
Cost of Shares Repurchased (43,744,062) (41,000,000)
--------------- -----------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (43,744,062) 39,813,364
--------------- -----------------
TOTAL INCREASE/DECREASE IN NET ASSETS (44,477,605) 44,464,342
NET ASSETS:
Beginning of the Period 44,564,342 100,000
--------------- -----------------
End of the Period (Including accumulated distributions
in excess of net investment income of $76,852 and
$54,939 $ 86,737 $ 44,564,342
=============== =================
</TABLE>
<TABLE>
Van Kampen American Capital Foreign Securities Fund
Financial Highlights
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
<CAPTION>
- -------------------------------------------------------------------------------------------------
July 1, 1996
(Commencement
of Investment
Six Months Ended Operations) to
June 30, 1997 December 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 10.400 $ 10.000
--------------- -----------------
Net Investment Income/Loss (0.221) .052
Net Realized and Unrealized Gain/Loss (1.505) .413
--------------- -----------------
Total from Investment Operations (1.726) .465
Less Distributions from and in Excess of Net Investment
Income .000 .065
--------------- -----------------
Net Asset Value, End of the Period $ 8.674 $ 10.400
=============== =================
Total Return -16.63%* 4.65%*
Net Assets at End of the Period (In millions) $0.1 $44.6
Ratio of Expenses to Average Net Assets 2.88% 0.45%
Ratio of Net Investment Income to Average Net Assets -0.61% 0.70%
Portfolio Turnover 1%* 76%*
Average Commission Paid Per Equity Share Traded (b) $.0129 $.0149
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Represents the average brokerage commission paid per equity share traded during the
period for trades where commissions were applicable.
</TABLE>
Van Kampen American Capital Foreign Securities Fund
Notes to Financial Statements
June 30, 1987 (Unaudited)
1. Significant Accounting Policies
Van Kampen American Capital Foreign Securities Fund (the "Fund") is organized as
a Delaware business trust, and is registered as a diversified open-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to provide long-term growth of
capital through investments in an internationally diversified portfolio of
equity securities of companies of any country. The Fund commenced investment
operations on July 1, 1996.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuation - Investments in securities listed on a securities
exchange are valued at their sales price as of the close of such securities
exchange. Unlisted securities and listed securities for which the last sales
price is not available are valued at the last bid price. For those securities
where quotations or prices are not available, valuations are determined in
accordance with the procedures established in good faith by the Board of
Trustees. Short-term securities with remaining maturities of 60 days or less
are valued at amortized cost.
B. Security Transactions - Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specific price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due to the Fund.
C. Investment Income - Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual
basis.
D. Currency Translation - Assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on quoted exchange rates as of
noon Eastern Time. Purchases and sales of portfolio securities are translated
at the rate of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated at rates prevailing when accrued.
E. Organizational Costs - The Fund will reimburse Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Fund's organization in the amount of $65,000. These costs
are being amortized on a straight line basis over the 60 month period ending
June 30, 2001. The Adviser has agreed that in the event any of the initial
shares of the Fund originally purchased by VKAC are redeemed during the
amortization period, the Fund will be reimbursed for any unamortized
organizational costs in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
F. Federal Income Taxes - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income and gains
to its shareholders. Therefore, no provision for federal income taxes is
required.
At June 30, 1997, for federal income tax purposes, the cost of short-term
investments is $175,000; the aggregate gross unrealized appreciation is $0 and
the aggregate gross unrealized depreciation is $0, resulting in no unrealized
appreciation or depreciation.
Net realized gains or losses may differ for financial reporting and tax
purposes as a result of the deferral of losses for tax purposes resulting from
wash sales.
G. Distribution of Income and Gains - The Fund declares and pays dividends
annually from net investment income and net realized gains on securities, if
any.
Due to inherent differences in the recognition of income, expense and
realized gains/losses under generally accepted accounting principles and for
federal income tax purposes, the amount of distributed net investment income may
differ for a particular period. These differences are temporary in nature, but
may result in book basis distribution in excess of net investment income for
certain periods.
Permanent differences between book and tax basis reporting have been
identified and appropriately reclassified. Permanent differences relating to
liquidating dividends totaling $3,994,005 were reclassified from accumlated net
realized gain to capital.
2. Investment Advisory Agreement and Other Transactions with Affiliates
The Adviser serves as the investment manager of the Fund, but receives no
compensation for its investment management services.
For the six months ended June 30, 1997, the Fund recognized expenses of
approximately $600 representing legal services provided by Skadden, Arps, Slate,
Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund
is an affiliated person.
For the six months ended June 30, 1997, the Fund recognized expenses of
approximately $7,800, representing VKAC's cost of providing accounting and
legal services to the Fund.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months
ended June 30, 1997, ACCESS has waived all fees for transfer agency and
shareholder services provided.
Certain officers and trustees of the Fund are also officers and
directors of VKAC. The Fund does not compensate its officers or trustees who
are officers of VKAC.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits are payable for a ten-year period and are based upon each
trustee's years of service to the fund. The maximum annual benefit per trustee
under the plan is equal to $2,500.
At June 30, 1997, VKAC owned 10,000 shares representing 100% of the
outstanding shares.
3. Capital Transactions
The Fund is authorized to issue an unlimited number of shares of beneficial
interest with a par value of $.01 per share. Fund shares are only available
for purchase by Funds for which VKAC serves as investment adviser.
At June 30, 1997 and December 31, 1996, capital aggregated $163,307 and
and $39,913,364, respectively. Transactions in common shares were as
follows:
<TABLE>
<CAPTION>
Six Months Period Ended
Ended December 31,
June 30, 1997 1997
------------- ------------
<S> <C> <C>
Beginning Shares 4,284,714 10,000
------------- ------------
Shares Sold 0 8,206,435
Shares Issued Through Dividend Reinvestment 0 30,102
Shares Redeemed (4,274,714) (3,961,823)
------------- ------------
Net Increase/Decrease in Shares Outstanding (4,274,714) 4,274,714
------------- ------------
Ending Shares 10,000 4,284,714
============= ============
</TABLE>
4. Investment Transactions
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $29,718 and
$33,699,031 respectively.
Result of Shareholder Votes
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the Fund was held on May 28, 1997
where shareholders voted on a new investment advisory agreement, the election of
Trustees and the ratification of KPMG Peat Marwick LLP as independent public
accountants. With regard to the approval of a new investment advisory agreement
between Van Kampen American Capital Investment Advisory Corp. and the Fund,
86,305 shares voted for the proposal, 0 shares voted against and 0 shares
abstained. With regard to the election of J. Miles Branagan as elected trustee
of the Fund, 86,305 shares voted in his favor 0 shares withheld. With regard to
the election of Richard M. DeMartini as elected trustee of the Fund, 86,305
shares voted in his favor 0 shares withheld. With regard to the election of
Linda Hutton Heagy as elected trustee of the Fund, 86,305 shares voted in her
favor 0 shares withheld. With regard to the election of R. Craig Kennedy as
elected trustee of the Fund, 86,305 shares voted in his favor 0 shares withheld.
With regard to the election of Jack E. Nelson as elected trustee of the Fund,
86,305 shares voted in his favor 0 shares withheld. With regard to the election
of Don G. Powell as elected trustee of the Fund, 86,305 shares voted in his
favor 0 shares withheld. With regard to the election of Jerome L. Robinson as
elected trustee of the mFund, 86,305 shares voted in his favor 0 shares
withheld. With regard to the election of Phillip B. Rooney as elected trustee
of the Fund, 86,305 shares voted in his favor 0 shares withheld. With regard
to the election of Fernando Sisto as elected trustee of the Fund, 86,305
shares voted in his favor 0 shares withheld. With regard to the election of
Wayne W. Whalen as elected trustee of the Fund, 86,305 shares voted in his
favor 0 mshares withheld. With regard to the ratification of KPMG Peat
Marwick LLP as independent public accountants for the Fund, 86,305 shares
voted for the proposal, 0 shares voted against and 0 shares abstained.
Van Kampen American Capital
Foreign Securities Fund
- --------------------------------------------------------------------------------
Board of Trustees Investment Adviser
J. Miles Branagan Van Kampen American Capital
Richard M. DeMartini* Investment Advisory Corp.
Linda Hutton Heagy One Parkview Plaza
R. Craig Kennedy Oakbrook Terrace, Illinois 60181
Jack E. Nelson
Don G. Powell*
Jerome L. Robinson Distributor
Phillip B. Rooney
Fernando Sisto Van Kampen American Capital
Wayne W. Whalen* - Chairman Distributors, Inc.
One Parkview Plaza
Officers Oakbrook Terrace, Illinois 60181
Dennis J. McDonnell* Shareholder Servicing Agent
President
ACCESS Investor Services, Inc.
Ronald A Nyberg* P.O. Box 418256
Vice President and Secretary Kansas City, Missouri 64141-9256
Edward D. Wood, III* Custodian
Vice President and Chief Financial
Officer State Street Bank and Trust Company
225 Franklin Street
Curtis W. Morell* P.O. Box 1713
Vice President and Chief Accounting Boston, Massachusetts 02105
Officer
Legal Counsel
John L. Sullivan*
Treasurer Skadden, Arps, Slate, Meagher &
Flom (Illinois)
Tanya M. Loden* 333 West Wacker Drive
Controller Chicago, Illinois 60606
Peter W. Hegel* Independent Accountants
Alan T. Sachtleben*
Paul R. Wolkenberg* KPMG Peat Marwick LLP
Vice Presidents Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
*"Interested" persons of the Fund as defined in the Investment Company Act
of 1940
Van Kampen American Capital Distributors, Inc., 1997 All rights reserved.
sm denotes a service mark of Van Kampen American Capital Distributors, Inc.
