<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Performance in Perspective....................... 4
Portfolio Management Review...................... 5
Glossary of Terms................................ 9
Portfolio Highlights............................. 10
Portfolio of Investments......................... 11
Statement of Assets and Liabilities.............. 16
Statement of Operations.......................... 17
Statement of Changes in Net Assets............... 18
Financial Highlights............................. 19
Notes to Financial Statements.................... 22
Report of Independent Accountants................ 30
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
January 20, 2000
Dear Shareholder:
As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.
Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.
Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:
- INVESTING FOR THE LONG-TERM
- BASING INVESTMENT DECISIONS ON SOUND RESEARCH
- BUILDING A DIVERSIFIED PORTFOLIO
- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE
While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.
Sincerely,
<TABLE>
<S> <C>
[/s/ Richard F. Powers, III] [/s/ Dennis J. McDonnell]
Richard F. Powers, III Dennis J. McDonnell
Chairman President
Van Kampen Asset Management Inc. Van Kampen Asset Management Inc.
</TABLE>
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.
EMPLOYMENT
The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.
INFLATION AND INTEREST RATES
Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.
U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
GRAPH
<TABLE>
<S> <C>
97Q3 4.0
97Q4 3.10
98Q1 6.70
98Q2 2.10
98Q3 3.80
98Q4 5.90
99Q1 3.70
99Q2 1.90
99Q3 5.70
99Q4 5.80
</TABLE>
Source: Bureau of Economic Analysis
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1999
VAN KAMPEN ENTERPRISE FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
One-year total return based on NAV(1).... 26.56% 25.54% 25.59%
One-year total return(2)................. 19.25% 20.53% 24.59%
Five-year average annual total
return(2)................................ 25.64% 26.01% 26.17%
Ten-year average total return(2)......... 17.66% N/A N/A
Life-of-Fund average annual total
return(2)................................ 13.85% 19.28% 20.66%
Commencement date........................ 01/07/54 12/20/91 07/20/93
</TABLE>
N/A = Not Applicable
(1)Assumes reinvestment of all distributions for the period and does not include
payment of the maximum sales charge (5.75% for A shares) or contingent deferred
sales charge for early withdrawal (5% for B shares and 1% for C shares). If the
sales charge was included, total return would be lower.
(2)Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or contingent
deferred sales charge for early withdrawal (B and C shares).
See the Comparative Performance section of the current prospectus. An investment
should be made with an understanding of the risks that an investment in equity
securities entails. These include the risk that the financial condition of the
issuers of the securities in the portfolio, or the condition of the stock market
in general, may worsen and therefore, the value of Fund shares may decline. The
Fund may invest up to 15% of the total assets in foreign securities which may
subject the Fund to special risks including currency exchange rate fluctuations,
and political and economic instability. In addition, the Fund is subject to
other risks. These risks include, but are not limited to: market risk -- the
possibility that the market values of securities owned by the Fund will decline;
derivative investments risk -- a derivative investment is one whose value
depends on (or is derived from) the value of an underlying asset; interest rate
or index involves risks different from investment in the underlying security;
and manager risk -- management may not be successful in selecting the best
performing securities and the Fund's performance may lag behind that of similar
funds. Past performance does not guarantee future results. Investment return and
net asset value will fluctuate with market conditions. Fund shares, when
redeemed, may be worth more or less than their original cost.
Because the prices of common stocks and other securities fluctuate, the value of
an investment in the Fund will vary upon the Fund's investment performance.
Foreign securities may magnify volatility due to changes in foreign exchange
rates, the political and economic uncertainties in foreign countries, and the
potential lack of liquidity, government supervision, and regulation.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE> 5
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment performance at regular intervals. A
comparison of your Fund's performance to an applicable benchmark can:
- Illustrate the market environment in which your Fund is being managed
- Reflect the impact of favorable market trends or difficult market
conditions
- Help you evaluate how your Fund's management team has responded to the
opportunities and challenges
The following graph compares your Fund's performance to that of the Standard
& Poor's 500 Index and the Russell 1000 Growth Index* over time. These indices
are broad-based, statistical composites that do not include any commissions or
fees that would be paid by an investor purchasing the securities they represent.
Such costs would lower the performance of these indices. An investment cannot be
made directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen Enterprise Fund vs. the Standard & Poor's 500 Index and the
Russell 1000 Growth Index* (December 31, 1989, through December 31, 1999)
[INVESTMENT PERFORMANCE CHART]
- ------------------------------
Fund's Total Return
1 Year Avg. Annual = 19.25%
5 Year Avg. Annual = 25.64%
10 Year Avg. Annual = 17.66%
- ------------------------------
<TABLE>
<CAPTION>
VAN KAMPEN ENTERPRISE FUND STANDARD & POOR'S 500 INDEX RUSSELL 1000 GROWTH INDEX*
-------------------------- --------------------------- --------------------------
<S> <C> <C> <C>
Dec 1989 9427.00 10000.00 10000.00
8756.00 9312.00 9194.00
8969.00 9391.00 9261.00
9264.00 9698.00 9622.00
9059.00 9437.00 9489.00
10041.00 10305.00 10475.00
9985.00 10305.00 10585.00
9859.00 10251.00 10488.00
8940.00 9284.00 9484.00
8409.00 8895.00 8971.00
8308.00 8836.00 9010.00
8881.00 9365.00 9620.00
Dec 1990 9156.00 9689.00 9960.00
9735.00 10091.00 10476.00
10475.00 10770.00 11309.00
10824.00 11091.00 11752.00
10735.00 11095.00 11692.00
11229.00 11523.00 12213.00
10590.00 11066.00 11631.00
11186.00 11563.00 12253.00
11561.00 11790.00 12664.00
11408.00 11858.00 12437.00
11715.00 11796.00 12630.00
11220.00 11278.00 12308.00
Dec 1991 12749.00 12628.00 14042.00
12656.00 12376.00 13702.00
12878.00 12495.00 13723.00
12389.00 12310.00 13348.00
12377.00 12653.00 13444.00
12527.00 12666.00 13543.00
12180.00 12545.00 13202.00
12545.00 13038.00 13794.00
12255.00 12726.00 13626.00
12564.00 12940.00 13783.00
12854.00 12967.00 13990.00
13481.00 13359.00 14598.00
Dec 1992 13818.00 13588.00 14743.00
14048.00 13684.00 14574.00
13884.00 13828.00 14345.00
14354.00 14180.00 14620.00
13804.00 13820.00 14036.00
14396.00 14133.00 14527.00
14475.00 14247.00 14391.00
14509.00 14171.00 14134.00
15055.00 14659.00 14713.00
15248.00 14614.00 14604.00
15101.00 14897.00 15010.00
14589.00 14705.00 14909.00
Dec 1993 15332.00 14952.00 15169.00
15796.00 15438.00 15518.00
15633.00 14974.00 15237.00
14843.00 14390.00 14500.00
15139.00 14555.00 14568.00
15127.00 14736.00 14781.00
14523.00 14451.00 14349.00
14812.00 14906.00 14833.00
15529.00 15467.00 15638.00
15215.00 15157.00 15425.00
15693.00 15474.00 15789.00
14988.00 14863.00 15284.00
Dec 1994 15303.00 15155.00 15541.00
15330.00 15523.00 15866.00
16067.00 16083.00 16532.00
16575.00 16626.00 17014.00
16900.00 17091.00 17385.00
17534.00 17711.00 17991.00
18494.00 18208.00 18690.00
19628.00 18786.00 19461.00
19872.00 18780.00 19483.00
20358.00 19650.00 20380.00
19763.00 19552.00 20393.00
20331.00 20355.00 21186.00
Dec 1995 20494.00 20829.00 21307.00
21153.00 21509.00 22020.00
21859.00 21658.00 22424.00
22000.00 21946.00 22453.00
22747.00 22241.00 23043.00
23444.00 22749.00 23849.00
22874.00 22929.00 23882.00
21481.00 21880.00 22482.00
22256.00 22291.00 23058.00
23982.00 23632.00 24738.00
24393.00 24249.00 24885.00
25961.00 26029.00 26753.00
Dec 1996 25308.00 25599.00 26230.00
27065.00 27169.00 28066.00
26981.00 27330.00 27876.00
25352.00 26290.00 26367.00
26561.00 27826.00 28118.00
28366.00 29456.00 30153.00
29472.00 30870.00 31362.00
32265.00 33282.00 34138.00
31413.00 31370.00 32141.00
33388.00 33179.00 33723.00
31720.00 32035.00 32476.00
32316.00 33463.00 33852.00
Dec 1997 32533.00 34128.00 34231.00
32495.00 34474.00 35257.00
35446.00 36903.00 37909.00
37403.00 38878.00 39419.00
37894.00 39231.00 39965.00
36479.00 38493.00 38832.00
37988.00 40158.00 41211.00
37045.00 39692.00 40937.00
30424.00 33905.00 34791.00
32254.00 36171.00 37462.00
34310.00 39076.00 40474.00
36347.00 41386.00 43552.00
Dec 1998 40196.00 43861.00 47480.00
41891.00 45660.00 50269.00
40157.00 44186.00 47972.00
41874.00 46043.00 50506.00
42488.00 47790.00 50564.00
41103.00 46597.00 49010.00
42962.00 49283.00 52432.00
41736.00 47704.00 50731.00
41459.00 47406.00 51615.00
41063.00 46212.00 50531.00
43496.00 49102.00 54331.00
45672.00 50038.00 57238.00
Dec 1999 50838.00 53078.00 63232.00
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions and includes payment of the maximum
sales charge (5.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
* Since Lipper Analytical Services has reclassified how it categorizes its
indices, we will no longer be using Lipper comparisons because we believe the
new system is less applicable. As a result, the Lipper Growth Fund Index will
not appear in this or future reports. In its place, we have included the
Russell 1000 Growth Index, a second index that we believe represents an
additional point of comparison for the Fund. The Russell 1000 Growth Index
measures the performance of 1,000 companies with higher price-to-book ratios
and higher forecasted growth values.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN ENTERPRISE FUND
We recently spoke with representatives of the adviser of the Van Kampen
Enterprise Fund about the key events and economic forces that shaped the markets
during the past 12 months. The representatives include Jeff D. New, senior
portfolio manager, who has managed the Fund since 1994 and worked in the
investment industry since 1987. Mr. New is joined by Michael Davis and Mary
Jayne Maly, portfolio managers, and Stephen L. Boyd, chief investment officer
for equity investments. The following discussion reflects their views on the
Fund's performance during the 12 months ended December 31, 1999.
Q WHAT MARKET FACTORS AFFECTED THE FUND DURING THE REPORTING PERIOD?
A The Dow Jones Industrial Average--perhaps the country's most widely
recognized stock market index--began the reporting period near 9200 and
crossed several key milestones in the first half of the year: 10,000 in
March and 11,000 in May. Major fluctuations followed, however, as the index
nearly dropped to 10,000 in the difficult third quarter before once again
lifting to a record high at year-end. Although many growth stocks--particularly
in the technology area--continued their strong results during most of the year,
it was, in fact, a "narrow" stock market propelled by the stellar performance of
only a few stocks. Along those lines, more stocks lost than gained ground during
the year.
Q GIVEN THIS ENVIRONMENT, WHAT STRATEGIES DID YOU USE TO MANAGE THE FUND?
A As we have stressed in prior reports, the Fund's investment discipline
leads us to purchase stocks that meet our criteria of positive future
fundamentals and attractive current valuations. By our definition, a
company with positive future fundamentals possesses at least one of the
following traits: consistent earnings growth; accelerating earnings growth;
better-than-expected fundamentals; or an underlying change in a company,
industry, or regulatory environment. We evaluate stocks from the "bottom up"--
in other words, on a company-by-company basis.
While our basic investment approach has remained the same, during the
reporting period we were sensitive to how changing market conditions affected
the universe of stocks in which we typically invest. By virtually every measure,
stock market valuations attained record or near-record highs. As a result, we
faced the delicate balancing act of investing in companies that were being
rewarded by the market while recognizing that stocks can become riskier as they
get more expensive.
5
<PAGE> 7
Q HOW DID THIS BALANCE AFFECT PERFORMANCE?
A The Fund's results were lifted by the outstanding performance of some of
the Fund's top holdings, especially in technology. Nevertheless, some of
our long-time investments in more traditional areas--such as health care
and grocery stores--were big disappointments that hurt performance relative to
the Fund's peers during the reporting period.
Q WHAT STOCKS HELPED THE FUND'S RETURN DURING 1999?
A Technology stocks continued to be the big winners, and most of our best
contributors to performance were in this area.
As of December 31, 1999, the Fund's second largest holding was Cisco
Systems, a company whose products have become the backbone of the Internet.
Cisco, which makes the devices that enable computers on the Internet to
communicate with each other, comprised 4.7 percent of the Fund's long-term
investments at year's end. The stock was an impressive performer during the year
and was the strongest contributor to the Fund's total return.
The Fund also benefited greatly from the performance of two large technology
companies that are leaders in their fields: Internet service provider America
Online and data-storage powerhouse EMC. Both companies are building on their
dominant position in their respective areas. Other technology stocks that
performed very well for the Fund during 1999 included Oracle
(database-management software developer), JDS Uniphase (semiconductor and
electronics manufacturer), and Sun Microsystems (computer systems and software
developer).
Performance was also enhanced by some investments in companies that, though
not necessarily considered technology businesses, are capitalizing on the growth
of new enterprises. Nokia, for example, the top manufacturer of wireless phones,
has seen its stock price rise substantially in response to its industry's
enormous growth potential and the dominance of its products in the marketplace.
Meanwhile, Corning, previously known for its consumer products, has become a
leader in making the optical fiber used to build data networks around the world.
Broadcast and media stocks also helped performance in 1999, especially radio
stocks, which benefited greatly from increased advertising spending by the
Internet, pharmaceutical, and financial services industries. Our holdings in
CBS, Clear Channel Communications, and AMFM (formerly Chancellor Media) provided
positive contributions. But the Fund's best performer in this area was
Univision, the nation's largest Spanish-language television network. The company
has been able to capitalize on the increasing economic influence of Spanish
speakers in the United States, as has radio broadcaster Hispanic Broadcasting,
which we also owned during the reporting period.
Keep in mind that not all securities in the Fund performed as well, nor is
there any guarantee they will continue to do so in the future. For additional
portfolio highlights, please refer to page 10.
6
<PAGE> 8
Q WHAT STOCKS HURT THE FUND'S PERFORMANCE?
A This was a difficult period for certain stocks that the Fund owned for a
long time. In some cases, we detected nothing fundamentally wrong with the
businesses, but in 1999 the stock market didn't generally reward old-line
companies offering the prospect of consistent but moderate earnings growth. For
example, two of the Fund's longstanding holdings in the grocery industry,
Safeway and Kroger, were among the portfolio's weakest performers. Investors
sold these and other grocery-store companies primarily because of concerns about
the Internet's potential impact on the industry and slowing sales growth.
Similarly, Rite Aid, another disappointment in the portfolio, joined other
drug-store stocks as laggards during the year. The stock, which we sold in
March, fell significantly further as the company's problems increased.
Waste Management and Philip Morris, two of the Fund's large holdings at the
beginning of 1999, saw their stock prices plummet during the year. Waste
Management's troubles began when word leaked that the company's management used
questionable accounting methods. We sold our position in the company, but not
before it caused a negative effect on the Fund's return. Philip Morris,
meanwhile, continued to languish as a result of ongoing litigation involving the
tobacco industry. This poor performance had a significant impact on the Fund
because Philip Morris was our largest holding at the beginning of the reporting
period. The situation could have been worse, however--we decided to sell this
stock relatively early in the year and thus avoided the brunt of the stock's
continued weakness.
Not all technology stocks outperformed in 1999. Two of the Fund's stocks in
this area--Compuware and Network Associates--were among the Fund's worst
performers during the year. Compuware suffered from concerns about its
accounting practices as well as uncertainty about its growth prospects, while
Network Associates failed to meet earnings expectations because of problems
concerning the company's aggressive expansion through corporate acquisitions.
Q HOW DID THE FUND PERFORM?
A The strong overall performance of most technology stocks helped fuel the
Fund's results during the reporting period. As a result, the Fund achieved
a 12-month total return of 26.56 percent(1) (Class A shares at net asset
value) as of December 31, 1999. By comparison, the Standard & Poor's 500 Index
returned 21.04 percent, and the Russell 1000 Growth Index returned 33.16
percent.* The S&P 500 is a broad-based, unmanaged index that reflects the
general performance of the stock market, while the Russell 1000 Growth Index
measures the performance of 1,000 companies with higher price-to-book ratios and
higher forecasted growth values. Past performance does not guarantee future
results. This index is a statistical composite that does not include any
- ---------------
* Since Lipper Analytical Services has reclassified how it categorizes its
indices, we will no longer be using Lipper comparisons because we believe the
new system is less applicable. As a result, the Lipper Growth Fund Index will
not appear in this or future reports. In its place, we have included the
Russell 1000 Growth Fund Index, a second index that we believe represents an
additional point of comparison for the Fund.
7
<PAGE> 9
commissions or sales charges that would be paid by an investor purchasing the
securities it represents. Such costs would lower the performance of the index.
An investment cannot be made directly in an index. Please refer to the footnotes
and chart on page 3 for additional Fund performance results.
Q WHAT DO YOU SEE AHEAD FOR THE FUND?
A Barring any unforeseen events, we envision continued worldwide economic
health, slightly rising but contained inflation, and moderate earnings
growth. Of course, our outlook will in part depend on whether the Federal
Reserve again increases interest rates. Although recent rate increases have had
only a moderate effect on stock prices, further increases could have a more
significant effect. The overall stock market and growth stock valuations have
historically been hurt by rising interest rates. Regardless of the short-term
market environment, we believe that our best long-term course of action is to
stick with the Fund's investment discipline by focusing on companies that have
positive earnings outlooks combined with attractive valuations.
8
<PAGE> 10
GLOSSARY OF TERMS
BOTTOM-UP INVESTING: A management style that emphasizes the analysis of
individual stocks, rather than economic and market cycles.
CLASS A SHARES: When Class A shares of a fund are purchased, the share price
includes the net asset value plus a one-time sales charge (or "load"). In
most cases, there is no redemption fee (contingent deferred sales charge).
DOW JONES INDUSTRIAL AVERAGE: The oldest and most widely recognized stock market
average, which reflects the performance of 30 actively traded stocks of
well-established, blue-chip companies.
EARNINGS ESTIMATES: A forecast for a company's net income during a given period.
Earnings estimates can come from the company's management as well as from
independent analysts.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a
year to establish monetary policy and monitor the economic pulse of the
United States.
FUNDAMENTALS: Characteristics of a company, such as revenue growth, earnings
growth, financial strength, market share, and quality of management.
GROWTH INVESTING: An investment strategy that seeks to identify stocks that tend
to offer greater-than-average earnings growth. Growth stocks typically trade
at higher prices relative to their earnings than value stocks, due to their
higher expected earnings growth.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic
indicator that measures the change in the cost of purchased goods and
services.
NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from the total assets in its portfolio and dividing
this amount by the number of shares outstanding. The NAV does not include
any initial or contingent deferred sales charge.
STANDARD & POOR'S 500 INDEX: A broad-based measurement of changes in stock-
market conditions based on the average performance of 500 widely held common
stocks. The index, which tracks industrial, transportation, financial, and
utility stocks, provides a guide to the overall health of the U.S. stock
market. The S&P 500 is a much broader index than the Dow Jones Industrial
Average and reflects the general stock market more fully.
VALUATION: The estimated or determined worth of a stock, based on financial
measures such as the stock's current price relative to earnings, revenue,
book value, and cash flow.
9
<PAGE> 11
PORTFOLIO HIGHLIGHTS
VAN KAMPEN ENTERPRISE FUND
TOP TEN PORTFOLIO HOLDINGS AS OF DECEMBER 31, 1999*
<TABLE>
<S> <C>
MICROSOFT develops, manufactures, licenses, and supports a
range of software products. ................................ 4.8%
CISCO SYSTEMS provides networking solutions that connect
computing devices and computer networks. ................... 4.7%
GENERAL ELECTRIC is a diversified industrial corporation
whose products include appliances, lighting products,
aircraft engines, and plastics. ............................ 3.4%
ORACLE supplies software products for information management
and also offers consulting and systems integration
services. .................................................. 3.0%
INTEL designs, manufactures, and markets microcomputer
components. ................................................ 2.9%
AMERICA ONLINE provides Internet online services, as well as
electronic-commerce and enterprise solutions to
businesses. ................................................ 2.9%
EMC provides products and services that help companies store
and access large amounts of computer data. ................. 2.6%
NOKIA is a leading maker of wireless telephones. ........... 2.5%
WAL-MART STORES operates discount department stores,
warehouse membership clubs, and a combination supermarket
and discount department store. ............................. 2.3%
HOME DEPOT operates retail stores that sell building
materials and home-improvement products. ................... 2.2%
</TABLE>
TOP FIVE PORTFOLIO INDUSTRIES*(1)
[BAR GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Technology 51.9 23.2
Health Care 9.8 13.5
Finance 8.9 12.0
Utilities 7.5 5.5
Consumer Services 7.4 10.9
</TABLE>
* As a percentage of long-term investments
(1) These sectors represent broad groupings of related industries.
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS* 90.9%
CONSUMER DISTRIBUTION 5.9%
Costco Wholesale Corp. (a)........................ 162,000 $ 14,782,500
Dayton Hudson Corp. .............................. 444,000 32,606,250
Home Depot, Inc. ................................. 1,101,000 75,487,312
Tandy Corp. ...................................... 404,000 19,871,750
Wal-Mart Stores, Inc. ............................ 1,130,000 78,111,250
--------------
220,859,062
--------------
CONSUMER DURABLES 0.4%
Harley-Davidson, Inc. ............................ 230,000 14,734,375
--------------
CONSUMER NON-DURABLES 4.0%
Anheuser-Busch Cos., Inc. ........................ 191,000 13,537,125
Colgate-Palmolive Co. ............................ 154,000 10,010,000
Jones Apparel Group, Inc. (a)..................... 742,000 20,126,750
Kimberly-Clark Corp. ............................. 208,000 13,572,000
Pepsi Bottling Group, Inc. ....................... 730,000 12,090,625
Procter & Gamble Co. ............................. 314,000 34,402,625
Quaker Oats Co. .................................. 466,000 30,581,250
Seagram Co. Ltd. ................................. 312,600 14,047,463
--------------
148,367,838
--------------
CONSUMER SERVICES 6.7%
CBS Corp. (a)..................................... 722,000 46,162,875
Clear Channel Communications, Inc. (a)............ 427,049 38,114,123
Hispanic Broadcasting Corp. (a)................... 218,000 20,103,688
Metro-Goldwyn-Mayer, Inc. (a)..................... 795,778 18,750,519
MGM Grand, Inc. .................................. 188,000 9,458,750
Omnicom Group, Inc. .............................. 429,000 42,900,000
Park Place Entertainment Corp. (a)................ 764,000 9,550,000
Time Warner, Inc. ................................ 266,000 19,268,375
Univision Communications, Inc. (a)................ 449,000 45,882,187
--------------
250,190,517
--------------
ENERGY 0.4%
Noble Drilling Corp. (a).......................... 453,000 14,835,750
--------------
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
FINANCE 8.1%
American Express Co. ............................. 177,000 $ 29,426,250
American International Group, Inc. ............... 244,000 26,382,500
Bank of America Corp. ............................ 35,000 1,756,563
Capital One Financial Corp. ...................... 288,000 13,878,000
Chase Manhattan Corp. ............................ 153,000 11,886,188
Citigroup, Inc. .................................. 423,000 23,502,937
Federal Home Loan Mortgage Corp. ................. 287,000 13,506,937
Federal National Mortgage Association............. 134,000 8,366,625
Fifth Third Bancorp............................... 273,000 20,031,375
Firstar Corp. .................................... 839,000 17,723,875
FleetBoston Financial Corp. ...................... 481,000 16,744,812
Franklin Resources, Inc. ......................... 265,000 8,496,563
Lehman Brothers Holdings, Inc. ................... 221,000 18,715,937
MBNA Corp. ....................................... 433,000 11,799,250
MGIC Investment Corp. ............................ 233,000 14,023,687
T. Rowe Price Associates, Inc. ................... 226,000 8,347,875
Providian Financial Corp. ........................ 85,000 7,740,313
Charles Schwab Corp. ............................. 396,000 15,196,500
SLM Holding Corp. ................................ 358,000 15,125,500
UnumProvident Corp. .............................. 245,000 7,855,313
Wells Fargo Co. .................................. 308,000 12,454,750
--------------
302,961,750
--------------
HEALTHCARE 8.9%
American Home Products Corp. ..................... 698,100 27,531,319
Amgen, Inc. (a)................................... 400,000 24,025,000
Baxter International, Inc. ....................... 258,000 16,205,625
Biogen, Inc. (a).................................. 211,000 17,829,500
Bristol-Myers Squibb Co. ......................... 651,000 41,786,062
Guidant Corp. .................................... 285,900 13,437,300
Johnson & Johnson, Inc. .......................... 472,000 43,955,000
Lincare Holdings, Inc. (a) ....................... 709,000 24,593,438
Merck & Co., Inc. ................................ 444,000 29,775,750
PE Corp.-PE Biosystems Group...................... 138,000 16,603,125
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Pfizer, Inc. ..................................... 369,000 $ 11,969,438
Schering-Plough Corp. ............................ 617,000 26,029,687
Warner-Lambert Co. ............................... 325,000 26,629,687
Wellpoint Health Networks, Inc. (a)............... 168,000 11,077,500
--------------
331,448,431
--------------
PRODUCER MANUFACTURING 1.8%
Corning, Inc. .................................... 525,000 67,692,188
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 0.5%
USX--U.S. Steel Group............................. 563,000 18,579,000
--------------
TECHNOLOGY 47.2%
Adobe Systems, Inc. .............................. 148,000 9,953,000
Altera Corp. (a).................................. 362,000 17,941,625
America Online, Inc. (a).......................... 1,304,000 98,370,500
Analog Devices, Inc. (a) ......................... 225,000 20,925,000
Apple Computer, Inc. (a) ......................... 157,000 16,141,563
Applied Materials, Inc. (a)....................... 273,000 34,585,687
BMC Software, Inc. (a)............................ 343,000 27,418,562
Cisco Systems, Inc. (a)........................... 1,491,000 159,723,375
Citrix Systems, Inc. (a).......................... 440,000 54,120,000
Computer Associates International, Inc. .......... 141,000 9,861,188
Comverse Technology, Inc. (a)..................... 330,000 47,767,500
Echostar Communications Corp. (a)................. 150,800 14,703,000
Electronic Arts, Inc. (a)......................... 81,000 6,804,000
EMC Corp. (a)..................................... 819,000 89,475,750
First Data Corp. ................................. 468,000 23,078,250
Gateway, Inc. (a)................................. 290,000 20,898,125
General Instrument Corp. (a)...................... 325,000 27,625,000
Honeywell International, Inc. .................... 446,500 25,757,469
Intel Corp. ...................................... 1,211,000 99,680,437
International Business Machines Corp. ............ 161,000 17,388,000
JDS Uniphase Corp. (a) ........................... 347,600 56,072,225
Linear Technology Corp. .......................... 147,000 10,519,688
LSI Logic Corp. (a)............................... 324,000 21,870,000
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Lucent Technologies, Inc. ........................ 903,650 $ 67,604,316
Micron Technology, Inc. .......................... 339,000 26,357,250
Microsoft Corp. (a)............................... 1,397,000 163,099,750
Motorola, Inc. ................................... 304,000 44,764,000
Nokia Corp.--ADR (Finland)........................ 440,000 83,600,000
Nortel Networks Corp. ............................ 442,000 44,642,000
Oracle Corp. (a).................................. 906,000 101,528,625
QUALCOMM, Inc. (a)................................ 236,000 41,565,500
Sanmina Corp. (a)................................. 312,000 31,161,000
Solectron Corp. (a) .............................. 128,000 12,176,000
STMicroelectronics NV--ADR (Netherlands).......... 200,000 30,287,500
Sun Microsystems, Inc. (a)........................ 810,000 62,724,375
Texas Instruments, Inc. .......................... 478,000 46,306,250
VERITAS Software Corp. (a)........................ 100,500 14,384,063
Waters Corp. (a).................................. 212,000 11,236,000
Xilinx, Inc. (a).................................. 612,000 27,826,875
Yahoo!, Inc. (a).................................. 93,000 40,239,937
--------------
1,760,183,385
--------------
TRANSPORTATION 0.2%
Kansas City Southern Industries, Inc. ............ 109,000 8,134,125
--------------
UTILITIES 6.8%
AES Corp. ........................................ 275,700 20,608,575
ALLTEL Corp. ..................................... 613,000 50,687,437
General Electric Co. ............................. 756,000 116,991,000
MCI Worldcom, Inc. (a)............................ 463,500 24,594,469
Nextel Communications, Inc. (a)................... 153,000 15,778,125
VoiceStream Wireless Corp. (a).................... 181,000 25,758,562
--------------
254,418,168
--------------
TOTAL LONG-TERM INVESTMENTS 90.9%
(Cost $2,039,753,879).......................................... 3,392,404,589
--------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- ------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS 8.1%
REPURCHASE AGREEMENTS 3.0%
DLJ Mortgage Acceptance Corp. ($94,648,000 par,
collateralized by U.S. Government obligations in a pooled
cash account, dated 12/31/99, to be sold on 01/03/00 at
$94,663,775).............................................. $ 94,648,000
SBC Warburg Dillon Read ($17,912,000 par, collateralized by
U.S. Government obligations in a pooled cash account,
dated 12/31/99, to be sold on 01/03/00 at $17,915,881).... 17,912,000
--------------
112,560,000
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 5.1%
Federal Home Loan Bank Consolidated Discount Notes
($15,000,000 par, yielding 5.58%, 03/10/00
maturity) (b)............................................. 14,841,300
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 5.64%, 01/27/00 maturity) (b).................... 24,898,889
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.63%, 01/18/00
maturity) (b)............................................. 24,934,007
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.67%, 02/24/00
maturity) (b)............................................. 24,790,375
Federal National Mortgage Association Discount Notes
($50,000,000 par, yielding 5.65%, 01/06/00
maturity) (b)............................................. 49,960,833
Federal National Mortgage Association Discount Notes
($50,000,000 par, yielding 5.65%, 01/07/00
maturity) (b)............................................. 49,953,000
--------------
189,378,404
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $301,938,404)....................................... 301,938,404
--------------
TOTAL INVESTMENTS 99.0%
(Cost $2,341,692,283)..................................... 3,694,342,993
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%................. 35,474,517
--------------
NET ASSETS 100.0%.......................................... $3,729,817,510
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
(b) Assets segregated for open futures transactions.
ADR--American Depositary Receipt
* The common stocks are classified by sectors which represent broad groupings of
related industries.
15
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $2,341,692,283)..................... $3,694,342,993
Cash........................................................ 37,342,543
Receivables:
Investments Sold.......................................... 40,101,317
Fund Shares Sold.......................................... 9,112,602
Dividends................................................. 1,597,531
Variation Margin on Futures............................... 645,998
Other....................................................... 172,136
--------------
Total Assets.......................................... 3,783,315,120
--------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 34,231,020
Investments Purchased..................................... 9,733,399
Income and Capital Gain Distributions..................... 5,552,275
Distributor and Affiliates................................ 2,136,367
Investment Advisory Fee................................... 1,164,705
Trustees' Deferred Compensation and Retirement Plans........ 288,172
Accrued Expenses............................................ 391,672
--------------
Total Liabilities..................................... 53,497,610
--------------
NET ASSETS.................................................. $3,729,817,510
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $2,294,861,784
Net Unrealized Appreciation................................. 1,364,234,284
Accumulated Net Realized Gain............................... 70,964,751
Accumulated Net Investment Loss............................. (243,309)
--------------
NET ASSETS.................................................. $3,729,817,510
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $2,591,140,580 and 113,772,002 shares of
beneficial interest issued and outstanding)........... $ 22.77
Maximum sales charge (5.75%* of offering price)......... 1.39
--------------
Maximum offering price to public........................ $ 24.16
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $1,020,771,324 and 46,643,784 shares of
beneficial interest issued and outstanding)........... $ 21.88
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $117,905,606 and 5,336,741 shares of
beneficial interest issued and outstanding)........... $ 22.09
==============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 17,222,388
Interest.................................................... 7,361,253
--------------
Total Income............................................ 24,583,641
--------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $5,103,323, $8,749,163 and $962,535
respectively)............................................. 14,815,021
Investment Advisory Fee..................................... 14,030,139
Shareholder Services........................................ 5,876,205
Custody..................................................... 216,323
Legal....................................................... 173,775
Trustees' Fees and Related Expenses......................... 91,054
Other....................................................... 1,205,409
--------------
Total Expenses.......................................... 36,407,926
Less Credits Earned on Cash Balances.................... 46,198
--------------
Net Expenses............................................ 36,361,728
--------------
NET INVESTMENT LOSS......................................... $ (11,778,087)
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 480,881,210
Futures................................................... 1,555,800
--------------
Net Realized Gain........................................... 482,437,010
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 1,058,881,928
--------------
End of the Period:
Investments............................................. 1,352,650,710
Futures................................................. 11,583,574
--------------
1,364,234,284
--------------
Net Unrealized Appreciation During the Period............... 305,352,356
--------------
NET REALIZED AND UNREALIZED GAIN............................ $ 787,789,366
==============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 776,011,279
==============
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income/Loss..................... $ (11,778,087) $ 2,399,932
Net Realized Gain.............................. 482,437,010 134,279,558
Net Unrealized Appreciation During the
Period....................................... 305,352,356 443,358,417
-------------- ---------------
Change in Net Assets from Operations........... 776,011,279 580,037,907
-------------- ---------------
Distributions from Net Investment Income....... (39,771) (4,405,387)
Distributions in Excess of Net Investment
Income....................................... (332,342) -0-
-------------- ---------------
Distributions from and in Excess of Net
Investment Income*........................... (372,113) (4,405,387)
Distributions from Net Realized Gain*.......... (443,264,269) (108,647,338)
-------------- ---------------
Total Distributions............................ (443,636,382) (113,052,725)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... 332,374,897 466,985,182
-------------- ---------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold...................... 5,415,754,623 5,283,612,665
Net Asset Value of Shares Issued Through
Dividend Reinvestment........................ 404,284,548 102,204,579
Cost of Shares Repurchased..................... (5,462,366,950) (5,118,178,150)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................. 357,672,221 267,639,094
-------------- ---------------
TOTAL INCREASE IN NET ASSETS................... 690,047,118 734,624,276
NET ASSETS:
Beginning of the Period........................ 3,039,770,392 2,305,146,116
-------------- ---------------
End of the Period (Including accumulated
undistributed net investment income of
$(243,309) and $39,771, respectively)........ $3,729,817,510 $ 3,039,770,392
============== ===============
</TABLE>
<TABLE>
<CAPTION>
*Distributions by Class
- ------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of
Net Investment Income:
Class A Shares.................... $ (372,113) $ (4,405,387)
Class B Shares.................... -0- -0-
Class C Shares.................... -0- -0-
-------------- --------------
$ (372,113) $ (4,405,387)
============== ==============
Distributions from Net Realized
Gain:
Class A Shares.................... $ (304,078,413) $ (75,906,906)
Class B Shares.................... (125,087,732) (29,616,587)
Class C Shares.................... (14,098,124) (3,123,845)
-------------- --------------
$ (443,264,269) $ (108,647,338)
============== ==============
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
Class A Shares 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................. $20.631 $ 17.414 $ 15.120 $ 13.07 $ 11.43
------- -------- -------- -------- --------
Net Investment Income/Loss.... (.030) .058 .087 .086 .08
Net Realized and Unrealized
Gain........................ 5.207 3.980 4.113 2.942 3.7325
------- -------- -------- -------- --------
Total from Investment
Operations.................. 5.177 4.038 4.200 3.028 3.8125
------- -------- -------- -------- --------
Less:
Distributions from and in
Excess of Net Investment
Income.................... .004 .045 .060 .077 .0725
Distributions from Net
Realized Gain............. 3.030 .776 1.846 .901 2.10
------- -------- -------- -------- --------
Total Distribution............ 3.034 .821 1.906 .978 2.1725
------- -------- -------- -------- --------
Net Assets Value, End of the
Period...................... $22.774 $ 20.631 $ 17.414 $ 15.120 $ 13.07
======= ======== ======== ======== ========
Total Return (a).............. 26.56% 23.56% 28.55% 23.48% 33.92%
Net Assets at End of the
Period (in millions)........$2,591.1 $2,137.4 $1,706.1 $1,276.9 $1,035.7
Ratio of Expenses to Average
Net Assets (b).............. .91% .94% .93% 1.01% .98%
Ratio of Net Investment
Income/Loss to Average Net
Assets (b).................. (.13%) .32% .54% .60% .59%
Portfolio Turnover............ 111% 72% 73% 110% 152%
</TABLE>
(a) Total Return is based upon net asset value which does not include payment of
maximum sales charge or contingent deferred sales charge.
(b) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
19
<PAGE> 21
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
Class B Shares 1999 1998(c) 1997 1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................. $20.075 $17.059 $14.909 $ 12.94 $ 11.37
------- ------- ------- ------- -------
Net Investment Loss.......... (.154) (.089) (.021) (.012) (.03)
Net Realized and Unrealized
Gain....................... 4.993 3.881 4.017 2.882 3.70
------- ------- ------- ------- -------
Total from Investment
Operations................. 4.839 3.792 3.996 2.870 3.67
Less Distributions from Net
Realized Gain.............. 3.030 .776 1.846 .901 2.10
------- ------- ------- ------- -------
Net Asset Value, End of the
Period..................... $21.884 20.075 $17.059 $14.909 $ 12.94
======= ======= ======= ======= =======
Total Return (a)............. 25.54% 22.65% 27.50% 22.48% 32.82%
Net Assets at End of the
Period (In millions).......$1,020.8 $ 816.3 $ 542.2 $ 305.6 $ 184.1
Ratio of Expenses to Average
Net Assets (b)............. 1.67% 1.74% 1.75% 1.82% 1.81%
Ratio of Net Investment Loss
to Average Net
Assets (b)................. (.91%) (.49%) (.29%) (.21%) (.24%)
Portfolio Turnover........... 111% 72% 73% 110% 152%
</TABLE>
(a) Total Return is based upon net asset value which does not include payment of
maximum sales charge of contingent deferred sales charge.
(b) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
(c) Based on average shares outstanding.
See Notes to Financial Statements
20
<PAGE> 22
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
Class C Shares 1999 1998(c) 1997 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $20.239 $17.191 $15.008 $ 13.01 $ 11.42
------- ------- ------- ------- -------
Net Investment Loss.................. (.136) (.090) (.023) (.013) (.03)
Net Realized and Unrealized Gain..... 5.020 3.914 4.052 2.912 3.72
------- ------- ------- ------- -------
Total from Investment Operations..... 4.884 3.824 4.029 2.899 3.69
Less Distributions from Net Realized
Gain............................... 3.030 .776 1.846 .901 2.10
------- ------- ------- ------- -------
Net Asset Value, End of the Period... $22.093 $20.239 $17.191 $15.008 $ 13.01
======= ======= ======= ======= =======
Total Return (a)..................... 25.59% 22.65% 27.51% 22.60% 32.85%
Net Assets at End of the Period (In
millions).......................... $ 117.9 $ 86.0 $ 56.9 $ 30.4 $ 15.7
Ratio of Expenses to Average Net
Assets (b)......................... 1.68% 1.74% 1.75% 1.82% 1.80%
Ratio of Net Investment Loss to
Average Net Assets (b)............. (.90%) (.48%) (.29%) (.22%) (.23%)
Portfolio Turnover................... 111% 72% 73% 110% 152%
</TABLE>
(a) Total Return is based upon net asset value which does not include payment of
maximum sales charge of contingent deferred sales charge.
(b) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
(c) Based on average shares outstanding.
See Notes to Financial Statements
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Enterprise Fund (the "Fund") is organized as a Delaware business
trust, and is registered as a diversified open-end management investment company
under the Investment Company Act of 1940, as amended. The Fund's investment
objective is to seek capital appreciation by investing in a portfolio of
securities consisting principally of common stocks. The Fund commenced
investment operations on January 7, 1954. The distribution of the Fund's Class B
and Class C shares commenced on December 20, 1991 and July 20, 1993,
respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sale price is not
available are valued at the mean of the bid and asked prices or, if not
available, their fair value as 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 is
considered to approximate 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 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
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
the value of the underlying security at not less than the repurchase proceeds
due the Fund.
C. INCOME AND EXPENSES--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts on debt securities
purchased are 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 December 31, 1999, for federal income tax purposes, cost of long- and
short-term investments is $2,348,151,732; the aggregate gross unrealized
appreciation is $1,398,587,691 and the aggregate gross unrealized depreciation
is $52,396,430, resulting in net unrealized appreciation on long- and short-term
investments of $1,346,191,261.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions and as a result of gains/losses recognized for tax purposes on open
futures at December 31, 1999.
E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually. Distributions from net realized gains for book purposes may include
short-term capital gains and gains on option and futures transactions. All
short-term capital gains and a portion of option and futures gains are included
in ordinary income for tax purposes.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
for the 1999 fiscal year have been identified and appropriately reclassified.
For the year ended December 31, 1999, a permanent book and tax difference
relating to a net operating loss, in the amount of $11,723,600, was reclassified
from accumulated net realized gain to accumulated net investment loss.
Additionally, a permanent book and tax difference relating to a
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
non-deductible expense, in the amount of $153,766, was reclassified from capital
to accumulated net investment loss. Finally, a permanent book and tax difference
relating to capital gain distributions, in the amount of $10,246, was
reclassified from accumulated net investment loss to accumulated net realized
gain.
F. EXPENSE REDUCTIONS--During the year ended December 31, 1999, the Fund's
custody fee was reduced by $46,198 a result of credits earned on overnight cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- ---------------------------------------------------------------------
<S> <C>
First $1 billion......................................... .50 of 1%
Next $1 billion.......................................... .45 of 1%
Next $1 billion.......................................... .40 of 1%
Over $3 billion.......................................... .35 of 1%
</TABLE>
For the year ended December 31, 1999, the Fund recognized expenses of
approximately $173,800 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 year ended December 31, 1999, the Fund recognized expenses of
approximately $640,300 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., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended December 31,
1999, the Fund recognized expenses of approximately $4,710,500. Transfer agency
fees are determined through negotiations with the Fund's Board of Trustees and
are based on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
retirement plan are payable for a ten-year period and are based upon each
trustee's years of service to the Fund. The maximum annual benefit per trustee
under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At December 31, 1999, capital aggregated $1,458,109,182, $747,435,502 and
$89,317,100 for Classes A, B, and C, respectively. For the year ended December
31, 1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 204,104,518 $ 4,361,367,361
Class B.................................. 45,071,295 932,198,067
Class C.................................. 5,836,735 122,189,195
------------ ---------------
Total Sales................................ 255,012,548 $ 5,415,754,623
============ ===============
Dividend Reinvestment:
Class A.................................. 12,823,258 $ 272,202,449
Class B.................................. 5,831,316 119,129,590
Class C.................................. 628,245 12,952,509
------------ ---------------
Total Dividend Reinvestment................ 19,282,819 $ 404,284,548
============ ===============
Repurchases:
Class A.................................. (206,756,637) $(4,423,347,663)
Class B.................................. (44,921,263) (926,532,977)
Class C.................................. (5,378,863) (112,486,310)
------------ ---------------
Total Repurchases.......................... (257,056,763) $(5,462,366,950)
============ ===============
</TABLE>
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
At December 31, 1998, capital aggregated $1,247,993,551, $622,683,389 and
$66,666,389 for Classes A, B, and C, respectively. For the year ended December
31, 1998, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................. 232,030,934 $ 4,349,545,687
Class B.................................. 46,624,437 851,354,417
Class C.................................. 4,456,779 82,712,561
------------ ---------------
Total Sales................................ 283,112,150 $ 5,283,612,665
============ ===============
Dividend Reinvestment:
Class A.................................. 3,731,141 $ 71,215,610
Class B.................................. 1,514,082 28,118,929
Class C.................................. 153,307 2,870,040
------------ ---------------
Total Dividend Reinvestment................ 5,398,530 $ 102,204,579
============ ===============
Repurchases:
Class A.................................. (230,130,328) $(4,324,087,590)
Class B.................................. (39,259,659) (725,635,528)
Class C.................................. (3,669,727) (68,455,032)
------------ ---------------
Total Repurchases.......................... (273,059,714) $(5,118,178,150)
============ ===============
</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, and any dividend reinvestment 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. For the year
ended December 31, 1999, 3,108,556 Class B shares automatically converted to
Class A shares and are shown in the above table as sales of Class A shares and
repurchases of Class B shares. Class C shares purchased before January 1, 1997,
and any dividend reinvestment plan C shares received on such shares,
automatically convert to Class A shares ten years after the end of the calendar
month in which the shares were purchased. Class C shares purchased on or after
January 1, 1997 do not possess a conversion feature. For the year ended December
31, 1999, no Class C shares converted to Class A shares. The CDSC for Class B
and C
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
shares will be imposed on most redemptions made within five years of the
purchase for Class B and one year of the purchase for Class C as detailed in the
following schedule.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
- ---------------------------------------------------------------------------
<S> <C> <C>
First........................................ 5.00% 1.00%
Second....................................... 4.00% None
Third........................................ 3.00% None
Fourth....................................... 2.50% None
Fifth........................................ 1.50% None
Sixth and Thereafter......................... None None
</TABLE>
For the year ended December 31, 1999, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $914,300 and CDSC on redeemed shares of approximately $1,916,200.
Sales charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $3,381,401,092 and $3,776,560,487,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in stock index futures.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
These contracts are generally used to provide the return of an index without
purchasing all of the securities underlying the index or to manage the Fund's
overall exposure to the equity markets.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, 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 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 for the year ended December 31, 1999, were
as follows:
<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1998.......................... -0-
Futures Opened............................................ 1,060
Futures Closed............................................ (300)
-----
Outstanding at December 31, 1999.......................... 760
=====
</TABLE>
The futures contracts outstanding as of December 31, 1999, and the
descriptions and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF APPRECIATION/
CONTRACTS DEPRECIATION
- ------------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS:
S&P 500 Future-March 2000
(Current Notional Value of $371,050 per
contract)................................. 760 $11,583,574
=== ===========
</TABLE>
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended December 31, 1999, are payments retained by Van Kampen of
approximately $7,362,500.
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
7. BORROWINGS
In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, has entered in to a $650,000,000 committed line of credit
facility with a group of banks which expires on November 28, 2000, but is
renewable with the consent of the participating banks. Each Fund is permitted to
utilize the facility in accordance with the restrictions of its prospectus. In
the event the demand for the credit facility meets or exceeds $650 million on a
complex-wide basis, each Fund will be limited to its pro-rata percentage based
on the net assets of each participating Fund. Interest on borrowings is charged
under the agreement at a rate of 0.50% above the federal funds rate per annum.
An annual commitment fee of 0.09% per annum is charged on the unused portion of
the credit facility, which each Fund incurs based on its pro-rata percentage of
quarterly net assets. The Fund has not borrowed against the credit facility
during the period.
29
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Van Kampen Enterprise Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Enterprise Fund (the
"Fund") at December 31, 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 December 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 11, 2000
30
<PAGE> 32
VAN KAMPEN ENTERPRISE FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN*--Chairman
SUZANNE H. WOOLSEY, PH.D
PAUL G. YOVOVICH
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President
and Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
STEPHEN L. BOYD*
PETER W. HEGEL*
MICHAEL H. SANTO*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the
Investment Company Act of 1940.
(C) Van Kampen Funds Inc., 2000 All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information on how to purchase shares, the sales charge, and
other pertinent data. After June 30, 2000 the report, if used with prospective
investors, must be accompanied by a quarterly performance update, if applicable.
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
December 31, 1999. The Fund designated and paid $422,953,662 as a 20% rate gain
distribution. Shareholders were sent a 1999 Form 1099-DIV in January 2000,
representing their proportionate share of this capital gain distribution. For
corporate shareholders 76.99% of the distributions qualify for the dividend
received deductions.
31
<PAGE> 33
RESULTS OF SHAREHOLDER VOTES
A Joint Special Meeting of the Shareholders of the Fund was held on December 15,
1999, where shareholders voted on the election of trustees and the selection of
independent public accountants.
1) With regard to the election of the following trustees by the shareholders
of the Fund:
<TABLE>
<CAPTION>
# OF SHARES
----------------------
IN FAVOR WITHHELD
- -----------------------------------------------------------------------
<S> <C> <C>
J. Miles Branagan.............................. 77,758,782 1,596,497
Jerry D. Choate................................ 77,729,307 1,625,972
Linda Hutton Heagy............................. 77,750,462 1,604,817
R. Craig Kennedy............................... 77,762,081 1,593,198
Mitchell M. Merin.............................. 77,750,551 1,604,728
Jack E. Nelson................................. 77,754,152 1,601,127
Richard F. Powers, III......................... 77,765,548 1,589,731
Phillip B. Rooney.............................. 77,772,655 1,582,624
Fernando Sisto................................. 77,631,323 1,723,956
Wayne W. Whalen................................ 77,778,467 1,576,812
Suzanne H. Woolsey............................. 77,732,892 1,622,387
Paul G. Yovovich............................... 77,752,834 1,602,445
</TABLE>
2) With regard to the ratification of PricewaterhouseCoopers as independent
public accountants for the Fund, 77,077,341 shares voted in favor of the
proposal, 483,763 shares voted against, and 1,794,174 shares abstained.
32
<PAGE> 34
YEAR 2000 UPDATE
As we enter the new century, it's "business as usual" for Van Kampen. Thank you
for the confidence you showed in us during the changeover on January 1, 2000,
and for entrusting us with your investment portfolio. We look forward to
continuing to serve your investment needs.
