<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Portfolio Management Review...................... 4
Glossary of Terms................................ 8
Portfolio Highlights............................. 9
Portfolio of Investments......................... 10
Statement of Assets and Liabilities.............. 17
Statement of Operations.......................... 18
Statement of Changes in Net Assets............... 19
Financial Highlights............................. 20
Notes to Financial Statements.................... 23
</TABLE>
HAR SAR 8/99
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
July 20, 1999
Dear Shareholder,
With the volatility that we've experienced recently in many financial
markets, some investors have sold securities because of uncertainty about where
the markets were going, only to be left rethinking whether they made the right
decision. We've witnessed this kind of market activity numerous times over the
past several years, sparked by concerns such as the impact of the Asian economic
crisis, high stock valuations, or, most recently, the stability of many
high-flying technology companies. While these fears eventually subsided,
investors who may have sold during this period were unable to reap the benefits
of the subsequent rally. That's partly because most of the recent big gains
happened in relatively short periods of time. This kind of volatility--and the
danger of making short-term decisions--highlights the importance of investing
for the long term, in accordance with your individual financial objectives.
Although the worst of the Asian crisis appears to be behind us, new concerns
are always emerging. In the coming months, we'll likely hear more about how the
year 2000 computer problem may affect the markets or that we're overdue for a
correction. While the markets could undoubtedly suffer as a result of these or
any number of other events, we encourage you to focus on your long-term
investment goals. Although nothing is certain, history has shown us that over
time, the markets tend to recover--and most investors want to be positioned to
take advantage of any recovery.
If you have concerns about market volatility or questions about how your
portfolio is structured to respond to these events, we encourage you to contact
your financial advisor. Your advisor can talk with you about sustaining a
long-term investment plan through a variety of market conditions. We hope that
Van Kampen Funds will play an important role as you and your advisor build a
portfolio designed to help you weather what the markets have in store.
Sincerely,
[SIG]
Richard F. Powers, III
Chairman
Van Kampen Asset Management Inc.
[SIG]
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
1
<PAGE> 3
ECONOMIC SNAPSHOT
The strength of the domestic economy continued to defy expectations in the
first half of 1999, although it finally began to show signs of slowing down.
Strong growth, healthy employment, and low inflation all contributed to the
favorable economic environment.
STRONG ECONOMIC GROWTH
The nation's gross domestic product rose at an impressive rate of 4.3
percent during the first quarter of 1999, but fell to 2.3 percent in the second
quarter. The first-quarter expansion was fueled by an increase in consumer
spending, which dropped to more moderate levels later in the reporting period.
POSITIVE EMPLOYMENT ENVIRONMENT
In May, the unemployment rate dropped to 4.2 percent--its lowest level in
more than 30 years. Throughout the reporting period, unemployment remained low,
the number of jobs grew, and wages rose. The labor market remained especially
tight in the service industry and most urban areas.
LOW INFLATION
Inflation remained low throughout most of the reporting period, although a
sharp increase in oil prices contributed to a spike in April's consumer price
index report (CPI). Following this up-tick, the Federal Reserve raised interest
rates 0.25 percent on June 30. Although the Fed had expressed a bias toward a
series of rate increases, May's tame CPI report prompted it to drop this bias
when announcing the June rate increase.
ECONOMIC OUTLOOK
Our outlook for the economy suggests that the moderate slowdown may
continue, bringing the economy back to historically normal growth levels.
Healthy job growth, which has been supporting the consumer confidence and
spending levels, showed signs of faltering toward the end of the reporting
period. However, a renewed optimism for corporate earnings, low unemployment,
and a vibrant housing market should provide some balance against a slower job
growth rate.
INTEREST RATES AND INFLATION
June 30, 1997, through June 30, 1999
[GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Jun 1997 6.5000 2.3000
6.0000 2.2000
5.5000 2.2000
Sep 1997 6.2500 2.2000
5.7500 2.1000
5.6875 1.8000
Dec 1997 6.5000 1.7000
5.5625 1.6000
5.6250 1.4000
Mar 1998 6.1250 1.4000
5.6250 1.4000
5.6875 1.7000
Jun 1998 6.0000 1.7000
5.5625 1.7000
5.9375 1.6000
Sep 1998 5.7500 1.5000
5.2500 1.5000
4.8750 1.5000
Dec 1998 4.0000 1.6000
4.8125 1.7000
4.8750 1.6000
Mar 1999 5.1250 1.7000
4.9375 2.3000
4.5000 2.1000
Jun 1999 4.0000 2.0000
</TABLE>
Interest rates are represented by the closing midline federal funds rate
on the last day of each month. Inflation is indicated by the annual
percent change of the Consumer Price Index for all urban consumers at
the end of each month.
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED JUNE 30, 1999
VAN KAMPEN HARBOR FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
Six-month total return based on NAV(1)... 13.24% 12.81% 12.86%
Six-month total return(2)................ 6.70% 7.81% 11.86%
One-year total return(2)................. 8.15% 8.85% 12.89%
Five-year average annual total
return(2)................................ 13.04% 13.30% 13.49%
Ten-year average annual total
return(2)................................ 10.63% N/A N/A
Life-of-Fund average annual total
return(2).............................. 9.98% 11.24% 10.53%
Commencement date........................ 11/15/56 12/20/91 10/26/93
</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).
(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. 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.
Debt securities acquired by the Fund are not subject to any ratings limitations
and may include high-, medium-, lower- and non-rated debt securities.
Lower-rated and comparable non-rated securities are regarded as speculative with
respect to capacity to pay interest and repay principal.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE> 5
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN HARBOR FUND
We recently spoke to the management team of the Van Kampen Harbor Fund about the
key events and economic forces that shaped the markets during the past six
months. The team includes Christine Drusch, senior portfolio manager, who has
been the Fund's lead manager since February 1998 (associate manager since 1991)
and has worked in the investment industry since 1985. She is joined by Matthew
Hart and David McLaughlin, portfolio managers, and Stephen L. Boyd, chief
investment officer for equity investments. The following excerpts reflect their
views on the Fund's performance during the six months ended June 30, 1999.
Q WHAT MARKET FACTORS AFFECTED THE FUND DURING THE REPORTING PERIOD?
A As has been its trademark in recent times, the stock market was volatile
during the first six months of 1999. The Dow Jones Industrial Average
passed two significant milestones during the reporting period--10,000 in
late March and 11,000 in early May. Small-cap stocks, measured by the Russell
2000, performed solidly, if not spectacularly, during the six months.
Investors' anticipation of an interest-rate increase toward the end of the
reporting period placed downward pressure on the stock market, particularly
among large-cap growth stocks. In response to this shift, investors began to
favor a broader range of market offerings, including cyclical stocks and
smaller-company securities. The Federal Reserve did indeed raise interest rates
on the last day of the reporting period, but, because the increase was widely
expected, the effect on stock prices was limited.
Q HOW DID THE CONVERTIBLE SECURITIES MARKET RESPOND?
A In all, it was a favorable environment for convertible securities. The
convertibles market is composed primarily of securities issued by mid-cap
companies. As a result, convertibles--and the Fund's return--benefited
from the solid performance of small and mid caps during the reporting period as
a whole.
Q GIVEN THIS ENVIRONMENT FOR CONVERTIBLES, WHAT WAS YOUR STRATEGY FOR
MANAGING THE FUND?
A We didn't change our investment strategy in response to market
conditions--we consistently manage the Fund for capital appreciation,
current income, and preservation of capital by investing primarily in
convertible securities. In seeking to meet this objective, we continued to focus
on growth companies and to diversify across market sectors. This approach helped
the Fund's return during the reporting period.
That said, because of the market's volatility, we were careful in selecting
areas of the market in which to invest. Although there were some attractive
opportunities in Internet
4
<PAGE> 6
technology, we sought to moderate our exposure to this area because we believed
that valuations for Internet companies were, in most cases, extremely high. We
did own some Internet names but were selective about our investments. These
securities' prices are especially sensitive to rising interest rates--like we
witnessed during the last few months of the reporting period. The Fund was well
positioned during this time, as Internet securities underperformed.
Along with limiting our exposure to stocks with high price-to-earnings
ratios, we also sought to take advantage of the market shift mentioned earlier
and slightly increased our exposure to cyclical industries. Our efforts enabled
us to moderate the effects of the market's recent shift away from traditional
growth securities and avoid significant damage to the Fund's return.
Q WHAT WERE SOME OF YOUR MOST SUCCESSFUL INVESTMENTS DURING THE REPORTING
PERIOD?
A For the most part, our investments in technology companies continued to
pay off for the Fund. We were pleased with our holdings in businesses that
have benefited from the growth of the telecommunications
industry--particularly cellular technology, which has enjoyed extremely rapid
growth of late. These holdings included Qualcomm, which develops and markets
communications technologies, and Conexant Systems, which develops semiconductors
used in those products. At the end of the reporting period, one of the Fund's
largest holdings was Comverse Technology. This company is the market leader in
its field, and it performed very well for the Fund.
Internet service provider America Online was a successful holding for the
Fund. Toward the end of the reporting period, however, the company's stock
performance declined, and we eliminated our position.
Although many retail companies lagged in April and May, our investments in
women's apparel retailer AnnTaylor and home-products company Home Depot
benefited the Fund. At the end of the reporting period, these companies
continued to show strong same-store sales--often a sign of a healthy business.
Keep in mind that not all securities in the Fund performed as favorably, nor
is there any guarantee they will continue to do so in the future. For additional
Fund portfolio highlights, please refer to page 9.
Q WERE YOU DISAPPOINTED BY ANY OF YOUR INVESTMENTS?
A Our disappointments were on a security-by-security basis, rather than the
result of underperformance in specific industries. Although other
securities performed below our expectations, these had a significant
impact on the Fund's return for the six-month period:
- Just prior to the start of the reporting period, we sold for a healthy
gain some of our position in convertible bonds issued by SCI, an
electronics contract manufacturer. Its convertibles began a steady decline
thereafter. In early May 1999, SCI called the remaining bonds in our
portfolio, forcing us to convert
5
<PAGE> 7
the bonds into common stock. By the end of the reporting period the stock
closed moderately higher than our conversion price, enabling us to recover
some of our losses of the previous months. We are optimistic about this
stock's future performance and continue to own it.
- Total Renal Care, a company that provides dialysis services to patients
with chronic kidney failure, similarly dragged the Fund's return. After
disappointing earnings in the first quarter, the firm's stock price fell
58 percent and the bonds fell 32 percent in a single day. The stock has
come back somewhat since then, although it is still down considerably for
the reporting period. We've maintained a position in Total Renal Care
because we believe the company will recover due to the industry's
attractive demographics, as aging baby boomers represent a promising
future market.
- Another security that performed poorly was Sunrise Assisted Living, which
provides homelike assisted living accommodations for the elderly. The
assisted living industry faced a difficult reporting period, as political
uncertainty surrounding patient reimbursement led to weak performance. We
eliminated our holdings in Sunrise during the period.
Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A Thanks to a favorable environment for convertibles and our willingness to
moderate our exposure to interest rate-sensitive securities, the Fund
performed very well, achieving a six-month return of 13.24(1) (Class A
shares at net asset value) as of June 30, 1999. By comparison, the Russell 2000
Index returned 9.28 percent, and the Lipper Convertible Securities Fund Index,
which more closely resembles the Fund, returned 11.01 percent. The Russell 2000
Index reflects the average performance of small-cap stocks, and the Lipper
Convertible Securities Fund Index represents the average performance of the 10
largest convertible securities funds.
These indices are statistical composites that do not include any commissions
or sales charges that would be paid by an investor purchasing the securities or
investments represented by these indices. Please refer to the chart and
footnotes on page 3 for additional Fund performance results. Past performance
does not guarantee future results.
Q WHAT DO YOU SEE AHEAD FOR THE FUND FOR THE NEXT SIX MONTHS?
A Because the Fund invests primarily in growth-oriented companies, such as
technology businesses, we are vulnerable if interest rates rise--growth
stocks tend to do poorly during periods of rising interest rates. At the
same time, we have increased our weighting in cyclical companies, which have
typically fared well in a rising rate environment. If interest rates rise, we
would expect to find a supportive environment for the cyclical convertibles in
which we've invested. And, if we continue to experience favorable economic
growth without inflation, then we are hopeful that the market environment will
remain positive for convertibles in general.
6
<PAGE> 8
We believe convertibles continue to offer investors a less aggressive way to
invest in growth companies--particularly in emerging industries such as Internet
technology. Investing in this area of the market can be risky, and convertibles
offer investors a way to participate in potential market gains and income while
enjoying the potential for reduced volatility from the convertibles.
[SIG]
Christine Drusch
Senior Portfolio Manager
[SIG]
David McLaughlin
Portfolio Manager
[SIG]
Matthew Hart
Portfolio Manager
[SIG]
Stephen L. Boyd
Chief Investment Officer
Equity Investments
7
<PAGE> 9
GLOSSARY OF TERMS
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).
CONVERTIBLE SECURITY: A security that can be exchanged for common stock at the
option of the security holder for a specified price or rate. Examples
include convertible bonds and convertible preferred stock.
CYCLICAL INDUSTRIES: Industries where earnings tend to rise quickly when the
economy strengthens and fall quickly when the economy weakens. Examples of
cyclical industries include housing, automobiles, and paper. Noncyclical
industries are typically less sensitive to changes in the economy. These
include utilities, grocery stores, and pharmaceutical companies.
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.
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.
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.
MARKET CAPITALIZATION: The size of a company, as measured by the value of its
issued and outstanding stock.
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.
PRICE-TO-EARNINGS (P/E) RATIO: The price-to-earnings ratio shows the "multiple"
of earnings at which a stock is selling. The P/E ratio is calculated by
dividing a stock's current price by its current earnings per share. A high
multiple means that investors are optimistic about future growth and have
bid up the stock's price.
VOLATILITY: A measure of the fluctuation in the market price of a security. A
security that is volatile has frequent and large swings in price.
8
<PAGE> 10
PORTFOLIO HIGHLIGHTS
VAN KAMPEN HARBOR FUND
TOP TEN PORTFOLIO HOLDINGS AS OF JUNE 30, 1999*
<TABLE>
<S> <C>
COMVERSE TECHNOLOGY develops computer and telecommunications
systems and software for multimedia communications and
information processing applications......................... 3.7%
HOME DEPOT operates retail stores that sell building
materials and home-improvement products..................... 2.8%
LSI LOGIC designs, manufactures, and markets semiconductor
products and computer-storage systems solutions............. 2.5%
HEWLETT-PACKARD is one of the world's largest computer
companies. It also makes networking products, electronic
components, instruments for chemical analysis, and handheld
calculators................................................. 2.2%
WINSTAR COMMUNICATIONS provides a range of
telecommunications services, including local, long-distance,
and Internet access services................................ 2.1%
TELEFONOS DE MEXICO provides telecommunications services to
domestic and international telephone users in Mexico........ 2.0%
UNION PACIFIC is a transportation, computer technology, and
logistics company, with operations in the United States,
Canada, and Mexico.......................................... 2.0%
LENNAR is engaged in two principal businesses: the building
and selling of homes and mortgage financing services........ 2.0%
GLOBAL TELESYSTEMS GROUP provides telecommunications
services to businesses, telecommunications service
providers, and consumers in Europe, Russia, the Commonwealth
of Independent States, India, and China..................... 2.0%
ANNTAYLOR STORES is a specialty retailer of women's apparel,
shoes, and accessories...................................... 1.9%
</TABLE>
TOP FIVE PORTFOLIO INDUSTRIES*
[BAR GRAPH]
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
<S> <C> <C>
Technology 29.5 29.6
Utilities 19.7 15.2
Finance 10.4 9.3
Consumer Distribution 7.0 8.0
Health Care 7.0 9.0
</TABLE>
* As a percentage of long-term investments
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE
OBLIGATIONS 42.0%
CONSUMER DISTRIBUTION 4.3%
$ 5,901 AnnTaylor Stores Corp.,
144A - Private Placement (a)......... 0.550% 06/18/19 $ 3,725,006
4,640 Costco Cos., Inc. ................... * 08/19/17 4,390,600
4,420 Home Depot, Inc. .................... 3.250 10/01/01 12,387,050
------------
20,502,656
------------
CONSUMER DURABLES 1.8%
20,140 Lennar Corp. ........................ * 07/29/18 8,836,425
------------
CONSUMER NON-DURABLES 0.9%
5,150 Loews Corp. (convertible into 79,185
Diamond Offshore Drilling, Inc.
common shares)....................... 3.125 09/15/07 4,158,625
------------
CONSUMER SERVICES 4.1%
4,200 Amazon.com, Inc., 144A - Private
Placement (a)........................ 4.750 02/01/09 4,105,500
2,530 Interpublic Group of Cos., Inc.,
144A - Private Placement (a)......... 1.870 06/01/06 2,324,438
5,800 Jacor Communications, Inc., LYON..... * 02/09/18 3,233,500
4,950 News America Holdings, Inc., LYON.... * 03/11/13 3,625,875
1,700 Omnicom Group, Inc. ................. 2.250 01/06/13 2,881,500
1,250 Omnicom Group, Inc., 144A - Private
Placement (a)........................ 4.250 01/03/07 3,206,250
------------
19,377,063
------------
ENERGY 0.9%
4,207 PennzEnergy Co. (convertible into
39,244 Chevron Corp. common
shares).............................. 4.950 08/15/08 4,327,951
------------
FINANCE 1.1%
4,216 Net.B@nk, Inc. ...................... 4.750 06/01/04 5,212,030
------------
HEALTHCARE 6.1%
2,347 Alpharma, Inc., 144A - Private
Placement (a)........................ 3.000 06/01/06 2,886,810
3,060 ALZA Corp. .......................... 5.000 05/01/06 4,226,625
5,080 Centocor, Inc. ...................... 4.750 02/15/05 5,645,150
6,900 Elan Finance Corp., Ltd., LYON,
144A - Private Placement (a)......... * 12/14/18 3,536,250
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTHCARE (CONTINUED)
$ 2,800 IDEC Pharmaceuticals Corp.,
144A - Private Placement (a)......... * 02/16/19 $ 1,519,000
2,400 Renal Treatment Centers, Inc. ....... 5.625% 07/15/06 2,013,000
7,860 Roche Holdings, Inc., LYON,
144A - Private Placement (a)......... * 04/20/10 4,440,900
3,213 Total Renal Care Holdings, Inc.,
144A - Private Placement (a)......... 7.000 05/15/09 2,614,579
2,526 Wellpoint Health Networks, Inc. ..... * 07/02/19 1,790,302
------------
28,672,616
------------
PRODUCER MANUFACTURING 0.9%
3,940 WMX Technologies, Inc. .............. 2.000 01/24/05 4,265,050
------------
TECHNOLOGY 20.5%
5,520 Adaptec, Inc. ....................... 4.750 02/01/04 5,237,100
2,550 At Home Corp., 144A - Private
Placement (a)........................ 0.525 12/28/18 1,976,250
2,280 Automatic Data Processing, Inc.,
LYON................................. * 02/20/12 2,593,500
5,720 Citrix Systems, Inc., 144A - Private
Placement (a)........................ * 03/22/19 2,559,700
8,875 Comverse Technology, Inc.,
144A - Private Placement (a)......... 4.500 07/01/05 16,562,969
5,990 Conexant Systems, Inc.,
144A - Private Placement (a)......... 4.250 05/01/06 8,505,800
1,480 DoubleClick, Inc., 144A - Private
Placement (a)........................ 4.750 03/15/06 1,850,000
900 EMC Corp. ........................... 3.250 03/15/02 4,369,500
15,470 Hewlett-Packard Co., LYON............ * 10/14/17 9,823,450
2,110 HNC Software, Inc. .................. 4.750 03/01/03 2,046,700
1,070 Lam Research Corp.................... 5.000 09/01/02 976,375
2,185 Level One Communications, Inc. ...... 4.000 09/01/04 4,252,556
7,000 LSI Logic Corp., 144A - Private
Placement (a)........................ 4.250 03/15/04 11,357,500
1,530 May & Speh, Inc. .................... 5.250 04/01/03 2,157,300
1,647 MindSpring Enterprises, Inc. ........ 5.000 04/15/06 1,557,444
2,090 Oak Industries, Inc. ................ 4.875 03/01/08 2,672,588
2,450 Quantum Corp. ....................... 7.000 08/01/04 2,339,750
4,327 Sanmina Corp., 144A - Private
Placement (a)........................ 4.250 05/01/04 4,808,379
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TECHNOLOGY (CONTINUED)
$ 5,060 Solectron Corp., LYON, 144A - Private
Placement (a)........................ * 01/27/19 $ 2,947,450
6,490 STMicroelectronics NV, LYON.......... * 06/10/08 8,169,287
------------
96,763,598
------------
UTILITIES 1.4%
4,300 NTL, Inc., 144A - Private
Placement (a)........................ 7.000% 12/15/08 6,767,125
------------
TOTAL DOMESTIC CONVERTIBLE CORPORATE OBLIGATIONS 42.0%.............. 198,883,139
------------
FOREIGN CONVERTIBLE CORPORATE
OBLIGATIONS 3.0%
8,210 Deutsche Bank Finance BV,
(Netherlands), (convertible into
42,700 DaimlerChrysler AG common
shares).............................. * 02/12/17 4,197,363
1,000 Swiss Life Finance Ltd., (United
Kingdom), (convertible into 13,614
shares of Royal Dutch Petroleum Co.),
144A - Private Placement (a)......... 2.000 05/20/05 993,750
8,600 Telefonos de Mexico, SA (Mexico)..... 4.250 06/15/04 8,901,000
------------
TOTAL FOREIGN CONVERTIBLE CORPORATE OBLIGATIONS...................... 14,092,113
------------
</TABLE>
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS 35.7%
CONSUMER NON-DURABLES 0.9%
Seagram Co. Ltd., ACES, 7.500%.......................
84,300 $ 4,209,731
------------
CONSUMER SERVICES 1.5%
Adelphia Communications Corp., Ser D, 5.500%.........
10,100 1,949,300
CSC Holdings, Inc., Ser I, 8.500%....................
35,000 3,780,000
Echostar Communications Corp., Ser C, 6.750%.........
4,800 1,488,000
------------
7,217,300
------------
ENERGY 3.9%
Apache Corp., ACES, 6.500%...........................
63,600 2,353,200
El Paso Energy Capital Trust I, 4.750%...............
135,750 6,719,625
Tosco Financing Trust, 5.750%........................
94,700 4,592,950
Unocal Corp., 6.250%.................................
81,000 4,566,375
------------
18,232,150
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
FINANCE 5.5%
American General Corp., ACES, 7.000%.................
35,000 $ 2,170,000
Amerus Life Holdings, Inc., ACES, 7.000%.............
102,600 2,795,850
Conseco Finance Trust IV, Ser F, PRIDES, 7.000%......
133,800 5,377,087
General Growth Properties, Inc., PIERS, 7.250%.......
102,400 2,457,600
National Australia Bank, 7.875%......................
160,000 4,860,000
Philadelphia Consolidated Holdings, PRIDES, 7.000%...
211,800 2,210,663
PLC Capital Trust II, PRIDES, 6.500%.................
22,000 1,276,000
Southwest Securities Group, Inc., DARTS, 5.000%
(convertible into 70,247 Knight-Trimark Group, Inc.
common shares) (b)...................................
84,300 5,036,925
------------
26,184,125
------------
HEALTHCARE 0.5%
Alkermes, Inc., 6.500%...............................
51,000 2,444,813
------------
PRODUCER MANUFACTURING 1.9%
Coltec Capital Trust, TIDES, 5.250%, 144A - Private
Placement (a)......................................
76,900 3,595,075
Ingersoll-Rand Co., PRIDES, 6.750%...................
171,500 5,145,000
------------
8,740,075
------------
RAW MATERIALS/PROCESSING INDUSTRIES 1.0%
Monsanto Co., ACES, 6.500%...........................
59,050 2,369,381
Pogo Trust I, Ser A, QUIPS, 6.500%...................
50,600 2,552,138
------------
4,921,519
------------
TECHNOLOGY 3.0%
PSINet, Inc., Ser C, 6.750%..........................
106,800 4,899,450
Qualcomm Financial Trust, 5.750%.....................
34,000 6,859,500
Tribune Co., DECS, 6.250%............................
89,800 2,505,599
------------
14,264,549
------------
TRANSPORTATION 4.3%
Canadian National Railway Co., ACES, 5.250%..........
25,400 1,358,900
Tower Automotive Capital Trust, 6.750%...............
100,000 5,137,500
Tower Automotive Capital Trust, 6.750%,
144A - Private Placement (a).......................
95,000 4,880,625
Union Pacific Capital Trust, 6.250%..................
172,500 8,862,188
------------
20,239,213
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES 13.2%
CalEnergy Capital Trust III, 6.500%..................
100,000 $ 4,725,000
Global TeleSystems Group, Inc., 7.250%, 144A -
Private Placement (a)................................ 131,700 8,823,900
Houston Industries, Inc., ACES, 7.000% (convertible
into 42,394 Time Warner, Inc. common shares).........
25,650 3,058,762
Intermedia Communications, Inc., Ser E, 7.000%.......
137,000 3,921,625
MediaOne Group, Inc., PIES, 6.250% (convertible into
26,007 Vodafone AirTouch PLC ADR's)..................
64,200 5,780,313
MediaOne Group, Inc., Ser D, 4.500%..................
34,000 5,093,625
Nextlink Communications, Inc., 6.500%, 144A - Private
Placement (a)......................................
27,100 2,445,775
Omnipoint Corp., 7.000%, 144A - Private
Placement (a)......................................
111,100 6,096,612
Skytel Communications, Inc., 2.250%..................
56,500 2,111,688
Sprint Corp., DECS, 8.250% (convertible into 112,761
SBC Communications, Inc. common shares)............
74,000 6,437,471
Texas Utilities Co., PRIDES, 9.250%..................
81,200 4,466,000
WinStar Communications, Inc., Ser D, 7.000%..........
166,000 9,420,500
------------
62,381,271
------------
TOTAL CONVERTIBLE PREFERRED STOCK 35.7%.......................... 168,834,746
------------
COMMON STOCK 13.9%
CONSUMER DISTRIBUTION 2.3%
AnnTaylor Stores Corp. (b)...........................
191,638 8,623,710
Sunglass Hut International, Inc. (b).................
132,000 2,268,750
------------
10,892,460
------------
CONSUMER NON-DURABLES 0.3%
Jones Apparel Group, Inc. (b)........................
40,000 1,372,500
------------
CONSUMER SERVICES 0.5%
Comcast Corp., Class A...............................
60,000 2,306,250
------------
ENERGY 1.3%
Mobil Corp. .........................................
60,500 5,989,500
------------
FINANCE 2.1%
American Express Co..................................
22,000 2,862,750
Citigroup, Inc. .....................................
111,000 5,272,500
Equitable Cos., Inc. ................................
30,000 2,010,000
------------
10,145,250
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
PRODUCER MANUFACTURING 0.9%
Tyco International Ltd. .............................
46,035 $ 4,361,816
------------
TECHNOLOGY 4.4%
Applied Materials, Inc. (b)..........................
32,500 2,400,938
Copper Mountain Networks, Inc. (b)...................
5,700 440,325
Lam Research Corp. (b)...............................
60,000 2,801,250
Motorola, Inc. ......................................
32,500 3,079,375
SCI Systems, Inc. (b)................................
82,854 3,935,565
Texas Instruments, Inc. .............................
24,500 3,552,500
Unisys Corp. (b).....................................
120,000 4,672,500
------------
20,882,453
------------
UTILITIES 2.1%
AT&T Corp............................................
111,000 6,195,187
Intermedia Communications, Inc. (b)..................
2,624 78,720
MCI Worldcom, Inc. (b)...............................
41,317 3,555,844
WinStar Communications, Inc. (b).....................
2,682 130,748
------------
9,960,499
------------
TOTAL COMMON STOCK 13.9%......................................... 65,910,728
------------
TOTAL LONG-TERM INVESTMENTS 94.6%
(Cost $384,167,164)............................................. 447,720,726
REPURCHASE AGREEMENT 2.3%
BankAmerica ($10,745,000 par collateralized by U.S. government
obligations in a pooled cash account, dated 06/30/99, to be sold
on 07/01/99 at $10,746,507)
(Cost $10,745,000).............................................. 10,745,000
------------
TOTAL INVESTMENTS 96.9%
(Cost $394,912,164)............................................. 458,465,726
OTHER ASSETS IN EXCESS OF LIABILITIES 3.1%....................... 14,765,147
------------
NET ASSETS 100.0%................................................ $473,230,873
============
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
* Zero-coupon bond
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may only be resold in
transactions exempt from registration which are normally transactions with
qualified institutional buyers.
(b) Non-income producing security as this stock currently does not declare
dividends.
ACES--Automatically convertible equity securities
ADR--American Depositary Receipt
DARTS--Derivative Adjustable Ratio Securities
DECS--Debt exchange for common stock
LYON--Liquid yield option note
PIERS--Preferred income equity redeemable stock
PIES--Premium income exchange securities
PRIDES--Preferred redeemable increased dividend equity security, traded in
shares
QUIPS--Quarterly income preferred securities
TIDES--Term income deferrable equity securities
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $394,912,164)....................... $458,465,726
Receivables:
Investments Sold.......................................... 15,842,462
Fund Shares Sold.......................................... 3,079,546
Interest.................................................. 1,377,126
Dividends................................................. 305,263
Other....................................................... 73,680
------------
Total Assets.......................................... 479,143,803
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,001,193
Fund Shares Repurchased................................... 534,972
Income Distributions...................................... 386,870
Distributor and Affiliates................................ 328,043
Investment Advisory Fee................................... 202,649
Custodian Bank............................................ 413
Accrued Expenses............................................ 288,274
Trustees' Deferred Compensation and Retirement Plans........ 170,516
------------
Total Liabilities..................................... 5,912,930
------------
NET ASSETS.................................................. $473,230,873
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $382,779,920
Net Unrealized Appreciation................................. 63,553,562
Accumulated Net Realized Gain............................... 25,930,343
Accumulated Undistributed Net Investment Income............. 967,048
------------
NET ASSETS.................................................. $473,230,873
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $411,850,699 and 25,197,142 shares of
beneficial interest issued and outstanding)........... $ 16.35
Maximum sales charge (5.75%* of offering price)......... .99
------------
Maximum offering price to public........................ $ 17.34
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $55,141,534 and 3,392,240 shares of
beneficial interest issued and outstanding)........... $ 16.26
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $6,238,640 and 381,089 shares of
beneficial interest issued and outstanding)........... $ 16.37
============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
17
<PAGE> 19
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 5,136,249
Dividends................................................... 4,286,578
-----------
Total Income............................................ 9,422,827
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,211,831
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $446,038, $303,093 and $29,760,
respectively)............................................. 778,891
Shareholder Services........................................ 363,720
Custody..................................................... 57,114
Trustees' Fees and Related Expenses......................... 23,892
Legal....................................................... 9,231
Other....................................................... 161,640
-----------
Total Expenses.......................................... 2,606,319
Less Credits Earned on Cash Balances.................... 40,589
-----------
Net Expenses............................................ 2,565,730
-----------
NET INVESTMENT INCOME....................................... $ 6,857,097
===========
REALIZED AND UNREALIZED GAIN:
Realized Gain/Loss:
Investments............................................... $24,760,149
Futures................................................... 2,709,863
-----------
Net Realized Gain........................................... 27,470,012
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 40,695,575
End of the Period:
Investments............................................... 63,553,562
-----------
Net Unrealized Appreciation During the Period............... 22,857,987
-----------
NET REALIZED AND UNREALIZED GAIN............................ $50,327,999
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $57,185,096
===========
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1999 and
the Year Ended December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................ $ 6,857,097 $ 15,238,836
Net Realized Gain................................ 27,470,012 21,993,591
Net Unrealized Appreciation/Depreciation During
the Period..................................... 22,857,987 (6,888,564)
------------ ------------
Change in Net Assets from Operations............. 57,185,096 30,343,863
------------ ------------
Distributions from Net Investment Income:
Class A Shares................................. (6,413,439) (13,495,042)
Class B Shares................................. (753,728) (2,044,075)
Class C Shares................................. (76,879) (152,905)
------------ ------------
(7,244,046) (15,692,022)
------------ ------------
Distributions from Net Realized Gains:
Class A Shares................................. (4,611,188) (18,851,717)
Class B Shares................................. (758,573) (3,468,896)
Class C Shares................................. (72,011) (278,390)
------------ ------------
(5,441,772) (22,599,003)
------------ ------------
Total Distributions.............................. (12,685,818) (38,291,025)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES..................................... 44,499,278 (7,947,162)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................ 225,349,569 211,066,810
Net Asset Value of Shares Issued Through
Dividend Reinvestment.......................... 10,202,587 31,243,567
Cost of Shares Repurchased....................... (254,841,060) (248,677,411)
------------ ------------
Net Change in Net Assets from Capital
Transactions................................... (19,288,904) (6,367,034)
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS............ 25,210,374 (14,314,196)
NET ASSETS:
Beginning of the Period.......................... 448,020,499 462,334,695
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$967,048 and $1,353,997, respectively)......... $473,230,873 $448,020,499
============ ============
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
Six Months Ended ------------------------------------
Class A Shares June 30, 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................. $14.835 $15.059 $15.054 $ 15.05 $13.24
------- ------- ------- ------- ------
Net Investment Income...... .246 .520 .600 .566 .68
Net Realized and Unrealized
Gain..................... 1.712 .546 1.854 1.173 2.25
------- ------- ------- ------- ------
Total from Investment
Operations................. 1.958 1.066 2.454 1.739 2.93
------- ------- ------- ------- ------
Less:
Distributions from and in
Excess of Net Investment
Income................... .260 .537 .730 .555 .7025
Distributions from and in
Excess of Net Realized
Gain..................... .188 .753 1.719 1.180 .4175
------- ------- ------- ------- ------
Total Distributions.......... .448 1.290 2.449 1.735 1.12
------- ------- ------- ------- ------
Net Asset Value, End of the
Period..................... $16.345 $14.835 $15.059 $15.054 $15.05
======= ======= ======= ======= ======
Total Return (a)............. 13.24%* 7.52% 16.91% 12.08% 22.46%
Net Assets at End of the
Period (In millions)....... $ 411.9 $ 375.4 $ 376.4 $ 373.1 $394.5
Ratio of Expenses to Average
Net Assets (b)............. 1.04% 1.02% 1.04% 1.09% 1.00%
Ratio of Net Investment
Income to Average Net
Assets..................... 3.16% 3.48% 3.58% 3.60% 4.62%
Portfolio Turnover........... 58%* 156% 170% 129% 130%
</TABLE>
* Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratio would decrease by .02% for the period ended June 30,
1999.
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. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended -------------------------------------
Class B Shares June 30, 1999(c) 1998(c) 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period............. $14.755 $14.981 $14.992 $ 14.99 $ 13.20
------- ------- ------- ------- -------
Net Investment Income....... .182 .397 .470 .437 .56
Net Realized and Unrealized
Gain...................... 1.706 .547 1.848 1.180 2.23
------- ------- ------- ------- -------
Total from Investment
Operations................ 1.888 .944 2.318 1.617 2.79
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income.................. .200 .417 .610 .435 .5825
Distributions from and in
Excess of Net Realized
Gain.................... .188 .753 1.719 1.180 .4175
------- ------- ------- ------- -------
Total Distributions......... .388 1.170 2.329 1.615 1.00
------- ------- ------- ------- -------
Net Asset Value, End of the
Period.................... $16.255 $14.755 $14.981 $14.992 $ 14.99
======= ======= ======= ======= =======
Total Return (a)............ 12.81%* 6.70% 15.98% 11.19% 21.46%
Net Assets at End of the
Period (In millions)...... $ 55.1 $ 66.7 $ 81.3 $ 78.9 $ 78.1
Ratio of Expenses to Average
Net Assets (b)............ 1.82% 1.81% 1.82% 1.88% 1.81%
Ratio of Net Investment
Income to Average Net
Assets.................... 2.38% 2.66% 2.80% 2.81% 3.81%
Portfolio Turnover.......... 58%* 156% 170% 129% 130%
</TABLE>
* Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratio would decrease by .02% for the period ended June 30,
1999.
(c) Based on average shares outstanding.
See Notes to Financial Statements
21
<PAGE> 23
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended -------------------------------------
Class C Shares June 30, 1999(c) 1998(c) 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period............. $14.855 $15.080 $15.079 $ 15.07 $ 13.25
------- ------- ------- ------- -------
Net Investment Income....... .183 .405 .448 .439 .56
Net Realized and Unrealized
Gain...................... 1.721 .540 1.882 1.185 2.26
------- ------- ------- ------- -------
Total from Investment
Operations................ 1.904 .945 2.330 1.624 2.82
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income.................. .200 .417 .610 .435 .5825
Distributions from and in
Excess of Net Realized
Gain.................... .188 .753 1.719 1.180 .4175
------- ------- ------- ------- -------
Total Distributions......... .388 1.170 2.329 1.615 1.00
------- ------- ------- ------- -------
Net Asset Value, End of the
Period.................... $16.371 $14.855 $15.080 $15.079 $ 15.07
======= ======= ======= ======= =======
Total Return (a)............ 12.86%* 6.65% 15.96% 11.20% 21.52%
Net Assets at End of the
Period (In millions)...... $ 6.2 $ 5.9 $ 4.6 $ 3.6 $ 3.6
Ratio of Expenses to Average
Net Assets (b)............ 1.82% 1.81% 1.82% 1.88% 1.80%
Ratio of Net Investment
Income to Average Net
Assets.................... 2.38% 2.71% 2.79% 2.81% 3.80%
Portfolio Turnover.......... 58%* 156% 170% 129% 130%
</TABLE>
* Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratio would decrease by .02% for the period ended June 30,
1999.
(c) Based on average shares outstanding.
See Notes to Financial Statements
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Harbor 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 income, capital appreciation, and conservation of capital by
investing primarily in convertible bonds and preferred stocks. The Fund
commenced investment operations on November 15, 1956. The distribution of the
Fund's Class B and Class C shares commenced on December 20, 1991 and October 26,
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.
Listed and unlisted securities for which the last sale price is not available
are valued at the mean of the bid and asked prices. Unlisted convertible
securities are valued at the mean of the bid and asked prices. Fixed income
investments and preferred stock are stated at value using market quotations or
indications of value obtained from an independent pricing service. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the Board
of Trustees. Short-term securities with remaining maturities of 60 days or less
are valued at amortized cost.
Fund investments include lower rated debt securities which may be more
susceptible to adverse economic conditions than other investment grade holdings.
These securities are often subordinated to the prior claims of other senior
lenders and uncertainties exist as to an issuer's ability to meet principal and
interest payments. Debt securities rated below investment grade and comparable
unrated securities represented approximately 27% of the long-term investments at
the end of the period.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
market fluctuations during this period. The Fund will maintain, in a segregated
account with its custodian, assets having an aggregate value at least equal to
the amount of the when issued or delayed delivery purchase commitments until
payment is made. At June 30, 1999, there were no when issued or delayed delivery
purchase commitments.
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 security only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
C. INCOME AND EXPENSES--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts 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.
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.
At June 30, 1999, for federal income tax purposes, cost of long- and
short-term investments is $394,945,565; the aggregate gross unrealized
appreciation is $72,274,986 and the aggregate gross unrealized depreciation is
$8,754,825, resulting in net unrealized appreciation on long- and short-term
investments of $63,520,161.
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
quarterly 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 which are included in ordinary income for
tax purposes.
F. EXPENSE REDUCTIONS--During the six months ended June 30, 1999, the Fund's
custody fee was reduced by $40,589 as a result of credits earned on overnight
cash balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- ---------------------------------------------------------------------
<S> <C>
First $350 million.................................... .55 of 1%
Next $350 million..................................... .50 of 1%
Next $350 million..................................... .45 of 1%
Over $1.05 billion.................................... .40 of 1%
</TABLE>
For the six months ended June 30, 1999, the Fund recognized expenses of
approximately $9,200 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, 1999, the Fund recognized expenses of
approximately $54,500 representing Van Kampen Funds Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
June 30, 1999, the Fund recognized expenses of approximately $283,900. 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
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
to defer all or a portion of their compensation to a later date. Benefits under
the retirement plan are payable for a ten-year period and are based upon each
trustee's years of service to the Fund. The maximum annual benefit per trustee
under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At June 30, 1999, capital aggregated $326,596,202, $50,347,415 and
$5,836,303 for Classes A, B, and C, respectively. For the six months ended June
30, 1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................... 14,008,764 $ 219,761,300
Class B.................................... 317,673 4,909,171
Class C.................................... 43,825 679,098
----------- -------------
Total Sales.................................. 14,370,262 $ 225,349,569
=========== =============
Dividend Reinvestment:
Class A.................................... 567,867 $ 8,785,696
Class B.................................... 84,270 1,291,500
Class C.................................... 8,108 125,391
----------- -------------
Total Dividend Reinvestment.................. 660,245 $ 10,202,587
=========== =============
Repurchases:
Class A.................................... (14,686,368) $(230,186,622)
Class B.................................... (1,529,280) (23,599,990)
Class C.................................... (68,171) (1,054,448)
----------- -------------
Total Repurchases............................ (16,283,819) $(254,841,060)
=========== =============
</TABLE>
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
At December 31, 1998, capital aggregated $328,235,828, $67,746,734, and
$6,086,262 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.................................... 12,927,991 $ 193,998,609
Class B.................................... 949,046 14,318,709
Class C.................................... 179,950 2,749,492
----------- -------------
Total Sales.................................. 14,056,987 $ 211,066,810
=========== =============
Dividend Reinvestment:
Class A.................................... 1,786,990 $ 26,175,448
Class B.................................... 321,906 4,707,544
Class C.................................... 24,679 360,575
----------- -------------
Total Dividend Reinvestment.................. 2,133,575 $ 31,243,567
=========== =============
Repurchases:
Class A.................................... (14,405,527) $(214,599,359)
Class B.................................... (2,177,447) (32,400,387)
Class C.................................... (112,483) (1,677,665)
----------- -------------
Total Repurchases............................ (16,695,457) $(248,677,411)
=========== =============
</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 will
automatically convert to Class A shares after the eighth year following
purchase. The CDSC will be imposed on most redemptions made within five years of
the purchase for Class B and one year of the purchase for Class C as detailed in
the following schedule.
<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>
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended June 30, 1999, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A shares of
approximately $18,300 and CDSC on the redeemed shares of Classes B and C of
approximately $56,800. 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 $249,197,487 and $266,927,417,
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. 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).
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Transactions in futures contracts, each with a par value of $100,000, for
the six months ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1998............................ 90
Futures Opened.............................................. 60
Futures Closed.............................................. (150)
---
Outstanding at June 30, 1999................................ 0
===
</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 six months ended June 30, 1999, are payments retained by Van Kampen of
approximately $274,700.
29
<PAGE> 31
VAN KAMPEN FUNDS
EQUITY FUNDS
Domestic
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
Small Cap Value
Technology
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Franchise
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
Income
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
Tax Exempt Income
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
Capital Preservation
Reserve
Tax Free Money
SENIOR LOAN FUNDS
Prime Rate Income Trust
Senior Floating Rate
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and expenses. Please read it carefully before you invest or send money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- - visit our Web site at
WWW.VANKAMPEN.COM--to view a prospectus, select Download Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Telecommunications Device for the Deaf users, call 1-800-421-2833.
- - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us
30
<PAGE> 32
VAN KAMPEN HARBOR FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
RICHARD M. DEMARTINI*
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
JACK E. NELSON
DON G. POWELL*
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
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
PAUL R. WOLKENBERG*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
2800 Post Oak Blvd.
Houston, Texas 77056
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., 1999
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 December 31, 1999, the report, if used with
prospective investors, must be accompanied by a quarterly performance update, if
applicable.
31
<PAGE> 33
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations, and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Fund's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Fund may invest that, in turn, may adversely affect
the net asset value of the Fund. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act which may limit the legal rights regarding the use of such
statements in the case of dispute.
32
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> HARBOR CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 394,912,164<F1>
<INVESTMENTS-AT-VALUE> 458,465,726<F1>
<RECEIVABLES> 20,604,397<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 73,680<F1>
<TOTAL-ASSETS> 479,143,803<F1>
<PAYABLE-FOR-SECURITIES> 4,001,193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,911,737<F1>
<TOTAL-LIABILITIES> 5,912,930<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 326,596,202
<SHARES-COMMON-STOCK> 25,197,142
<SHARES-COMMON-PRIOR> 25,306,879
<ACCUMULATED-NII-CURRENT> 967,048<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 25,930,343<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 63,553,562<F1>
<NET-ASSETS> 411,850,699
<DIVIDEND-INCOME> 4,286,578<F1>
<INTEREST-INCOME> 5,136,249<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2,565,730)<F1>
<NET-INVESTMENT-INCOME> 6,857,097<F1>
<REALIZED-GAINS-CURRENT> 27,470,012<F1>
<APPREC-INCREASE-CURRENT> 22,857,987<F1>
<NET-CHANGE-FROM-OPS> 57,185,096<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (6,413,439)
<DISTRIBUTIONS-OF-GAINS> (4,611,188)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,008,764
<NUMBER-OF-SHARES-REDEEMED> (14,686,368)
<SHARES-REINVESTED> 567,867
<NET-CHANGE-IN-ASSETS> 36,419,910
<ACCUMULATED-NII-PRIOR> 1,353,997<F1>
<ACCUMULATED-GAINS-PRIOR> 3,902,103<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,211,831<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2,606,319<F1>
<AVERAGE-NET-ASSETS> 386,607,024
<PER-SHARE-NAV-BEGIN> 14.835
<PER-SHARE-NII> 0.246
<PER-SHARE-GAIN-APPREC> 1.712
<PER-SHARE-DIVIDEND> (0.260)
<PER-SHARE-DISTRIBUTIONS> (0.188)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.345
<EXPENSE-RATIO> 1.04
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> HARBOR CLASS B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 394,912,164<F1>
<INVESTMENTS-AT-VALUE> 458,465,726<F1>
<RECEIVABLES> 20,604,397<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 73,680<F1>
<TOTAL-ASSETS> 479,143,803<F1>
<PAYABLE-FOR-SECURITIES> 4,001,193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,911,737<F1>
<TOTAL-LIABILITIES> 5,912,930<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,347,415
<SHARES-COMMON-STOCK> 3,392,240
<SHARES-COMMON-PRIOR> 4,519,577
<ACCUMULATED-NII-CURRENT> 967,048<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 25,930,343<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 63,553,562<F1>
<NET-ASSETS> 55,141,534
<DIVIDEND-INCOME> 4,286,578<F1>
<INTEREST-INCOME> 5,136,249<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2,565,730)<F1>
<NET-INVESTMENT-INCOME> 6,857,097<F1>
<REALIZED-GAINS-CURRENT> 27,470,012<F1>
<APPREC-INCREASE-CURRENT> 22,857,987<F1>
<NET-CHANGE-FROM-OPS> 57,185,096<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (753,728)
<DISTRIBUTIONS-OF-GAINS> (758,573)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 317,673
<NUMBER-OF-SHARES-REDEEMED> (1,529,280)
<SHARES-REINVESTED> 84,270
<NET-CHANGE-IN-ASSETS> (11,545,863)
<ACCUMULATED-NII-PRIOR> 1,353,997<F1>
<ACCUMULATED-GAINS-PRIOR> 3,902,103<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,211,831<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2,606,319<F1>
<AVERAGE-NET-ASSETS> 61,173,825
<PER-SHARE-NAV-BEGIN> 14.755
<PER-SHARE-NII> 0.182
<PER-SHARE-GAIN-APPREC> 1.706
<PER-SHARE-DIVIDEND> (0.200)
<PER-SHARE-DISTRIBUTIONS> (0.188)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.255
<EXPENSE-RATIO> 1.82
<FN>
<F1> This item relates to the Fund on a composite basis
and not on a class basis.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> HARBOR CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 394,912,164<F1>
<INVESTMENTS-AT-VALUE> 458,465,726<F1>
<RECEIVABLES> 20,604,397<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 73,680<F1>
<TOTAL-ASSETS> 479,143,803<F1>
<PAYABLE-FOR-SECURITIES> 4,001,193<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,911,737<F1>
<TOTAL-LIABILITIES> 5,912,930<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,836,303
<SHARES-COMMON-STOCK> 381,089
<SHARES-COMMON-PRIOR> 397,327
<ACCUMULATED-NII-CURRENT> 967,048<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 25,930,343<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 63,553,562<F1>
<NET-ASSETS> 6,238,640
<DIVIDEND-INCOME> 4,286,578<F1>
<INTEREST-INCOME> 5,136,249<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2,565,730)<F1>
<NET-INVESTMENT-INCOME> 6,857,097<F1>
<REALIZED-GAINS-CURRENT> 27,470,012<F1>
<APPREC-INCREASE-CURRENT> 22,857,987<F1>
<NET-CHANGE-FROM-OPS> 57,185,096<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (76,879)<F1>
<DISTRIBUTIONS-OF-GAINS> (72,011)<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 43,825
<NUMBER-OF-SHARES-REDEEMED> (68,171)
<SHARES-REINVESTED> 8,108
<NET-CHANGE-IN-ASSETS> 336,327
<ACCUMULATED-NII-PRIOR> 1,353,997<F1>
<ACCUMULATED-GAINS-PRIOR> 3,902,103<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,211,831<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 2,606,319<F1>
<AVERAGE-NET-ASSETS> 6,006,859
<PER-SHARE-NAV-BEGIN> 14.855
<PER-SHARE-NII> 0.183
<PER-SHARE-GAIN-APPREC> 1.721
<PER-SHARE-DIVIDEND> (0.200)
<PER-SHARE-DISTRIBUTIONS> (0.188)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.371
<EXPENSE-RATIO> 1.82
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>
</TABLE>
