<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.............. 17
Statement of Operations.......................... 18
Statement of Changes in Net Assets............... 19
Financial Highlights............................. 20
Notes to Financial Statements.................... 23
Report of Independent Accountants................ 30
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
September 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
ECONOMIC GROWTH
Americans continued their spending spree over the past 12 months, keeping
the economy growing at a healthy pace. Although the economic environment
remained positive, we experienced a slowdown over the last several months from
the rapid growth early in the reporting period. The nation's gross domestic
product (GDP) peaked at 6.0 percent in the fourth quarter of 1998, then fell to
more sustainable levels in the first and second quarters of 1999.
EMPLOYMENT SITUATION
The strong job market helped encourage continued economic growth by making
consumers confident enough to spend at a brisk pace. During the reporting
period, the unemployment rate reached its lowest level in almost 30 years, and
wages and the number of jobs created continued to climb. However, some
economists expressed concerns about the job market in recent months, with wages
still increasing but productivity remaining stagnant. This has pushed the cost
of labor higher, as evidenced by the Employment Cost Index, which jumped sharply
in the second quarter of 1999.
INFLATION AND INTEREST RATES
In addition to strong growth levels, inflation remained tame throughout most
of the reporting period, although a sharp increase in oil prices contributed to
a spike in April's consumer price index (CPI) report. The Federal Reserve
remained active in guarding against inflation and tempering the economy during
this environment. The Fed lowered interest rates 0.25 percent three times in the
fall of 1998 in response to economic pressures, but, during the summer of 1999,
reversed two of those decreases to keep the economy from overheating.
INTEREST RATES AND INFLATION
August 31, 1997, through August 31, 1999
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Aug 1997 5.5000 2.2000
6.2500 2.2000
5.7500 2.1000
Nov 1997 5.6875 1.8000
6.5000 1.7000
5.5625 1.6000
Feb 1998 5.6250 1.4000
6.1250 1.4000
5.6250 1.4000
May 1998 5.6875 1.7000
6.0000 1.7000
5.5625 1.7000
Aug 1998 5.9375 1.6000
5.7500 1.5000
5.2500 1.5000
Nov 1998 4.8750 1.5000
4.0000 1.6000
4.8125 1.7000
Feb 1999 4.8750 1.6000
5.1250 1.7000
4.9375 2.3000
May 1999 4.5000 2.1000
4.0000 2.0000
4.7500 2.1000
Aug 1999 5.4375 2.3000
</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 AUGUST 31, 1999
VAN KAMPEN EMERGING GROWTH FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
One-year total return based on NAV(1).... 75.10% 73.78% 73.79%
One-year total return(2)................. 65.05% 68.78% 72.79%
Five-year average annual total
return(2)................................ 26.37% 26.76% 26.89%
Ten-year average annual total
return(2)................................ 20.99% N/A N/A
Life-of-Fund average annual total
return(2)................................ 18.28% 22.76% 21.90%
Commencement Date........................ 10/02/70 04/20/92 07/06/93
</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.
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
opportunities and challenges
The following graph compares your Fund's performance to that of the Standard
& Poor's 400 MidCap Index* and the Russell 2000 Stock Index over time. These
indices are broad-based, statistical composites that does not include any
commissions or sales charges that would be paid by an investor purchasing the
securities they represent.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen Emerging Growth Fund vs. the Standard & Poor's 400 MidCap Index*
and the Russell 2000 Stock Index (August 31, 1989, through August 31, 1999)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
VAN KAMPEN EMERGING STANDARD & POOR'S 400
GROWTH FUND MIDCAP INDEX RUSSELL 2000 STOCK INDEX
------------------- --------------------- ------------------------
<S> <C> <C> <C>
Aug 1989 9423 10000 10000
9466 10172 10032
9181 9725 9438
9380 9917 9501
9368 10313 9538
8515 9423 8704
8888 9733 8975
9399 9990 9324
9210 9559 9019
10396 10465 9658
10460 10578 9677
10220 10317 9252
Aug 1990 9115 9220 8019
8389 8702 7310
8118 8416 6864
9115 9200 7387
9552 9780 7680
10458 10533 8375
11324 11448 9308
11955 12021 9964
11551 11997 9939
12255 12521 10412
11532 11935 9805
12580 12632 10150
Aug 1991 13062 13061 10525
13160 13070 10608
13778 13559 10888
13199 13074 10385
15325 14668 11216
15533 14906 12125
15683 15111 12479
14946 14596 12056
13879 14399 11634
14015 14504 11789
13421 14144 11231
14230 14821 11622
Aug 1992 13621 14434 11294
14187 14693 11554
14795 15020 11922
16026 15826 12834
16815 16413 13281
17359 16596 13731
16702 16332 13413
17676 16949 13849
17125 16481 13469
18839 17197 14064
19073 17342 14152
18945 17283 14348
Aug 1993 19987 17960 14967
20885 18211 15390
20659 18243 15786
19692 17805 15266
20837 18693 15788
21184 19102 16283
21200 18790 16224
19797 17987 15368
20209 18093 15459
19451 17884 15286
18330 17334 14767
18492 17892 15009
Aug 1994 19652 18789 15846
19548 18506 15792
20055 18680 15730
19032 17800 15095
19353 18028 15500
19046 18190 15305
20156 19104 15942
20943 19501 16216
21498 19870 16577
21878 20306 16862
23551 21197 17736
25729 22276 18758
Aug 1995 26160 22647 19146
27079 23262 19488
26491 22637 18616
27435 23585 19399
27989 23592 19910
27650 23908 19889
28990 24677 20509
29899 25041 20926
32240 25777 22045
33571 26084 22914
32928 25762 21973
29825 23994 20054
Aug 1996 31533 25340 21218
34378 26507 22047
33185 26552 21708
33809 28006 22602
33003 28110 23195
34924 29134 23658
32071 28855 23084
30255 27697 21995
31466 28385 22056
34511 30824 24510
36010 31762 25561
39834 34866 26750
Aug 1997 39238 34789 27362
42505 36862 29365
39815 35220 28075
39238 35705 27893
40045 37166 28382
39567 36423 27934
43880 39398 29999
46418 41251 31236
46939 41966 31409
44857 40038 29718
48830 40369 29780
47332 38764 27369
Aug 1998 38378 31515 22055
42563 34537 23781
42818 37577 24751
46259 39410 26047
53951 44253 27659
59181 42492 28027
55094 40213 25757
61879 41431 26159
62159 44655 28503
59606 44799 28919
65351 47288 30227
64724 46239 29397
Aug 1999 67198 44608 28309
</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.
* The Russell 2000 Stock Index reflects the general performance of small-cap
stocks and was initially selected as a benchmark for the Fund's performance.
Based upon the Fund's asset composition, we believe the Standard & Poor's 400
MidCap Index provides a more accurate broad-based benchmark for the Fund.
Therefore, the Russell 2000 Index will not be shown in future reports.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN EMERGING GROWTH FUND
We recently spoke to the management team of the Van Kampen Emerging Growth Fund
about the key events and economic forces that shaped the markets during the past
12 months. The team includes Gary M. Lewis, senior portfolio manager, who has
managed the Fund since 1989 and worked in the investment industry since 1979. He
is joined by Dudley Brickhouse, Janet Luby, and David Walker, 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
12 months ended August 31, 1999.
Q COULD YOU DESCRIBE THE MARKET ENVIRONMENT IN WHICH THE FUND OPERATED
LAST YEAR?
A It was a volatile 12 months. The reporting period began on a low note,
as investors sought to overcome a significant market drop on August 31,
1998; on that day the Dow Jones Industrial Average fell more than 6
percent in response to economic troubles around the world. Despite these
troubles, U.S. markets soon recovered. In the wake of favorable corporate
earnings reports and three interest rate cuts by the Federal Reserve Board, the
Dow went on to pass two significant milestones in 1999--10,000 in late March and
11,000 in early May. In an effort to moderate economic growth, the Fed did
increase interest rates twice toward the end of the reporting period. Because
the increases were generally expected, the effect on stock prices was limited.
Q IN LIGHT OF THIS ENVIRONMENT, WHAT WAS YOUR STRATEGY IN MANAGING THE
FUND, AND HOW DID THIS STRATEGY AFFECT THE FUND'S PERFORMANCE?
A Our investment strategy--to look for stocks with rising earnings and
rising valuations--has worked well for us in the past, so we didn't
change our approach to stock selection as market conditions fluctuated.
We invested in those companies we believed had the potential to outperform
earnings expectations, and we sold stocks if their underlying companies'
earnings estimates or valuations were declining. We consistently manage the
portfolio from the "bottom up," meaning that we evaluate each company
individually before deciding to invest.
That said, as the reporting period went on, it became increasingly difficult
to identify stocks that met our criteria, as valuations were declining for many
of the companies that comprise our investment universe. As a result, the number
of holdings in the portfolio declined from 184 to 144 stocks at the end of the
reporting period.
Overall, our focus on a bottom up stock-selection strategy benefited the
Fund, as we were successful in identifying a number of stocks that performed
well during the reporting period. As a result, positive stock selection
contributed to the Fund's overall return.
5
<PAGE> 7
Q WHICH INVESTMENTS PARTICULARLY HELPED THE FUND'S PERFORMANCE?
A Technology stocks generally performed very well. This trend benefited
the Fund, as we invested in a broad range of companies that make
extensive use of technology. Internet companies continued their rapid
growth; we were heavily invested in this area, although toward the end of the
reporting period we shifted our focus from service companies to firms that are
helping to provide the Internet's infrastructure.
In the Internet services area, our investment in America Online was the
single largest contributor to performance. Yahoo! was also a meaningful
contributor, although, by the end of the reporting period, we did not continue
to own the stock.
Other technology holdings which contributed positively to the Fund's return
included EMC, which makes systems to store large amounts of computer data;
Qualcomm, a manufacturer and licenser of wireless communications equipment; and
Dell Computer (not held as of the end of the period). Finally, our investment in
JDS Uniphase, which facilitates data transmission over the "information
superhighway," performed well and boosted the Fund's return.
Q DID OTHER STOCKS HELP THE FUND?
A Television-related technology companies contributed favorably to the
Fund's performance, including Echostar Communications, which provides
direct-broadcast- satellite-television service, and Gemstar
International. Best known for its VCR Plus+ product, Gemstar plans to introduce
an on-screen television guide, which may enhance the company's future earnings.
In the area of health care, we were pleased with our investments in
biotechnology firms such as Biogen, most recognized for its successful multiple
sclerosis drug; Medimmune, a maker of drugs for transplants and infectious
diseases; and Immunex, which developed and markets a new drug used to treat
rheumatoid arthritis (we sold our position in Immunex prior to the end of the
reporting period). The Fund's performance was also enhanced by VISX, which
develops equipment used for laser vision-correction surgery.
Although many retailers had difficulties later in the reporting period, we
found success with those companies that could capitalize on consumer demand for
technology. For example, Best Buy, a longtime holding in the Fund, and Circuit
City performed very well because they were beneficiaries of this increased
demand. Non-technology retailers whose performance helped the Fund's return
included Home Depot, a do-it-yourself warehouse store chain, and specialty
apparel firms Abercrombie and Fitch and Gap Stores (not held in the portfolio at
the end of the reporting period).
Of course, not all of the stocks in the Fund performed as favorably, nor is
there any guarantee that any of the stocks mentioned above will continue to
perform as well in the future. For additional Fund portfolio highlights, please
refer to page 10.
6
<PAGE> 8
Q DID ANY STOCKS HURT THE FUND'S RETURN?
A Some technology stocks were hurt by concerns about the year 2000
phenomenon--namely, that corporate spending on computer hardware,
software, and services would slow down in the face of companies' need
to focus on critical year 2000 projects. Examples of such companies whose
performance detracted from the Fund's return include CBT Group, J.D. Edwards &
Company, and Keane. We sold these stocks during the reporting period.
The Fund's return was also affected negatively by investments in certain
health care stocks, including Safeskin and Boston Scientific, which fell in
response to disappointing earnings expectations. Our investment in Cardinal
Health also hurt performance; the company's valuation suffered because of
industry concerns related to accounting issues at a competing firm, uncertainty
about the company's most recent acquisition, and questions about how the
Internet would affect their business. These stocks are no longer held in the
Fund.
Q YOU MENTIONED EARLIER THAT SOME RETAIL STOCKS HAD DIFFICULTIES. HOW DID
THIS AFFECT THE FUND?
A Although retail stocks performed well for much of the reporting period,
as a group they were underperformers toward the period's end.
Consequently, to avoid further damage to the Fund's return, we scaled
back our holdings in this sector. Some of the retail companies that had a
negative impact on the Fund's performance included
- Consolidated Stores, a chain of discount and toy stores;
- Saks, an upscale department store chain; and
- restaurant company Tricon Global Restaurants, which operates fast food
establishments Taco Bell, Pizza Hut, and Kentucky Fried Chicken.
We sold all of these stocks during the reporting period.
Q HOW DID THE FUND PERFORM?
A The Fund performed exceptionally well during the reporting period,
achieving a one-year total return of 75.10 percent(1) as of August 31,
1999 (Class A shares at net asset value). By comparison, the Standard &
Poor's 400 MidCap Index returned 39.84 percent, and the Russell 2000 Stock Index
returned 26.60 percent.
We attribute the Fund's healthy return to successful stock selection.
However, returns for both the Fund and the indices were also enhanced by the
calendar--the reporting period began after August 31, 1998, immediately
following a substantial market decline that depressed stock prices.
The Fund invests primarily in companies whose market capitalization falls
within the range of the companies composing the S&P 400 MidCap Index. This range
is between approximately $238 million and $11.5 billion, as of August 31, 1999.
The S&P 400 MidCap Index is an unmanaged broad-based index that reflects the
general performance of 400 domestic mid-cap stocks. The Russell 2000 Stock Index
is an unmanaged
7
<PAGE> 9
broad-based index that reflects the general performance of small-cap stocks. The
average market capitalization of the Russell 2000 is approximately $526 million.
Compared to its peers, the Fund has performed extremely well. For the
12-month period ended August 31, 1999, the Fund's total return (Class A shares
at net asset value) ranked it 40 out of 388 funds in the mid-cap category,
according to Lipper Analytical Services. The Fund also ranked 4 out of 132 for
the five-year period and 1 out of 45 for the ten-year period. Lipper
calculations are based on changes in net asset value with dividends reinvested.
The calculations also don't include sales charges; if they had, results might
have been less favorable.
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 DURING THE NEXT SIX MONTHS?
A Concerns about further increases in interest rates will make for an
interesting six months. Questions about the year 2000 problem will also
affect investors' decisions--although to what extent is uncertain. We
do, however, think that corporate spending on the year 2000 problem will lead to
a slowdown in the software industry, because firms may delay their purchases of
new software until after the new year. Finally, we continue to adjust to a new
"day trading" stock market culture, which has led to a new standard of market
volatility.
Through all of these developments, we will continue to do what has worked
well for us in the past, which is to invest according to our discipline. In
volatile times our job is more difficult because it can be challenging to find
stocks that meet our criteria. In that case, we search harder for stocks whose
valuations are increasing or for those stocks whose valuations are declining the
least. Either way, we have confidence in our investment strategy and stick with
it during all types of market conditions.
<TABLE>
<S> <C> <C>
Gary M. Lewis Dudley Brickhouse Janet Luby
Gary M. Lewis Dudley Brickhouse Janet Luby
Senior Portfolio Manager Portfolio Manager Portfolio Manager
David Walker Stephen L. Boyd
David Walker Stephen L. Boyd
Portfolio Manager Chief Investment
Officer
Equity Investments
</TABLE>
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).
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.
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.
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.
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.
9
<PAGE> 11
PORTFOLIO HIGHLIGHTS
VAN KAMPEN EMERGING GROWTH FUND
TOP TEN PORTFOLIO HOLDINGS AS OF AUGUST 31, 1999*
<TABLE>
<S> <C>
BEST BUY is a specialty retailer that sells home office
products, consumer electronics, entertainment software, and
appliances.................................................. 4.0%
QUALCOMM is a leading designer, developer, and manufacturer
of digital wireless communications products................. 3.4%
JDS UNIPHASE develops a range of products used by systems
manufacturers to develop optical networks for the
telecommunications and cable television industries.......... 3.1%
BROADCOM makes semiconductors used in high-speed data and
video-transmission products................................. 2.4%
LSI LOGIC designs, manufactures, and markets semiconductor
products and computer-storage systems solutions............. 2.4%
TEXAS INSTRUMENTS is a global semiconductor company as well
as a leading designer and supplier of digital signal
processing solutions and analog technologies................ 2.4%
CONEXANT SYSTEMS supplies semiconductor products for a broad
range of communications applications........................ 2.2%
XILINX is a leading maker of field-programmable gate arrays
and complex programmable logic devices, integrated circuits
that customers can instruct to perform specific functions... 2.0%
CIRCUIT CITY STORES is a national retailer of brand-name
consumer electronics, personal computers, major appliances,
and entertainment software.................................. 2.0%
BIOGEN researches, develops, and markets biopharmaceuticals
to treat a variety of ailments.............................. 1.9%
</TABLE>
TOP FIVE PORTFOLIO SECTORS*(1)
GRAPH
<TABLE>
<CAPTION>
AUGUST 31, 1999 AUGUST 31, 1998
--------------- ---------------
<S> <C> <C>
Technology 57.50 36.50
Consumer Distribution 14.40 19.60
Consumer Services 10.60 13.10
Health Care 7.50 9.50
Producer Manufacturing 4.20 4.30
</TABLE>
* As a Percentage of Fund's Long-Term Investments
(1) These sectors represent broad groupings of related industries.
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS* 93.2%
CONSUMER DISTRIBUTION 13.4%
Abercrombie & Fitch Co., Class A (a)...............
900,000 $ 31,387,500
American Eagle Outfitters (a)......................
600,000 23,550,000
AnnTaylor Stores Corp. (a).........................
400,000 13,250,000
Bed Bath & Beyond, Inc. (a)........................
750,000 20,625,000
Best Buy Co., Inc. (a).............................
4,000,000 281,000,000
BJ's Wholesale Club, Inc. (a)......................
450,000 12,712,500
CDW Computer Centers, Inc. (a).....................
100,000 4,437,500
Circuit City Stores, Inc. .........................
3,200,000 137,600,000
Family Dollar Stores, Inc. ........................
1,200,000 23,625,000
Home Depot, Inc. ..................................
800,000 48,900,000
Intimate Brands, Inc., Class A.....................
497,500 19,184,844
Kohl's Corp. (a)...................................
350,000 24,937,500
Lexmark International Group, Inc., Class A (a).....
1,600,000 126,000,000
Lowe's Cos., Inc. .................................
400,000 18,100,000
Ross Stores, Inc. .................................
225,000 9,365,625
Tandy Corp. .......................................
2,100,000 99,225,000
Tiffany & Co. .....................................
1,000,000 52,875,000
TJX Cos., Inc. ....................................
750,000 21,656,250
Tommy Hilfiger Corp. (a)...........................
700,000 23,756,250
Williams Sonoma, Inc. (a)..........................
225,000 8,775,000
--------------
1,000,962,969
--------------
CONSUMER DURABLES 0.6%
Harley Davidson, Inc. .............................
285,000 15,532,500
Maytag Corp. ......................................
500,000 31,312,501
--------------
46,845,001
--------------
CONSUMER NON-DURABLES 0.3%
Linens 'n Things, Inc. (a).........................
750,000 25,687,500
--------------
CONSUMER SERVICES 9.9%
Adelphia Communications Corp., Class A (a).........
250,000 15,500,000
AT&T Corp. -- Liberty Media Group, Class A (a).....
1,600,000 51,200,000
Brinker International, Inc. (a)....................
250,000 6,000,000
Cablevision Systems Corp., Class A (a).............
700,000 49,000,000
CBS Corp. .........................................
1,100,000 51,700,000
Clear Channel Communications, Inc. (a).............
1,587,780 111,243,836
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER SERVICES (CONTINUED)
Comcast Corp., Class A.............................
950,000 $ 30,993,750
Darden Restaurants, Inc. ..........................
400,000 6,250,000
Echostar Communications Corp., Class A (a).........
1,400,000 117,075,000
Hispanic Broadcasting Corp. (a)....................
275,000 20,556,250
Insight Communications, Inc. (a)...................
213,400 5,815,150
International Network Services (a).................
600,000 31,912,500
Navigant Consulting Co. (a)........................
200,000 8,775,000
Omnicom Group, Inc. ...............................
700,000 52,762,500
Outback Steakhouse, Inc. (a).......................
900,000 26,662,500
Outdoor Systems, Inc. (a)..........................
662,500 21,407,031
Readers Digest Association, Inc., Class A..........
125,000 3,906,250
SFX Entertainment, Inc., Class A (a)...............
450,000 18,534,375
TMP Worldwide, Inc. (a)............................
300,000 16,612,500
Univision Communications, Inc., Class A (a)........
850,000 62,687,500
Valassis Communications, Inc. (a)..................
762,500 33,359,375
--------------
741,953,517
--------------
ENERGY 2.1%
Amerada Hess Corp. ................................
350,000 21,721,875
Apache Corp. ......................................
1,300,000 59,150,000
Halliburton Co. ...................................
800,000 37,100,000
Kerr-McGee Corp. ..................................
500,000 28,000,000
Vastar Resources, Inc. ............................
100,000 6,662,500
--------------
152,634,375
--------------
FINANCE 1.1%
First Tennessee National Corp. ....................
400,000 12,800,000
Firstar Corp. .....................................
894,450 23,982,441
Marsh & McLennan Cos., Inc. .......................
200,000 14,562,500
Northern Trust Corp. ..............................
200,000 16,962,500
Old Kent Financial Corp. ..........................
267,500 10,566,250
--------------
78,873,691
--------------
HEALTHCARE 7.1%
Allergan, Inc. ....................................
500,000 49,937,500
Andrx Corp. (a)....................................
250,000 17,968,750
Biogen, Inc. (a)...................................
1,700,000 130,475,000
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Cree Research, Inc. (a)............................
300,000 $ 10,143,750
IDEC Pharmaceuticals Corp. (a).....................
400,000 50,825,000
Medimmune, Inc. (a)................................
1,100,000 113,506,250
MiniMed, Inc. (a)..................................
200,000 18,187,500
St. Jude Medical, Inc. (a).........................
600,000 21,750,000
VISX, Inc. (a).....................................
1,250,000 113,125,000
--------------
525,918,750
--------------
PRODUCER MANUFACTURING 3.9%
ANTEC Corp. (a)....................................
500,000 22,781,250
ASM Lithography Holding NV-ADR (Netherlands) (a)...
500,000 31,562,500
Corning, Inc. .....................................
800,000 53,200,000
Metromedia Fiber Network, Inc. (a).................
1,500,000 44,156,250
Tyco International Ltd. ...........................
1,225,000 124,107,811
Zebra Technologies Corp., Class A (a)..............
300,000 14,100,000
--------------
289,907,811
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 0.2%
Millipore Corp.....................................
100,000 3,775,000
Willamette Industries, Inc. .......................
350,000 13,868,750
--------------
17,643,750
--------------
TECHNOLOGY 53.7%
Adaptec, Inc. (a)..................................
600,000 23,400,000
Adobe Systems, Inc. ...............................
575,000 57,284,375
Affiliated Computer Services, Inc., Class A (a)....
150,000 6,412,500
Altera Corp. (a)...................................
1,600,000 67,400,000
Amdocs Ltd. (a)....................................
225,000 5,906,250
America Online, Inc. (a)...........................
350,000 31,959,375
Analog Devices, Inc. (a)...........................
1,200,000 61,800,000
Applied Micro Circuits Corp. (a)...................
400,000 36,900,000
Broadcom Corp., Class A (a)........................
1,325,000 170,593,750
BroadVision, Inc. (a)..............................
500,000 49,781,250
Check Point Software Technologies Ltd. (a).........
300,000 23,137,500
Cisco Systems, Inc. (a)............................
831,210 56,366,428
Citrix Systems, Inc. (a)...........................
900,000 51,300,000
Clarify, Inc. (a)..................................
355,000 15,620,000
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
CommScope, Inc. (a)................................
400,000 $ 13,775,000
Comverse Technology, Inc. (a)......................
1,150,000 89,700,000
Concord EFS, Inc. (a)..............................
775,000 28,771,875
Conexant Systems, Inc. (a).........................
2,100,000 150,937,500
CSG Systems International, Inc. (a)................
350,000 7,896,875
Cypress Semiconductor Corp. (a)....................
500,000 11,562,500
Electronics for Imaging, Inc. (a)..................
825,000 48,365,625
EMC Corp. (a)......................................
1,200,000 72,000,000
Exodus Communications, Inc. (a)....................
1,000,000 80,375,000
Flextronics International Corp. (a)................
500,000 29,343,750
Galileo Technology Ltd. (a)........................
175,000 9,121,875
Gemstar International Group Ltd. (a)...............
1,800,000 124,200,000
General Dynamics Corp. ............................
300,000 18,900,000
General Instrument Corp. (a).......................
650,000 31,971,875
Hewlett-Packard Co. ...............................
450,000 47,418,750
Intuit, Inc. (a)...................................
250,000 22,390,625
Jabil Circuit, Inc. (a)............................
300,000 13,443,750
JDS Uniphase Corp. (a).............................
2,050,000 217,428,125
KLA -- Tencor Corp. (a)............................
475,000 29,835,938
Lam Research Corp. (a).............................
650,000 36,684,375
Legato Systems, Inc. (a)...........................
1,000,000 43,062,500
LSI Logic Corp. (a)................................
3,000,000 170,250,000
Lucent Technologies, Inc. .........................
500,000 32,031,250
Macromedia, Inc. (a)...............................
650,000 25,756,250
McLeodUSA, Inc. (a)................................
450,000 15,018,750
Mercury Interactive Corp. (a)......................
500,000 23,875,000
Microsoft Corp. (a)................................
250,000 23,140,625
Motorola, Inc. ....................................
550,000 50,737,500
National Semiconductor Corp. (a)...................
500,000 14,093,750
Network Appliance, Inc. (a)........................
1,300,000 85,393,750
Nokia Corp. -- ADR (Finland).......................
1,450,000 120,893,750
Nortel Networks Corp. .............................
1,800,000 73,912,500
Novell, Inc. (a)...................................
1,350,000 31,978,125
PMC Sierra, Inc. ..................................
1,000,000 93,000,000
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
QLogic Corp. (a)...................................
700,000 $ 60,943,750
Qualcomm, Inc. (a).................................
1,250,000 240,234,375
Rational Software Corp. (a)........................
1,150,000 31,121,875
Real Networks, Inc. (a)............................
325,000 26,568,750
RF Micro Devices, Inc. (a).........................
1,300,000 57,118,750
SanDisk Corp. (a)..................................
200,000 16,875,000
Scientific-Atlanta, Inc. ..........................
700,000 35,875,000
SDL, Inc. (a)......................................
400,000 32,750,000
Siebel Systems, Inc. (a)...........................
750,000 51,515,625
Solectron Corp. (a)................................
800,000 62,600,000
STMicroelectronics N.V. -- ADR (Netherlands).......
800,000 53,400,000
Taiwan Semiconductor Manufacturing Co., Ltd. -- ADR
(Taiwan) (a).....................................
774,900 22,423,669
Teradyne, Inc. (a).................................
1,000,000 68,062,500
Texas Instruments, Inc. ...........................
2,000,000 164,125,000
Unisys Corp. (a)...................................
600,000 25,800,000
VeriSign, Inc. (a).................................
850,000 92,065,625
VERITAS Software Corp. (a).........................
1,750,000 103,687,500
Vitesse Semiconductor Corp. (a)....................
1,300,000 88,400,000
Waters Corp. (a)...................................
850,000 56,046,875
Western Wireless Corp. (a).........................
788,200 30,493,488
Xilinx, Inc. (a)...................................
2,000,000 139,875,000
--------------
4,005,111,398
--------------
TRANSPORTATION 0.1%
Royal Caribbean Cruises Ltd. ......................
200,000 9,362,500
--------------
UTILITIES 0.8%
Centurytel, Inc. ..................................
421,000 16,550,562
Nextel Communications, Inc. (a)....................
700,000 40,468,750
--------------
57,019,312
--------------
TOTAL COMMON STOCKS 93.2%.................................... 6,951,920,574
SUBSCRIPTION WARRANT 0.2%
BJ Services Co. (40,000 common stock warrants expiring
04/12/00)................................................... 17,125,000
--------------
TOTAL LONG-TERM INVESTMENTS 93.4%
(Cost $4,797,431,930)..................................... 6,969,045,574
--------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS 4.5%
COMMERCIAL PAPER 1.0%
General Electric Capital Corp. ($39,195,000 par, yielding
5.501%, 09/01/99 maturity).................................. $ 39,189,012
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 4.9%
Federal Home Loan Bank Consolidated Discount Notes
($25,000,000 par, yielding 5.113%, 10/08/99 maturity)....... 24,869,729
Federal Home Loan Bank Consolidated Discount Notes
($25,000,000 par, yielding 5.248%, 11/10/99 maturity)....... 24,744,250
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 5.049%, 09/02/99 maturity)......................... 24,996,521
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 5.012%, 09/03/99 maturity)......................... 24,993,069
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 5.015%, 09/16/99 maturity)......................... 24,948,125
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 5.187%, 10/15/99 maturity)......................... 24,842,944
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.100%, 09/13/99 maturity)....... 24,957,667
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.102%, 09/15/99 maturity)....... 24,950,611
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.115%, 09/21/99 maturity)....... 24,929,306
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.083%, 09/27/99 maturity)....... 24,908,819
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.107%, 10/07/99 maturity)....... 24,873,750
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 5.054%, 10/22/99 maturity)....... 24,823,271
--------------
298,838,062
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $338,031,019)....................................... 338,027,074
--------------
TOTAL INVESTMENTS 97.9%
(Cost $5,135,462,949)..................................... 7,307,072,648
OTHER ASSETS IN EXCESS OF LIABILITIES 2.1%................... 154,059,867
--------------
NET ASSETS 100.0%............................................ $7,461,132,515
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
ADR--American Depositary Receipt
* The common stocks are classified by sectors which represent broad groupings of
related industries.
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $5,135,462,949)..................... $7,307,072,648
Cash........................................................ 5,255
Receivables:
Fund Shares Sold.......................................... 156,203,225
Investments Sold.......................................... 46,149,794
Dividends................................................. 483,470
Other....................................................... 306,043
--------------
Total Assets............................................ 7,510,220,435
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 20,200,460
Fund Shares Repurchased................................... 19,090,566
Distributor and Affiliates................................ 5,504,311
Investment Advisory Fee................................... 2,641,371
Income Distributions...................................... 55,266
Accrued Expenses............................................ 1,280,734
Trustees' Deferred Compensation and Retirement Plans........ 315,212
--------------
Total Liabilities....................................... 49,087,920
--------------
NET ASSETS.................................................. $7,461,132,515
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $4,014,509,849
Net Unrealized Appreciation................................. 2,171,609,699
Accumulated Net Realized Gain............................... 1,275,281,460
Accumulated Net Investment Loss............................. (268,493)
--------------
NET ASSETS.................................................. $7,461,132,515
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $4,156,446,560 and 69,274,406 shares of
beneficial interest issued and outstanding)............. $ 60.00
Maximum sales charge (5.75%* of offering price)......... 3.66
--------------
Maximum offering price to public........................ $ 63.66
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $2,850,199,201 and 51,300,931 shares of
beneficial interest issued and outstanding)............. $ 55.56
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $454,486,754 and 8,041,271 shares of
beneficial interest issued and outstanding)............. $ 56.52
==============
</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 Year Ended August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 17,496,868
Dividends................................................... 11,281,932
--------------
Total Income............................................ 28,778,800
--------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Class
A, B and C of $7,289,619, $21,476,163 and $2,924,092,
respectively)............................................. 31,689,874
Investment Advisory Fee..................................... 24,683,317
Shareholder Services........................................ 13,034,312
Custody..................................................... 356,376
Legal....................................................... 231,054
Trustees' Fees and Related Expenses......................... 115,074
Other....................................................... 2,813,894
--------------
Total Expenses.......................................... 72,923,901
Less Credits Earned on Overnight Cash Balances.......... 133,248
--------------
Net Expenses............................................ 72,790,653
--------------
NET INVESTMENT LOSS......................................... $ (44,011,853)
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $1,274,614,934
Futures................................................... 1,859,208
--------------
Net Realized Gain........................................... 1,276,474,142
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 569,329,117
End of the Period:
Investments............................................. 2,171,609,699
--------------
Net Unrealized Appreciation During the Period............... 1,602,280,582
--------------
NET REALIZED AND UNREALIZED GAIN............................ $2,878,754,724
==============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $2,834,742,871
==============
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1999 August 31, 1998
- ---------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss........................... $ (44,011,853) $ (32,447,765)
Net Realized Gain............................. 1,276,474,142 416,497,597
Net Unrealized Appreciation/Depreciation
During the Period........................... 1,602,280,582 (480,322,858)
--------------- ---------------
Change in Net Assets from Operations.......... 2,834,742,871 (96,273,026)
--------------- ---------------
Distributions from Net Realized Gain:
Class A Shares.............................. (128,077,038) (187,557,556)
Class B Shares.............................. (97,408,811) (124,329,647)
Class C Shares.............................. (11,808,076) (14,246,695)
--------------- ---------------
Total Distributions......................... (237,293,925) (326,133,898)
--------------- ---------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................. 2,597,448,946 (422,406,924)
--------------- ---------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold..................... 8,647,337,210 4,635,449,750
Net Asset Value of Shares Issued Through
Dividend Reinvestment....................... 220,329,357 306,065,324
Cost of Shares Repurchased.................... (7,517,072,085) (4,337,043,496)
--------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................ 1,350,594,482 604,471,578
--------------- ---------------
TOTAL INCREASE IN NET ASSETS.................. 3,948,043,428 182,064,654
NET ASSETS:
Beginning of the Period....................... 3,513,089,087 3,331,024,433
--------------- ---------------
End of the Period (Including accumulated net
investment loss of $268,493 and $190,102,
respectively)............................... $ 7,461,132,515 $ 3,513,089,087
=============== ===============
</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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------------------------
Class A Shares 1999(a) 1998(a) 1997 1996(a) 1995(a)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period............. $ 36.129 $ 40.844 $ 34.347 $ 31.59 $ 24.37
-------- -------- -------- -------- --------
Net Investment
Income/Loss............... (.228) (.212) (.127) (.096) .05
Net Realized and Unrealized
Gain/Loss................. 26.408 (.750) 8.177 6.043 7.79
-------- -------- -------- -------- --------
Total from Investment
Operations................ 26.180 (.962) 8.050 5.947 7.84
Less Distributions from Net
Realized Gain............. 2.309 3.753 1.553 3.190 .62
-------- -------- -------- -------- --------
Net Asset Value, End of the
Period.................... $ 60.000 $ 36.129 $ 40.844 $ 34.347 $ 31.59
======== ======== ======== ======== ========
Total Return (b)............ 75.10% (2.19%) 24.44% 20.54% 33.11%
Net Assets at End of the
Period (In millions)...... $4,156.4 $1,990.8 $1,970.7 $1,438.5 $1,029.2
Ratio of Expenses to Average
Net Assets (c)............ .97% 1.00% 1.05% 1.10% 1.14%
Ratio of Net Investment
Income/Loss to Average Net
Assets (c)................ (.45%) (.50%) (.30%) (.29%) .19%
Portfolio Turnover.......... 124% 103% 92% 91% 101%
</TABLE>
(a) Based on average shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
maximum sales charge or contingent deferred sales charge.
(c) For the years ended August 31, 1997 and 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
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 August 31,
--------------------------------------------------
Class B Shares 1999(a) 1998(a) 1997 1996(a) 1995(a)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................. $ 33.840 $ 38.789 $ 32.938 $ 30.65 $23.86
-------- -------- -------- ------- ------
Net Investment Loss........... (.575) (.515) (.270) (.349) (.16)
Net Realized and Unrealized
Gain/Loss................... 24.602 (.681) 7.674 5.827 7.57
-------- -------- -------- ------- ------
Total from Investment
Operations.................. 24.027 (1.196) 7.404 5.478 7.41
Less Distributions from Net
Realized Gain............... 2.309 3.753 1.553 3.190 .62
-------- -------- -------- ------- ------
Net Asset Value, End of
the Period.................. $ 55.558 $ 33.840 $ 38.789 $32.938 $30.65
======== ======== ======== ======= ======
Total Return (b).............. 73.78% (2.98%) 23.51% 19.61% 32.01%
Net Assets at End of the
Period (In millions)........ $2,850.2 $1,357.6 $1,220.4 $ 757.3 $450.5
Ratio of Expenses to Average
Net Assets (c).............. 1.74% 1.79% 1.85% 1.90% 1.97%
Ratio of Net Investment Loss
to Average Net Assets (c)... (1.22%) (1.29%) (1.10%) (1.10%) (.64%)
Portfolio Turnover............ 124% 103% 92% 91% 101%
</TABLE>
(a) Based on average shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
maximum sales charge or contingent deferred sales charge.
(c) For the years ended August 31, 1997 and 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
21
<PAGE> 23
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August 31,
-----------------------------------------------
Class C Shares 1999(a) 1998(a) 1997 1996(a) 1995(a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $34.391 $39.351 $33.384 $ 31.02 $24.14
------- ------- ------- ------- ------
Net Investment Loss............ (.583) (.523) (.273) (.354) (.16)
Net Realized and Unrealized
Gain/Loss.................... 25.020 (.684) 7.793 5.908 7.66
------- ------- ------- ------- ------
Total from Investment
Operations................... 24.437 (1.207) 7.520 5.554 7.50
Less Distributions from Net
Realized Gain................ 2.309 3.753 1.553 3.190 .62
------- ------- ------- ------- ------
Net Asset Value, End of the
Period....................... $56.519 $34.391 $39.351 $33.384 $31.02
======= ======= ======= ======= ======
Total Return (b)............... 73.79% (2.96%) 23.56% 19.60% 32.01%
Net Assets at End of the Period
(In millions)................ $ 454.5 $ 164.7 $ 139.9 $ 82.4 $ 41.8
Ratio of Expenses to Average
Net Assets (c)............... 1.74% 1.79% 1.85% 1.89% 1.96%
Ratio of Net Investment Loss to
Average Net Assets (c)....... (1.21%) (1.29%) (1.10%) (1.10%) (.63%)
Portfolio Turnover............. 124% 103% 92% 91% 101%
</TABLE>
(a) Based on average shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
maximum sales charge or contingent deferred sales charge.
(c) For the years ended August 31, 1997 and 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
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Emerging Growth 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 seeks capital
appreciation by principally investing in common stock of small- and medium-sized
companies that are considered to be emerging growth companies. The Fund
commenced investment operations on October 2, 1970. The distribution of the
Fund's Class B and Class C shares commenced on April 20, 1992 and July 6, 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 sales price is not
available are valued at the mean of the bid and asked prices or, if not
available, their fair value as determined using procedures established in good
faith by the Board of Trustees. Short-term securities with remaining maturities
of 60 days or less are valued at amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments whereby 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.
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
The seller is required to maintain the value of the underlying security at not
less than the repurchase proceeds due to 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.
Accumulated realized gain/loss differs for financial and tax reporting
purposes as a result of the deferral of losses relating to wash sale
transactions.
At August 31, 1999, for federal income tax purposes, cost of long- and
short-term investments is $5,144,464,421; the aggregate gross unrealized
appreciation is $2,263,890,539 and the aggregate gross unrealized depreciation
is $101,282,312, resulting in net unrealized appreciation of $2,162,608,227.
E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income and from net realized gains, if any.
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 and expenses under
generally accepted accounting principles and federal income tax purposes,
permanent differences between book and tax basis reporting for the current
fiscal year have been identified and appropriately reclassified. For federal
income tax purposes, a net operating loss recognized in the current year cannot
be used to offset future years net investment income. Therefore, $43,933,462 of
net operating loss generated by the Fund has been reclassified from accumulated
net investment loss to capital.
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
F. EXPENSE REDUCTIONS--During the year ended August 31, 1999, the Trust's
custody fee was reduced by $133,248 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.................................... .575 of 1%
Next $350 million..................................... .525 of 1%
Next $350 million..................................... .475 of 1%
Over $1.05 billion.................................... .425 of 1%
</TABLE>
For the year ended August 31, 1999, the Fund recognized expenses of
approximately $231,100 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 August 31, 1999, the Fund recognized expenses of
approximately $1,083,500 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., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended August 31,
1999, the Fund recognized expenses of approximately $10,181,300. Transfer agency
fees are determined through negotiations with the Fund's Board of Trustees and
are based on competitive benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
At August 31, 1999, capital aggregated $1,979,972,088, $1,722,809,021 and
$311,728,740 for Classes A, B, and C, respectively. For the year ended August
31, 1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................. 147,365,988 $ 7,385,533,602
Class B................................. 20,174,832 961,208,279
Class C................................. 6,262,136 300,595,329
------------ ---------------
Total Sales............................... 173,802,956 $ 8,647,337,210
============ ===============
Dividend Reinvestment:
Class A................................. 2,789,895 $ 118,849,554
Class B................................. 2,309,440 91,592,399
Class C................................. 245,102 9,887,404
------------ ---------------
Total Dividend Reinvestment............... 5,344,437 $ 220,329,357
============ ===============
Repurchases:
Class A................................. (135,984,083) $(6,833,274,241)
Class B................................. (11,300,817) (534,381,291)
Class C................................. (3,254,698) (149,416,553)
------------ ---------------
Total Repurchases......................... (150,539,598) $(7,517,072,085)
============ ===============
</TABLE>
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
At August 31, 1998, capital aggregated $1,333,338,505, $1,221,172,216 and
$153,338,108 for Classes A, B, and C, respectively. For the year ended August
31, 1998, transactions, were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................. 95,621,832 $ 4,044,478,378
Class B................................. 11,867,712 474,169,896
Class C................................. 2,870,475 116,801,476
------------ ---------------
Total Sales............................... 110,360,019 $ 4,635,449,750
============ ===============
Dividend Reinvestment:
Class A................................. 4,998,669 $ 177,702,686
Class B................................. 3,474,757 116,334,867
Class C................................. 353,446 12,027,771
------------ ---------------
Total Dividend Reinvestment............... 8,826,872 $ 306,065,324
============ ===============
Repurchases:
Class A................................. (93,766,322) $(3,988,507,130)
Class B................................. (6,687,281) (267,187,091)
Class C................................. (1,991,360) (81,349,275)
------------ ---------------
Total Repurchases......................... (102,444,963) $(4,337,043,496)
============ ===============
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996 will automatically convert to Class A shares after the
eighth year following purchase. Class B shares purchased before June 1, 1996
automatically convert to Class A shares after the sixth year following purchase.
For the year ended August 31, 1999, 3,288,828 Class B shares automatically
converted to Class A shares. The CDSC for Class B and C
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 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 August 31, 1999, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$2,321,200 and CDSC on redeemed shares of approximately $3,478,800. Sales
charges do not represent expenses to the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $7,245,476,984 and $6,480,995,452,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when taking delivery of
a security underlying a futures contract. In these instances, 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 exchange traded stock index futures. These contracts are
generally used to provide the return of an index without
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
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).
Transactions in futures contracts for the year ended August 31, 1999, were
as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ----------------------------------------------------------------------
<S> <C>
Outstanding at August 31, 1998.............................. -0-
Futures Opened.............................................. 495
Futures Closed.............................................. (495)
---
Outstanding at August 31, 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 year ended August 31, 1999, are payments retained by Van Kampen of
approximately $17,060,700.
29
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Van Kampen Emerging Growth 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 Emerging Growth Fund
(the "Fund") at August 31, 1999, the results of its operations, the changes in
its net assets and the financial highlights for each of the periods presented,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereinafter 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 generally
accepted auditing standards 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 August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
October 6, 1999
30
<PAGE> 32
VAN KAMPEN FUNDS
GROWTH
Aggressive Equity
Aggressive Growth
American Value
Emerging Growth
Enterprise
Equity Growth
Growth
Pace
Small Cap Value
Technology
GROWTH AND INCOME
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
GLOBAL/INTERNATIONAL
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Fixed Income
Global Franchise
Global Government Securities
Global Managed Assets
International Magnum
Latin American
Short-Term Global Income
Strategic Income
Worldwide High Income
INCOME
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
CAPITAL PRESERVATION
Reserve
Tax Free Money
SENIOR LOAN
Prime Rate Income Trust
Senior Floating Rate
TAX FREE
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
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 ongoing 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
31
<PAGE> 33
VAN KAMPEN EMERGING GROWTH 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
STEPHAN 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 East Randolph Drive
Chicago, Illinois 60601
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
August 31, 1999. The Fund designated and paid $193,444,110 as a 20% rate gain
distribution. These distributions, where applicable, were included on 1998's
Form 1099-DIV which was mailed to shareholders in January of 1999. In January,
2000 the Trust will provided tax information to shareholders for the 1999
calendar year.
* "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 and other pertinent
data. After March 31, 1999, the report must, if used with prospective investors,
be accompanied by a quarterly performance update.
32
<PAGE> 34
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.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> EMG GROWTH A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 5,135,462,949<F1>
<INVESTMENTS-AT-VALUE> 7,307,072,648<F1>
<RECEIVABLES> 202,836,489<F1>
<ASSETS-OTHER> 306,043<F1>
<OTHER-ITEMS-ASSETS> 5,255<F1>
<TOTAL-ASSETS> 7,510,220,435<F1>
<PAYABLE-FOR-SECURITIES> 20,200,460<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 28,887,460<F1>
<TOTAL-LIABILITIES> 49,087,920<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,979,972,088
<SHARES-COMMON-STOCK> 69,274,406
<SHARES-COMMON-PRIOR> 55,102,606
<ACCUMULATED-NII-CURRENT> (268,493)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 1,275,281,460<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2,171,609,699<F1>
<NET-ASSETS> 4,156,446,560
<DIVIDEND-INCOME> 11,281,932<F1>
<INTEREST-INCOME> 17,496,868<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (72,790,653)<F1>
<NET-INVESTMENT-INCOME> (44,011,853)<F1>
<REALIZED-GAINS-CURRENT> 1,276,474,142<F1>
<APPREC-INCREASE-CURRENT> 1,602,280,582<F1>
<NET-CHANGE-FROM-OPS> 2,834,742,871<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (128,077,038)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 147,365,988
<NUMBER-OF-SHARES-REDEEMED> (135,984,083)
<SHARES-REINVESTED> 2,789,895
<NET-CHANGE-IN-ASSETS> 2,165,637,136
<ACCUMULATED-NII-PRIOR> (190,102)<F1>
<ACCUMULATED-GAINS-PRIOR> 236,101,243<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 24,683,317<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 72,923,901<F1>
<AVERAGE-NET-ASSETS> 3,127,599,417
<PER-SHARE-NAV-BEGIN> 36.129
<PER-SHARE-NII> (0.228)
<PER-SHARE-GAIN-APPREC> 26.408
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (2.309)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 60.000
<EXPENSE-RATIO> 0.97
<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> EMG GROWTH B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 5,135,462,949<F1>
<INVESTMENTS-AT-VALUE> 7,307,072,648<F1>
<RECEIVABLES> 202,836,489<F1>
<ASSETS-OTHER> 306,043<F1>
<OTHER-ITEMS-ASSETS> 5,255<F1>
<TOTAL-ASSETS> 7,510,220,435<F1>
<PAYABLE-FOR-SECURITIES> 20,200,460<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 28,887,460<F1>
<TOTAL-LIABILITIES> 49,087,920<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,722,809,021
<SHARES-COMMON-STOCK> 51,300,931
<SHARES-COMMON-PRIOR> 40,117,476
<ACCUMULATED-NII-CURRENT> (268,493)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 1,275,281,460<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2,171,609,699
<NET-ASSETS> 2,850,199,201<F1>
<DIVIDEND-INCOME> 11,281,932<F1>
<INTEREST-INCOME> 17,496,868<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (72,790,653)<F1>
<NET-INVESTMENT-INCOME> (44,011,853)<F1>
<REALIZED-GAINS-CURRENT> 1,276,474,142<F1>
<APPREC-INCREASE-CURRENT> 1,602,280,582<F1>
<NET-CHANGE-FROM-OPS> 2,834,742,871<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (97,408,811)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,174,832
<NUMBER-OF-SHARES-REDEEMED> (11,300,817)
<SHARES-REINVESTED> 2,309,440
<NET-CHANGE-IN-ASSETS> 1,492,606,702
<ACCUMULATED-NII-PRIOR> (190,102)<F1>
<ACCUMULATED-GAINS-PRIOR> 236,101,243<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 24,683,317<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 72,923,901<F1>
<AVERAGE-NET-ASSETS> 2,151,589,339
<PER-SHARE-NAV-BEGIN> 33.840
<PER-SHARE-NII> (0.575)
<PER-SHARE-GAIN-APPREC> 24.602
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (2.309)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 55.558
<EXPENSE-RATIO> 1.74
<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> EMG GROWTH C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 5,135,462,949<F1>
<INVESTMENTS-AT-VALUE> 7,307,072,648<F1>
<RECEIVABLES> 202,836,489<F1>
<ASSETS-OTHER> 306,043<F1>
<OTHER-ITEMS-ASSETS> 5,255<F1>
<TOTAL-ASSETS> 7,510,220,435<F1>
<PAYABLE-FOR-SECURITIES> 20,200,460<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 28,887,460<F1>
<TOTAL-LIABILITIES> 49,087,920<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 311,728,740
<SHARES-COMMON-STOCK> 8,041,271
<SHARES-COMMON-PRIOR> 4,788,731
<ACCUMULATED-NII-CURRENT> (268,493)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 1,275,281,460<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2,171,609,699<F1>
<NET-ASSETS> 454,486,754
<DIVIDEND-INCOME> 11,281,932<F1>
<INTEREST-INCOME> 17,496,868<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (72,790,653)<F1>
<NET-INVESTMENT-INCOME> (44,011,853)<F1>
<REALIZED-GAINS-CURRENT> 1,276,474,142<F1>
<APPREC-INCREASE-CURRENT> 1,602,280,582<F1>
<NET-CHANGE-FROM-OPS> 2,834,742,871<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (11,808,076)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,262,136
<NUMBER-OF-SHARES-REDEEMED> (3,254,698)
<SHARES-REINVESTED> 245,102
<NET-CHANGE-IN-ASSETS> 289,799,590
<ACCUMULATED-NII-PRIOR> (190,102)<F1>
<ACCUMULATED-GAINS-PRIOR> 236,101,243<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 24,683,317<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 72,923,901<F1>
<AVERAGE-NET-ASSETS> 292,954,985
<PER-SHARE-NAV-BEGIN> 34.391
<PER-SHARE-NII> (0.583)
<PER-SHARE-GAIN-APPREC> 25.020
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (2,309)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 56.519
<EXPENSE-RATIO> 1.74
<FN>
<F1>This item related to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
