<PAGE>
VAN KAMPEN
GOVERNMENT
SECURITIES FUND
Semi-Annual Report
June 30, 1998
[PHOTO APPEARS HERE]
Van Kampen
FUNDS
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Letter to Shareholders................. 1
Performance Results.................... 3
Glossary of Terms...................... 4
Portfolio Management Review............ 5
Portfolio Highlights................... 7
Portfolio of Investments............... 8
Statement of Assets and Liabilities....10
Statement of Operations................11
Statement of Changes in Net Assets.....12
Financial Highlights...................13
Notes to Financial Statements..........16
</TABLE>
GOVT SAR 8/98
<PAGE>
Letter to Shareholders
July 16, 1998 [PHOTO APPEARS HERE]
Dennis J. McDonnell and Don G. Powell
Dear Shareholder,
As you may know, Van Kampen American Capital is consolidating all of the
retail mutual funds that we distribute under the single name of Van Kampen
Funds. This move accompanies the change in our legal name to Van Kampen Funds
Inc.
You can be assured that the change in your fund's name will not affect its
management or daily operations. You will begin seeing the application of this
change with this report. In addition, as of August 31, your fund will be listed
in the daily newspapers by share class under the heading "Van Kampen Funds." For
your convenience, we have enclosed a separate brochure that covers additional
details related to these changes.
Economic Review
The U.S. economy continued to expand at a robust pace despite a deepening
recession in Asia. The nation's inflation-adjusted output of goods and services
ran at 5.4 percent during the first quarter, an annualized rate considered by
many economists to be virtually unsustainable without leading to inflation. As
the reporting period ended, however, there were indications that the Asian
financial crisis was finally having a moderating impact on the economy. Also,
the Conference Board's index of leading indicators has forecasted a slowdown in
economic growth for later this year.
Despite the generally solid pace of economic activity, inflation remained
benign. Consumer prices rose by 1.7 percent during the 12 months through June,
while producer prices actually declined during the same period. Falling
commodity prices and the impact of the strong dollar helped to offset the
inflationary implications of a tight labor market and strong consumer spending.
While the Federal Reserve kept short-term interest rates steady at 5.5
percent during the reporting period, minutes from the central bank's May policy
meeting indicated growing sentiment for tightening monetary policy if the drag
from Asia does not slow the American economy on its own.
Market Review
Domestic fixed-income securities benefited from a global flight to quality
by investors--caused by turmoil in Asia and by the growing perception that the
domestic economy was slowing. After starting the year at 5.92 percent, the yield
on the 30-year Treasury benchmark bond rose to over 6.00 percent during the
spring amid signs that some Asian economies were beginning to recover. When
weakness in the Japanese yen undercut that recovery, U.S. bond prices surged,
causing long-term government yields to fall to 5.62 percent by the end of the
reporting period.
1 Continued on page two
<PAGE>
While all sectors of the domestic fixed-income market posted positive
returns, strength was concentrated among longer-term, higher-quality issues. For
the six months of 1998, long-term government bonds gained 6.27 percent, compared
to 4.51 percent for high-yield corporate bonds.
Outlook
We believe economic growth is likely to moderate in coming months as the
impact of the Asian crisis becomes more evident. A return to the "Goldilocks"
economy--not too hot, not too cold--should allow long-term interest rates to
fall modestly from current levels. If fallout from Asia does not slow economic
activity enough to counteract the inflationary pressures building in the
economy, we would expect the Federal Reserve to raise short-term interest rates
by the end of the year.
Additional details about your fund, including a question-and-answer section
with your portfolio management team, are provided in this report. As always, we
are pleased to have the opportunity to serve you and your family through our
diverse menu of quality investments.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen Asset Management Inc. Van Kampen Asset Management Inc.
2
<PAGE>
Performance Results for the Period Ended June 30, 1998
Van Kampen Government Securities Fund
<TABLE>
<CAPTION>
A Shares B Shares C Shares
<S> <C> <C> <C>
Total Returns
Six-month total return based on NAV/1/...... 3.27% 2.91% 2.91%
Six-month total return/2/................... (1.62%) (1.09%) 1.91%
One-year total return/2/.................... 4.56% 5.03% 8.05%
Five-year average annual total return/2/.... 4.52% 4.53% 4.75%
Ten-year average annual total return/2/..... 7.66% N/A N/A
Life-of-Fund average annual total return/2/. 8.13% 5.53% 4.85%
Commencement date........................... 07/16/84 12/20/91 03/10/93
Distribution Rate and Yield
Distribution Rate/3/........................ 6.13% 5.73% 5.74%
SEC Yield/4/................................ 5.11% 4.58% 4.56%
</TABLE>
N/A = Not Applicable
/1/ Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (4.75% for A shares) or
contingent deferred sales charge for early withdrawal (4% 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).
/3/ Distribution rate represents the monthly annualized distributions of the
Fund at the end of the period and not the earnings of the Fund.
/4/ SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio
should theoretically generate for the 30-day period ending June 30, 1998.
See the Prior Performance section of the current prospectus. 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.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE>
Glossary of Terms
Basis point: A measure used in quoting bond yields. One hundred basis points is
equal to one percent. For example, if a bond's yield changes from 7.00 to
6.65 percent, it is a 35 basis-point move.
Coupon rate: The stated rate of interest a bond pays until maturity, expressed
as a percentage of its face value. The coupon rate is usually fixed and
tends to be higher among bonds with lower maturities or lower credit
ratings.
Duration: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected one
percent change in the price of a bond for every one percent change in
interest rates. The longer a fund's duration, the greater the effect of
interest rate movements on net asset value. Typically, funds with shorter
durations have performed better in rising rate environments, while funds
with longer durations have performed better when rates decline.
Federal funds rate: The interest rate charged by one institution lending federal
funds to another. This overnight rate is used to meet banks' daily reserve
requirements. The Federal Reserve Board uses the federal funds rate to
affect the direction of interest rates.
Federal Reserve Board (Fed): The governing body of the Federal Reserve System,
which is the central bank system 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
U.S.
Inflation: An economic state in which the money supply and business activity
dramatically increase, accompanied by sharply rising prices. Inflation is
widely measured by the Consumer Price Index, an economic indicator that
measures the change in the cost of purchased goods and services.
Mortgage-backed securities: Securities backed by pools of similar mortgages.
These securities are generally issued by agencies of the U.S. government,
such as Government National Mortgage Association (GNMA, or "Ginnie Mae")
and Federal Home Loan Mortgage Corporation (FHLMC, or "Freddie Mac").
Net asset value (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from its total assets and dividing this amount by the
number of shares outstanding. The NAV does not include any initial or
contingent deferred sales charge.
Yield: The annual rate of return on an investment, expressed as a percentage.
For bonds and notes, the yield is the annual interest divided by the market
price.
Yield curve: A result of viewing the yields of U.S. Treasury securities maturing
in 1, 5, 10, and 30 years. When grouped together and graphed, a pattern of
increasing yield is often reflected as the time to maturity extends. This
pattern creates an upward sloping "curve." A "flat" yield curve represents
little difference between short- and long-term interest rates.
4
<PAGE>
Portfolio Management Review
Van Kampen Government Securities Fund
We recently spoke with the management team of the Van Kampen Government
Securities Fund about the key events and economic forces that shaped the markets
during the past six months. The team includes John R. Reynoldson, portfolio
manager, and Peter W. Hegel, chief investment officer for fixed-income
investments. The following excerpts reflect their views on the Fund's
performance during the six months ended June 30, 1998.
Q How would you describe the market in which the Fund operated during this
period?
A For the first six months of the year, the yield of the benchmark 10-year
Treasury was predominately restricted to a narrow yield range. At the same time,
the market continued to operate under a cloud of suspicion regarding the Asian
currency crisis. When renewed rumblings of international problems emerged in the
second quarter, the 10-year Treasury dropped below 5.50 percent.
The impact from Asia also tempered fears of inflation in the United States
in spite of continued strong economic growth. Consequently, Federal Reserve
Board meetings during the period resulted in no change to the federal funds
rate. Chairman Alan Greenspan's sentiments supported the theory that the
problems in Asia will likely continue to affect the U.S. economy for some time,
decreasing the need for a more restrictive monetary policy.
In addition to the fact that this period was marked by low volatility and
relatively few changes to the fixed-income market, the yield curve between long-
term and short-term securities continued to flatten, with rates for long-term
securities decreasing more than rates for short-term securities. As a result,
investors were more willing to purchase higher-yielding securities in spite of
the additional risk these securities represent.
Q How did these conditions affect your management of the Fund's portfolio?
A In this low-volatility, low-yield environment, we maintained the Fund's
position in mortgage-backed securities with an increased focus on reducing the
portfolio's exposure to prepayment risk. Securities with high coupons--generally
at or above 8 percent--were especially at risk in the first few months of the
year. Consequently, we allocated a portion of the Fund's assets to FNMA 15-year
mortgage bonds with six to seven percent coupons.
We finished the period with approximately 46 percent of the portfolio
invested in mortgage-backed investments and the remainder invested in Treasury
securities. This profile represents an overweighting in more conservative 15-
and 30-year bonds with an average 6.5 and 7.0 percent coupon and a bias toward
GNMAs, which tend to have less exposure to prepayment risks than FNMAs and
FHLMCs. Because of the flattening yield curve, the majority of the portfolio's
Treasury securities were invested in the long end of the curve.
Following the bond rally in January, we reduced the portfolio's duration to
more neutral levels, but extended it somewhat in mid-April. At the end of the
period, the Fund's duration was 5.4 years. Please refer to page seven for
additional Fund portfolio highlights.
5
<PAGE>
Q How did the fund perform during the reporting period?
A For the six-month period ended June 30, 1998, the Government Securities
Fund generated a total return of 3.27 percent/1/ (Class A shares at net asset
value). By comparison, the Lehman Brothers Mutual Fund U.S. Government/Mortgage
Index posted a total return of 3.88 percent for the same period. This broad-
based index attempts to measure the market performance of government securities
with maturities between one and ten years and does not reflect any commissions
or fees that would be paid by an investor purchasing the securities it
represents. For additional Fund performance results, please refer to the chart
on page three.
Q What is your outlook for the months ahead?
A By the end of the second quarter, economic growth was showing signs of
slowing down. We look for this trend to continue, particularly in light of a
buildup in manufacturing inventories resulting from decreased demand for exports
from Asia. With this in mind, we expect to operate the Fund in a very
constructive market. As such, we will continue to judiciously monitor the
portfolio's exposure to mortgage-backed securities with an eye toward the risk
of increased prepayments. In addition to generally holding an average to
somewhat long duration, we will also continue to maintain the portfolio's makeup
of lower coupon holdings with a focus on GNMA and 15-year paper, and longer-term
Treasuries.
/s/ Peter W. Hegel /s/ John R. Reynoldson
Peter W. Hegel John R. Reynoldson
Chief Investment Officer Portfolio Manager
Fixed Income Investments
6 Please see footnotes on page three
<PAGE>
Portfolio Highlights
Van Kampen Government Securities Fund
Coupon Distribution as of June 30, 1998
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Percentage of Coupon Rate
Long-Term Investments 6-6.9 7-7.9 8-8.9 9-9.9 10 or more
<S> <C> <C> <C> <C> <C>
50%
40% 43.0%
30% 32.7%
20% 17.9%
10%
0% 2.7% 3.7%
</TABLE>
Portfolio Composition by Sector as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
As of June 30, 1998
<S> <C>
[_] U.S. Treasuries......... 54%
[_] GNMAs................... 19% [PIE CHART APPEARS HERE]
[_] FNMAs................... 22%
[_] FHLMCs.................. 5%
</TABLE>
Duration
<TABLE>
<CAPTION>
As of June 30, 1998 As of December 31, 1997
<S> <C> <C>
Duration 5.4 years 4.9 years
</TABLE>
7
<PAGE>
Portfolio of Investments
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Par
Amount Market
(000) Description Coupon Maturity Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Government Agency Obligations 45.4%
$ -0- Federal Home Loan Mortgage Corp. Pool................ 11.000% 02/01/14 $ 271
39,119 Federal Home Loan Mortgage Corp.
Gold 30 Year Pools................................... 7.000 02/01/23 to 09/01/24 39,711,361
60,545 Federal Home Loan Mortgage Corp.
Gold 30 Year Pools................................... 7.500 01/01/22 to 07/01/24 62,123,141
1,914 Federal Home Loan Mortgage Corp.
Gold 30 Year Pools................................... 8.000 07/01/24 to 09/01/24 1,985,187
-0- Federal National Mortgage Association
7 Year Balloon Pool.................................. 7.000 12/01/99 299
135,781 Federal National Mortgage Association
15 Year Dwarf Pools.................................. 6.000 01/01/09 to 04/01/13 134,364,807
49,923 Federal National Mortgage Association
15 Year Dwarf Pools.................................. 6.500 12/01/07 to 06/01/12 50,214,885
32,762 Federal National Mortgage Association
15 Year Dwarf Pools.................................. 7.500 03/01/02 to 09/01/12 33,712,730
88,357 Federal National Mortgage Association Pools.......... 6.500 01/01/26 to 06/01/26 87,981,858
74,841 Federal National Mortgage Association Pools.......... 7.000 10/01/24 to 05/01/25 75,903,101
64,574 Federal National Mortgage Association Pools.......... 7.500 03/01/22 to 01/01/25 66,267,887
247 Federal National Mortgage Association Pools.......... 8.000 09/01/24 to 11/01/24 255,984
200 Federal National Mortgage Association Pools.......... 11.500 02/01/13 to 05/01/19 228,062
3,398 Federal National Mortgage Association Pools.......... 12.000 03/01/13 to 01/01/16 3,916,187
90,663 Government National Mortgage Association Pools....... 6.500 07/15/24 to 07/15/26 90,411,621
82,328 Government National Mortgage Association Pools....... 7.000 01/15/23 to 03/15/26 83,649,745
53,417 Government National Mortgage Association Pools....... 7.500 02/15/07 to 08/15/24 54,956,123
55,667 Government National Mortgage Association Pools....... 8.000 07/15/07 to 10/15/25 58,053,091
27,244 Government National Mortgage Association Pools....... 8.500 09/15/04 to 12/15/21 28,869,744
50,320 Government National Mortgage Association Pools....... 9.000 11/15/17 to 12/15/19 54,300,439
185 Government National Mortgage Association Pools....... 11.000 01/15/10 to 11/15/20 209,750
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
======================================================================================================================
Par
Amount Market
(000) Description Coupon Maturity Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Government Agency Obligations (Continued)
$ 4,928 Government National Mortgage Association Pools........... 12.000% 06/15/11 to 08/15/15 $ 5,714,601
2,022 Government National Mortgage Association Pools........... 12.500 04/15/10 to 07/15/18 2,365,571
--------------
Total United States Government Agency Obligations...... 935,196,445
--------------
United States Treasury Obligations 52.7%
120,000 United States Treasury Bonds (a)......................... 8.125 08/15/19 154,927,200
50,000 United States Treasury Bonds............................. 11.125 08/15/03 62,250,000
175,000 United States Treasury Notes (a)......................... 7.000 07/15/06 191,191,000
50,000 United States Treasury Notes............................. 7.500 05/15/02 53,345,000
395,000 United States Treasury Notes (a)......................... 8.500 02/15/00 to 11/15/00 417,324,600
215,000 United States Treasury Notes (a)......................... 8.875 11/15/98 207,654,750
--------------
Total United States Treasury Obligations................................................ 1,086,692,550
--------------
Total Long-Term Investments 98.1%
(Cost $1,965,007,810)............................................................................. 2,021,888,995
Repurchase Agreement 0.3%
BA Securities ($5,920,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 06/30/98,
to be sold on 07/01/98 at $5,920,995)
(Cost $5,920,000)................................................................................. 5,920,000
--------------
Total Investments 98.4%
(Cost $1,970,927,810)............................................................................. 2,027,808,995
Other Assets in Excess of Liabilities 1.6%.......................................................... 32,319,408
--------------
Net Assets 100.0%................................................................................... $2,060,128,403
==============
</TABLE>
(a) Assets segregated as collateral for open forward and open futures
transactions.
9 See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
=============================================================================================
Assets:
<S> <C>
Total Investments (Cost $1,970,927,810)...................................... $2,027,808,995
Receivables:
Interest................................................................... 27,842,594
Fund Shares Sold........................................................... 23,341,082
Variation Margin on Futures................................................ 1,082,812
Forward Commitments.......................................................... 622,982
Other........................................................................ 154,488
--------------
Total Assets............................................................... 2,080,852,953
--------------
Liabilities:
Payables:
Income Distributions....................................................... 11,631,482
Fund Shares Repurchased.................................................... 6,034,348
Distributor and Affiliates................................................. 1,312,425
Investment Advisory Fee.................................................... 889,159
Custodian Bank............................................................. 1,102
Accrued Expenses............................................................. 525,100
Trustees' Deferred Compensation and Retirement Plans......................... 330,934
--------------
Total Liabilities.......................................................... 20,724,550
--------------
Net Assets................................................................... $2,060,128,403
==============
Net Assets Consist of:
Capital...................................................................... $2,640,461,395
Net Unrealized Appreciation.................................................. 64,608,862
Accumulated Distributions in Excess of Net Investment Income................. (683,431)
Accumulated Net Realized Loss................................................ (644,258,423)
--------------
Net Assets................................................................... $2,060,128,403
==============
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$1,880,117,447 and 183,162,717 shares of beneficial interest issued
and outstanding)........................................................ $ 10.26
Maximum sales charge (4.75%* of offering price)......................... .51
--------------
Maximum offering price to public........................................ $ 10.77
==============
Class B Shares:
Net asset value and offering price per share (Based on net assets of
$164,801,936 and 16,056,991 shares of beneficial interest
issued and outstanding)................................................. $ 10.26
==============
Class C Shares:
Net asset value and offering price per share (Based on net assets of
$15,209,020 and 1,485,091 shares of beneficial interest issued
and outstanding)........................................................ $ 10.24
==============
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
10
<PAGE>
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
Interest.......................................................... $77,416,545
-----------
Expenses:
Investment Advisory Fee........................................... 5,492,923
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $2,270,227, $909,424 and $78,798, respectively)... 3,258,449
Shareholder Services.............................................. 1,791,645
Custody........................................................... 135,113
Trustees' Fees and Expenses....................................... 41,943
Legal............................................................. 18,897
Other............................................................. 504,898
-----------
Total Expenses.................................................. 11,243,868
-----------
Net Investment Income............................................. $66,172,677
===========
Realized and Unrealized Gain/Loss:
Realized Gain/Loss:
Investments..................................................... $ (595,333)
Futures......................................................... 4,134,895
Forward Commitments............................................. 964,831
-----------
Net Realized Gain................................................. 4,504,393
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period...................................... 67,300,424
-----------
End of the Period:
Investments............................................. 56,881,185
Futures................................................. 7,253,132
Forward Commitments..................................... 474,545
-----------
64,608,862
-----------
Net Unrealized Depreciation During the Period..................... (2,691,562)
-----------
Net Realized and Unrealized Gain.................................. $ 1,812,831
===========
Net Increase in Net Assets From Operations........................ $67,985,508
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1998 and
the Year Ended December 31, 1997 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income......................................... $ 66,172,677 $ 146,884,848
Net Realized Gain/Loss........................................ 4,504,393 (27,878,030)
Net Unrealized Appreciation/Depreciation
During the Period........................................... (2,691,562) 71,602,438
-------------- ---------------
Change in Net Assets from Operations.......................... 67,985,508 190,609,256
-------------- ---------------
Distributions from Net Investment Income...................... (66,448,477) (146,949,682)
Distributions in Excess of Net Investment Income.............. (683,431) 0
-------------- ---------------
Distributions from and in Excess of Net Investment Income*.... (67,131,908) (146,949,682)
-------------- ---------------
Net Change in Net Assets from Investment Activities........... 853,600 43,659,574
-------------- ---------------
From Capital Transactions:
Proceeds from Shares Sold..................................... 289,751,019 132,259,259
Net Asset Value of Shares Issued Through
Dividend Reinvestment....................................... 37,936,262 82,009,897
Cost of Shares Repurchased.................................... (414,362,674) (526,704,317)
-------------- ---------------
Net Change in Net Assets from
Capital Transactions........................................ (86,675,393) (312,435,161)
-------------- ---------------
Total Decrease in Net Assets.................................. (85,821,793) (268,775,587)
Net Assets:
Beginning of the Period....................................... 2,145,950,196 2,414,725,783
-------------- ---------------
End of the Period (Including accumulated undistributed
net investment income of $(683,431) and
$275,800, respectively)..................................... $2,060,128,403 $ 2,145,950,196
============== ===============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
*Distribution by Class June 30, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of Net Investment Income:
Class A Shares........................................... $(61,393,587) $(133,143,951)
Class B Shares........................................... (5,280,892) (12,711,171)
Class C Shares........................................... (457,429) (1,094,560)
------------ -------------
$(67,131,908) $(146,949,682)
============ =============
</TABLE>
See Notes to Financial Statements
12
<PAGE>
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, 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period........... $ 10.259 $ 10.045 $ 10.55 $ 9.67 $ 10.80
-------- -------- -------- -------- --------
Net Investment Income............................ .320 .659 .689 .67 .66
Net Realized and Unrealized Gain/Loss............ .015 .215 (.504) .8985 (1.1145)
-------- -------- -------- -------- --------
Total from Investment Operations................... .335 .874 .185 1.5685 (.4545)
Less Distributions from and in Excess
of Net Investment Income......................... .330 .660 .690 .6885 .6755
-------- -------- -------- -------- --------
Net Asset Value, End of the Period................. $ 10.264 $ 10.259 $ 10.045 $ 10.55 $ 9.67
======== ======== ======== ======== ========
Total Return (a)................................... 3.27%* 9.16% 1.90% 16.77% (4.26%)
Net Assets at End of the Period (In millions)...... $1,880.1 $1,930.4 $2,156.4 $2,544.5 $2,578.7
Ratio of Expenses to Average Net Assets (b)........ 1.00% 1.03% 1.06% 1.01% 1.02%
Ratio of Net Investment Income to Average
Net Assets (b)................................... 6.41% 6.62% 6.88% 6.62% 6.96%
Portfolio Turnover................................. 106%* 114% 271% 231% 306%
</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) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
13 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
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 B Shares June 30, 1998(a) 1997(a) 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period........... $10.261 $10.050 $ 10.56 $ 9.68 $ 10.80
------- ------- ------- ------- --------
Net Investment Income............................ .287 .588 .635 .60 .60
Net Realized and Unrealized Gain/Loss............ .010 .211 (.527) .8965 (1.1275)
------- ------- ------- ------- --------
Total from Investment Operations................... .297 .799 .108 1.4965 (.5275)
Less Distributions from and in Excess
of Net Investment Income......................... .294 .588 .618 .6165 .5925
------- ------- ------- ------- --------
Net Asset Value, End of the Period................. $10.264 $10.261 $10.050 $ 10.56 $ 9.68
======= ======= ======= ======= ========
Total Return (b)................................... 2.91%* 8.27% 1.17% 15.93% (4.95%)
Net Assets at End of the Period (In millions)...... $ 164.8 $ 199.2 $ 236.7 $ 285.5 $ 278.7
Ratio of Expenses to Average Net Assets (c)........ 1.77% 1.78% 1.82% 1.77% 1.78%
Ratio of Net Investment Income to Average
Net Assets (c)................................... 5.64% 5.87% 6.13% 5.86% 6.20%
Portfolio Turnover................................. 106%* 114% 271% 231% 306%
</TABLE>
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
14 See Notes to Financial Statements
<PAGE>
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 Ended Year Ended December 31,
--------------------------------------------
Class C Shares June 30, 1998 1997(a) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period............ $10.239 $10.031 $ 10.54 $ 9.66 $ 10.79
------- ------- ------- ------- --------
Net Investment Income............................. .285 .587 .623 .60 .60
Net Realized and Unrealized Gain/Loss............. .011 .209 (.514) .8965 (1.1375)
------- ------- ------- ------- --------
Total from Investment Operations.................... .296 .796 .109 1.4965 (.5375)
Less Distributions from and in Excess
of Net Investment Income.......................... .294 .588 .618 .6165 .5925
------- ------- ------- ------- --------
Net Asset Value, End of the Period.................. $10.241 $10.239 $10.031 $ 10.54 $ 9.66
======= ======= ======= ======= ========
Total Return (b).................................... 2.91%* 8.28% 1.18% 15.96% (5.05%)
Net Assets at End of the Period (In millions)....... $ 15.2 $ 16.4 $ 21.6 $ 26.8 $ 32.0
Ratio of Expenses to Average Net Assets (c)......... 1.77% 1.79% 1.82% 1.77% 1.78%
Ratio of Net Investment Income to Average
Net Assets (c).................................... 5.64% 5.87% 6.12% 5.86% 6.24%
Portfolio Turnover.................................. 106%* 114% 271% 231% 306%
</TABLE>
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) For the year ended December 31, 1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
15
<PAGE>
Notes to Financial Statements
June 30, 1998 (Unaudited)
================================================================================
1. Significant Accounting Policies
Van Kampen Government Securities Fund, formerly known as Van Kampen American
Capital Government Securities Fund (the "Fund"), is organized as a Delaware
business trust, and is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek a high level of income by primarily
investing in debt securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund commenced investment operations on July
16, 1984. The distribution of the Fund's Class B and C shares commenced on
December 20, 1991 and March 10, 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 are stated at value using market quotations.
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.
B. Security Transactions--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
C. Income and Expenses--Interest income is recorded on an accrual basis.
Original issue discount is amortized over the expected life of each applicable
security. Premiums on debt securities
16
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
are not amortized. Expenses of the Fund are allocated on a pro rata basis to
each class of shares, except for distribution and service fees and transfer
agency costs which are unique to each class of shares.
D. Federal Income Taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At June 30, 1998, for federal income tax purposes, cost of long- and short-
term investments is $1,971,396,560; the gross unrealized appreciation is
$68,483,867 and the gross unrealized depreciation is $4,343,755, resulting in
net unrealized appreciation including open futures transactions and forward
commitments of $64,140,112.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At December 31, 1997, the Fund had an accumulated capital loss
carryforward for tax purposes of $641,024,045 which will expire between December
31, 1998 and December 31, 2005. Of this amount, $211,266,437 will expire on
December 31, 1998.
E. Distribution of Income and Gains--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
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:
Average Net Assets % Per Annum
=========================================================
First $1 billion............................. .540 of 1%
Next $1 billion............................. .515 of 1%
Next $1 billion............................. .490 of 1%
Next $1 billion............................. .440 of 1%
Next $1 billion............................. .390 of 1%
Next $1 billion............................. .340 of 1%
Next $1 billion............................. .290 of 1%
Over $7 billion............................. .240 of 1%
17
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
For the six months ended June 30, 1998, the Fund recognized expenses of
approximately $18,900 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, 1998, the Fund recognized expenses of
approximately $137,000 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, 1998, the Fund recognized expenses of approximately $1,368,300.
Beginning in 1998, the transfer agency fees are determined through negotiations
with the Fund's Board of Trustees and are based upon competitive market
benchmarks.
Certain officers and trustees of the Fund are also officers and directors
of Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the 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
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At June 30, 1998, capital aggregated $ 2,517,585,839, $ 111,666,188, and
$11,209,368 for Classes A, B and C, respectively. For the six months ended June
30, 1998, transactions were as follows:
Shares Value
===========================================================
Sales:
Class A................... 26,656,593 $ 272,994,388
Class B................... 1,492,180 15,307,568
Class C................... 141,612 1,449,063
----------- -------------
Total Sales................. 28,290,385 $ 289,751,019
=========== =============
18
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
==============================================================================
<TABLE>
<CAPTION>
Shares Value
==============================================================================
<S> <C> <C>
Dividend Reinvestment:
Class A...................................... 3,355,688 $ 34,356,063
Class B...................................... 318,289 3,259,815
Class C...................................... 31,360 320,384
----------- -------------
Total Dividend Reinvestment.................... 3,705,337 $ 37,936,262
=========== =============
Repurchases:
Class A...................................... (35,013,965) $(358,549,883)
Class B...................................... (5,162,310) (52,880,329)
Class C...................................... (286,678) (2,932,462)
----------- -------------
Total Repurchases.............................. (40,462,953) $(414,362,674)
=========== =============
</TABLE>
At December 31, 1997, capital aggregated $2,568,785,271, $145,979,134 and
$12,372,383 for Classes A, B and C, respectively. For the year ended December
31, 1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
==============================================================================
<S> <C> <C>
Sales:
Class A...................................... 11,053,580 $111,167,157
Class B...................................... 1,797,284 17,946,215
Class C...................................... 314,437 3,145,887
----------- -------------
Total Sales.................................... 13,165,301 $132,259,259
=========== =============
Dividend Reinvestment:
Class A...................................... 7,387,982 $ 73,655,314
Class B...................................... 769,452 7,676,933
Class C...................................... 68,029 677,650
----------- -------------
Total Dividend Reinvestment.................... 8,225,463 $ 82,009,897
=========== =============
Repurchases:
Class A...................................... (44,948,129) $(450,176,664)
Class B...................................... (6,711,644) (67,148,668)
Class C...................................... (939,038) (9,378,985)
----------- -------------
Total Repurchases.............................. (52,598,811) $(526,704,317)
=========== =============
</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
19
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
five years of the purchase for Class B and one year of the purchase for Class C
as detailed in the following schedule.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
------------------------
Year of Redemption Class B Class C
================================================================================
<S> <C> <C>
First................................................ 4.00% 1.00%
Second............................................... 4.00% None
Third................................................ 3.00% None
Fourth............................................... 2.50% None
Fifth................................................ 1.50% None
Sixth and Thereafter................................. None None
</TABLE>
For the six months ended June 30, 1998, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A shares of
approximately $63,200 and CDSC on redeemed shares of approximately $379,300.
Sales charges do not represent expenses of the Fund.
4. Investment Transactions
During the period, the cost of purchases and proceeds from sales of government
securities, including paydowns on mortgage-backed securities and excluding
short-term investments, were $2,240,264,372 and $2,290,590,069, respectively.
5. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when taking delivery of
a security underlying a futures contract or forward. In this instance, the
recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract or forward.
Summarized below are the specific types of derivative financial instruments
used by the Fund.
A. Futures Contracts--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange
20
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
traded futures contracts on U.S. Treasury Bonds and typically closes the
contract prior to the delivery date. These contracts are generally used to
manage the portfolio's effective maturity and duration.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. During the period the futures contract is open,
payments are received from or made to the broker based upon changes in the value
of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended June 30, 1998,
were as follows:
<TABLE>
<CAPTION>
Contracts
===============================================================================
<S> <C>
Outstanding at December 31, 1997................................. 4,000
Futures Opened................................................... 25,850
Futures Closed................................................... (26,000)
---------
Outstanding at June 30, 1998..................................... 3,850
=========
</TABLE>
The futures contracts outstanding as of June 30, 1998, and the descriptions
and unrealized appreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Contracts Appreciation
================================================================================
<S> <C> <C>
Long Contracts:
U.S. Treasury Bond Future
Sept. 1998 (Current notional value of
$123,594 per contract)............................ 3,850 $ 7,253,132
========= ============
</TABLE>
B. Forward Commitments--The Fund trades certain securities under the terms of
forward commitments, whereby the settlement occurs at a specific future date.
Forward commitments are privately negotiated transactions between the Fund and
dealers. While forward commitments are outstanding, the Fund maintains
sufficient collateral of cash or securities in a segregated account with its
custodian. Forward commitments are marked-to-market on a daily basis with
changes in value reflected as a component of unrealized
appreciation/depreciation. Purchasing securities on a forward commitment
involves a risk that the market value at the time of delivery may be lower than
the agreed upon purchase price resulting in an unrealized loss. Selling
securities on a forward commitment involves different risks and can result in
losses more significant than those arising from the purchase of such securities.
21
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
The following forward commitments were outstanding as of June 30, 1998:
<TABLE>
<CAPTION>
Par Unrealized
Amount Current Appreciation/
(000) Description Value Depreciation
========================================================================================
<S> <C> <C> <C>
Long Contracts
$ 75,000 FNMA August 15-Year
Dwarf Forward, 7.00%................ $ 76,271,625 $ (40,875)
100,000 FNMA July 15-Year
Dwarf Forward, 7.00%................ 100,594,000 187,750
50,000 FNMA July 30-Year Forward, 6.00%.... 48,679,750 3,969
Short Contracts
25,000 GNMA July Forward, 8.00%............ 25,906,250 60,545
75,000 FNMA August 15-Year
Dwarf Forward, 7.00%................ 76,271,625 216,656
100,000 FNMA July Forward, 7.50%............ 102,578,500 46,500
----------
$ 474,545
==========
</TABLE>
C. Closed but Unsettled Forward Commitments--In certain situations, the Fund has
entered into offsetting transactions for outstanding forward commitments prior
to settlement of the obligation. In doing so, the Fund realizes a gain or loss
on the transaction at the time the forward commitment is closed. Risks may
result as a result of the potential inability of counterparties to meet the
terms of their contracts.
The following closed but unsettled forward transactions were outstanding at
June 30, 1998:
<TABLE>
<CAPTION>
Net Receivable/
Description Receivable Payable Payable
========================================================================================
<S> <C> <C> <C>
FNMA August 15-Year Dwarf Forward,
7.00%............................. $ 50,910,156 $ (50,875,000) $ 35,156
FNMA July Forward, 7.00%............ 50,781,250 (50,667,969) 113,281
----------
$ 148,437
==========
</TABLE>
22
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
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, 1998, are payments retained by Van Kampen of
approximately $788,100.
23
<PAGE>
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
U.S. Real Estate
Utility
Value
International /Global
Asian Growth
Emerging Markets
Global Equity
Global Equity Allocation
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 and
Senior Loan Funds
Prime Rate Income Trust
Reserve
Senior Floating Rate
Tax Free Money
To find out more about any of these funds, ask your financial adviser 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.van-kampen.com - to view prospectuses, select Investors' Place, then
Download a 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.van-kampen.com and selecting Investors' Place
24
<PAGE>
Van Kampen Government Securities Fund
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Don G. Powell*
Phillip B. Rooney
Fernando Sisto
Wayne W. Whalen*--Chairman
Officers
Dennis J. McDonnell*
President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Chief Financial Officer
Curtis W. Morell*
Vice President and Chief Accounting Officer
John L. Sullivan*
Treasurer
Tanya M. Loden*
Controller
Peter W. Hegel*
Paul R. Wolkenberg*
Vice President
Investment Adviser
Van Kampen
Asset Management Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Distributor
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
Van Kampen Investor
Services Inc.
P.O. Box 418256
Kansas City, Missouri 64141-9256
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., 1998
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, 1998, the report, if used with
prospective investors, must be accompanied by a quarterly performance update.
25
<PAGE>
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GOV'T SECS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,970,927,810 <F1>
<INVESTMENTS-AT-VALUE> 2,027,808,995 <F1>
<RECEIVABLES> 52,266,488 <F1>
<ASSETS-OTHER> 154,488 <F1>
<OTHER-ITEMS-ASSETS> 622,982 <F1>
<TOTAL-ASSETS> 2,080,852,953 <F1>
<PAYABLE-FOR-SECURITIES> 0 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 20,724,550 <F1>
<TOTAL-LIABILITIES> 20,724,550 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,517,585,839
<SHARES-COMMON-STOCK> 183,162,717
<SHARES-COMMON-PRIOR> 188,164,401
<ACCUMULATED-NII-CURRENT> (683,431)<F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> (644,258,423)<F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 64,608,862 <F1>
<NET-ASSETS> 1,880,117,447
<DIVIDEND-INCOME> 0 <F1>
<INTEREST-INCOME> 77,416,545 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (11,243,868)<F1>
<NET-INVESTMENT-INCOME> 66,172,677 <F1>
<REALIZED-GAINS-CURRENT> 4,504,393 <F1>
<APPREC-INCREASE-CURRENT> (2,691,562)<F1>
<NET-CHANGE-FROM-OPS> 67,985,508 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (61,393,587)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,656,593
<NUMBER-OF-SHARES-REDEEMED> (35,013,965)
<SHARES-REINVESTED> 3,355,688
<NET-CHANGE-IN-ASSETS> (50,309,639)
<ACCUMULATED-NII-PRIOR> 275,800 <F1>
<ACCUMULATED-GAINS-PRIOR> (648,762,816)<F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 5,492,923 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 11,243,868 <F1>
<AVERAGE-NET-ASSETS> 1,907,686,425
<PER-SHARE-NAV-BEGIN> 10.259
<PER-SHARE-NII> 0.320
<PER-SHARE-GAIN-APPREC> 0.015
<PER-SHARE-DIVIDEND> (0.330)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.264
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GOV'T SECS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,970,927,810 <F1>
<INVESTMENTS-AT-VALUE> 2,027,808,995 <F1>
<RECEIVABLES> 52,266,488 <F1>
<ASSETS-OTHER> 154,488 <F1>
<OTHER-ITEMS-ASSETS> 622,982 <F1>
<TOTAL-ASSETS> 2,080,852,953 <F1>
<PAYABLE-FOR-SECURITIES> 0 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 20,724,550 <F1>
<TOTAL-LIABILITIES> 20,724,550 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,666,188
<SHARES-COMMON-STOCK> 16,056,991
<SHARES-COMMON-PRIOR> 19,408,832
<ACCUMULATED-NII-CURRENT> (683,431)<F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> (644,258,423)<F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 64,608,862 <F1>
<NET-ASSETS> 164,801,936
<DIVIDEND-INCOME> 0 <F1>
<INTEREST-INCOME> 77,416,545 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (11,243,868)<F1>
<NET-INVESTMENT-INCOME> 66,172,677 <F1>
<REALIZED-GAINS-CURRENT> 4,504,393 <F1>
<APPREC-INCREASE-CURRENT> (2,691,562)<F1>
<NET-CHANGE-FROM-OPS> 67,985,508 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (5,280,892)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,492,180
<NUMBER-OF-SHARES-REDEEMED> (5,162,310)
<SHARES-REINVESTED> 318,289
<NET-CHANGE-IN-ASSETS> (34,351,070)
<ACCUMULATED-NII-PRIOR> 275,800 <F1>
<ACCUMULATED-GAINS-PRIOR> (648,762,816)<F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 5,492,923 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 11,243,868 <F1>
<AVERAGE-NET-ASSETS> 183,397,709
<PER-SHARE-NAV-BEGIN> 10.261
<PER-SHARE-NII> 0.287
<PER-SHARE-GAIN-APPREC> 0.010
<PER-SHARE-DIVIDEND> (0.294)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.264
<EXPENSE-RATIO> 1.77
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GOV'T SECS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,970,927,810 <F1>
<INVESTMENTS-AT-VALUE> 2,027,808,995 <F1>
<RECEIVABLES> 52,266,488 <F1>
<ASSETS-OTHER> 154,488 <F1>
<OTHER-ITEMS-ASSETS> 622,982 <F1>
<TOTAL-ASSETS> 2,080,852,953 <F1>
<PAYABLE-FOR-SECURITIES> 0 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 20,724,550 <F1>
<TOTAL-LIABILITIES> 20,724,550 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,209,368
<SHARES-COMMON-STOCK> 1,485,091
<SHARES-COMMON-PRIOR> 1,598,797
<ACCUMULATED-NII-CURRENT> (683,431)<F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> (644,258,423)<F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 64,608,862 <F1>
<NET-ASSETS> 15,209,020
<DIVIDEND-INCOME> 0 <F1>
<INTEREST-INCOME> 77,416,545 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (11,243,868)<F1>
<NET-INVESTMENT-INCOME> 66,172,677 <F1>
<REALIZED-GAINS-CURRENT> 4,504,393 <F1>
<APPREC-INCREASE-CURRENT> (2,691,562)<F1>
<NET-CHANGE-FROM-OPS> 67,985,508 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (457,429)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141,612
<NUMBER-OF-SHARES-REDEEMED> (286,678)
<SHARES-REINVESTED> 31,360
<NET-CHANGE-IN-ASSETS> (1,161,084)
<ACCUMULATED-NII-PRIOR> 275,800 <F1>
<ACCUMULATED-GAINS-PRIOR> (648,762,816)<F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 5,492,923 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 11,243,868 <F1>
<AVERAGE-NET-ASSETS> 15,884,064
<PER-SHARE-NAV-BEGIN> 10.239
<PER-SHARE-NII> 0.285
<PER-SHARE-GAIN-APPREC> 0.011
<PER-SHARE-DIVIDEND> (0.294)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.241
<EXPENSE-RATIO> 1.77
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
