VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST/, N-30D, 1997-02-28

VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST/
N-30D, 1997-02-28

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<PAGE> 1

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 3
Portfolio Highlights............................. 4
Portfolio Management Review...................... 5
Portfolio of Investments......................... 7
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>

UTLF SAR 2/97
<PAGE> 2
LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital Utility
Fund has continued to generate solid
investment performance. As noted in
earlier reports, VK/AC Holding Inc., [PHOTO]
the parent company of Van Kampen
American Capital, Inc., was acquired
by Morgan Stanley Group Inc., a world
leader in asset management and
investment banking. The transaction DENNIS J. MCDONNELL AND DON G. POWELL
was completed in October, and we are
excited about the opportunities it creates for investors. As part of the
acquisition, Van Kampen American Capital became the distributor of Morgan
Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW
The U.S. economy experienced moderate growth and low inflation during the
reporting period. At the beginning of 1996, economists were concerned that the
tepid economic pace of late 1995 might continue, possibly leading to a recession
by year end. That assumption soon came into question, however, when non-farm
payrolls increased by a stunning 705,000 in February, the biggest one-month jump
in 13 years. Then, a larger-than-expected 4.7 percent rate in real GDP (the
nation's gross domestic product, adjusted for inflation) during the second
quarter confirmed that the economy was back in a strong-growth mode. By summer,
the earlier talk of recession and rate cuts had changed to concerns about
economic overheating and the possibility of interest rate hikes.
Despite mounting evidence of inflation, the Federal Reserve held to a stable
monetary policy, believing the supply-and-demand imbalances in the commodity
markets were temporary and that burdensome consumer debt loads would eventually
slow the economy without the need for higher interest rates. Events during the
second half of 1996 proved the wisdom of Federal Reserve policy; real GDP growth
moderated to 2.0 percent in the third quarter while commodity prices receded.
For the year, core producer prices rose by 0.6 percent, the second-lowest annual
increase on record. Including the volatile food and energy sectors, however,
prices at the retail level rose by 3.3 percent.

MARKET REVIEW
The combination of steady growth and benign inflation provided the lift for
equity prices to soar still farther into record territory during the past six
months. For the year, the Standard & Poor's 500-Stock Index and the Dow Jones
Industrial Average posted returns of 22.90 percent and 26.01 percent,
respectively, following their 37.44 percent and 33.45 percent advance in 1995.
Downside volatility also returned for the first time since the current bull
market began in October 1990. After climbing steadily through the first

Continued on page two

1
<PAGE> 3
four months of 1996, stock prices suddenly hit turbulence, with the S&P
500-Stock Industrial Index falling by about 12 percent between late May and
mid-July. The NASDAQ market, which includes many technology stocks, experienced
an even stronger correction.
The sharp drop in stock prices was caused by fears that the Fed would raise
interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996, with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

OUTLOOK
We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, while low
inflation should allow stocks to maintain current valuation levels. While we do
not anticipate a continuation of the huge gains enjoyed during the last two
years, we believe that further advances in the broad equity market are likely
and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might persuade the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers will
be to the financial market's liking.
Your Fund's performance during 1996 has illustrated the benefits of owning a
diversified portfolio of common stocks. While not every year can be equally
profitable, we believe that equities will remain the best-performing asset class
over the long term.
Additional details about your Fund, including a question and answer section
with your portfolio management team, are provided in this report. We appreciate
your continued confidence in your investment with Van Kampen American Capital.

Sincerely,

[SIG]
Don G. Powell

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell

President
Van Kampen American Capital
Investment Advisory Corp.

2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1996

VAN KAMPEN AMERICAN CAPITAL UTILITY FUND

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS

<S> <C> <C> <C>
Six-month total return based on NAV(1)... 7.11% 6.72% 6.72%
Six-month total return(2)................ .97% 2.72% 5.72%
One-year total return(2)................. 4.54% 6.20% 9.13%
Life-of-Fund average annual total
return(2)............................... 5.94% 6.34% 6.69%
Commencement date........................ 07/28/93 07/28/93 08/13/93
</TABLE>

(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 (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).

See the Fund 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.

3
<PAGE> 5
PORTFOLIO HIGHLIGHTS

VAN KAMPEN AMERICAN CAPITAL UTILITY FUND

TOP TEN HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, 1996 JUNE 30, 1996
<S> <C> <C>
Edison International.................. 3.0% ................... 2.2%
Public Service Co. of New Mexico...... 2.8% ................... 3.2%
Houston Industries, Inc. ............. 2.7% ................... 2.2%
Illinova Corp. ....................... 2.7% ................... 2.3%
Baltimore Gas & Electric Co. ......... 2.7% ................... N/A
Pinnacle West Capital Corp. .......... 2.6% ................... 2.3%
DTE Energy Co. ....................... 2.6% ................... 2.0%
GPU, Inc. ............................ 2.5% ................... N/A
FPL Group, Inc. ...................... 2.4% ................... 2.2%
Southern Co........................... 2.3% ................... N/A
</TABLE>

N/A = Not Applicable

TOP FIVE PORTFOLIO HOLDINGS BY SECTOR AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
<S> <C>
Electric Utilities.......... 52.9%
Telecommunications.......... 20.2%
Oil, Gas, Pipeline and
Distribution.............. 18.3%
Real Estate Investment
Trusts.................... 6.5%
Cable Television............ 1.5%
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
<S> <C>
Electric Utilities.......... 56.7%
Telecommunications.......... 22.1%
Oil, Gas, Pipeline and
Distribution.............. 17.6%
Buildings & Real Estate..... 3.0%
Water and Sewer Utilities... 0.6%
</TABLE>

ASSET ALLOCATION AS A PERCENTAGE OF TOTAL ASSETS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996

<C> <C>
Stocks............. 80.1%
Bonds.............. 11.0%
Convertibles....... 3.5%
Cash and Short-Term
Investments....... 4.8%
Other.............. 0.6%
[Pie Chart]
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
<C> <C>
Stocks............. 83.1%
Bonds.............. 9.3%
Convertibles....... 4.3%
Cash and Short-Term
Investments....... 0.7%
Other.............. 2.6%
[Pie Chart]
</TABLE>

4
<PAGE> 6

PORTFOLIO MANAGEMENT REVIEW

VAN KAMPEN AMERICAN CAPITAL UTILITY FUND

We recently spoke with the management team of the Van Kampen American Capital
Utility Fund about the key events and economic forces that shaped the markets
during the past six months. The team is led by Mary Jayne Maly, portfolio
manager, and Alan T. Sachtleben, chief investment officer for equity
investments. The following excerpts reflect their views on the Fund's
performance during the six-month period ended December 31, 1996.

Q WHAT FACTORS HAD THE GREATEST IMPACT ON THE FUND OVER THE PAST SIX MONTHS?

A A volatile bond market and robust economy hampered returns in the utility
sector. Volatility in the bond market created price fluctuations among
utility stocks, which are generally interest-rate sensitive. Additionally,
economic growth resulted in strong corporate earnings, with technology and
consumer-oriented stocks exhibiting rapid earnings growth and attractive
performance. Utility stocks were somewhat at a disadvantage as they are
generally mature companies with a lower rate of earnings growth.
Two utility sectors, electric and telephone companies, faced new challenges.
The electric utility industry is transitioning from a regulated monopoly to full
competition, which presents potential opportunities as well as drawbacks.
Successful companies with effective management teams should be able to navigate
easily through this transition, but deregulation typically means lower prices
for consumers, which often translates into lower earnings.
Due to legislation passed during the year, the telephone industry is facing
deregulation issues that will allow local and long-distance phone companies to
compete in one another's market. Any resulting price wars could have a negative
impact on earnings, and phone company stocks have produced lackluster returns in
anticipation of this event.
Gas utility companies, on the other hand, generated attractive total
returns. Supply-and-demand fundamentals were strong, resulting in increasing gas
prices and strong earnings growth. Also, the trend of convergence between gas
and electric utility industries has led to a number of mergers. In addition to
economies of scale and incremental earnings growth, electric company management
could benefit from gas company management in deregulation, which occurred
several years ago.

Q HOW DID YOU RESPOND TO THESE FACTORS DURING THE PERIOD?

A We enhanced performance through our 18 percent weighting in gas utilities,
particularly as a number of our holdings were bought out at attractive
premiums. In the electric utility sector, we invested in companies that
are already well-positioned for competition or have effective management teams
in place to guide the companies through deregulation. Additionally, we
identified and purchased those companies we believe would be most likely to
thrive in this deregulated environment. We also used our disciplined research
techniques to select the telephone companies we believed had the strongest
growth potential. However, we remained underweighted in the telephone industry,
as we feel there is still downside potential.

5
<PAGE> 7
Bonds and real estate investment trusts (REITs) rounded out the portfolio.
We added to our fixed-income holdings (a total of 11 percent by the end of the
reporting period) due to their historic ability to buffer a portfolio and offset
sector volatility. REITs comprised about 6 percent of the portfolio by the end
of the reporting period. For additional Fund portfolio highlights, please refer
to page four.

Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?

A The Fund generated a six-month total return of 7.11 percent(1) (Class A
shares at net asset value), outperforming its peer indices. By comparison,
the Standard & Poor's 40 Utilities Index returned only 3.06 percent, which
the Lipper Utility Fund Index returned 5.87 percent for the period. Keep in mind
that the S&P 40 Utilities Index is a broad-based, unmanaged index that reflects
the general performance of utility stocks and does not reflect any commissions
or fees that would be paid by an investor purchasing the securities it
represents. The Lipper Utility Fund Index reflects the average performance of
the largest utility funds and does not reflect any sales charges that would be
paid by an investor purchasing the securities it represents. Please refer to the
chart on page three for additional Fund performance results.

Q WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?

A The Fund's performance will depend on the economy, interest rate levels,
and performance of the overall stock market. If the economy weakens and
corporate earnings growth begins to decline, the Fund may benefit due to
the historically defensive nature of its investments. We also feel that the Fund
has the potential to outperform the broader market indices in a rising rate
environment, which would uncover attractive valuations. We are emphasizing
relatively inexpensive electric utilities in the Fund's portfolio, as well as
gas utilities with strong fundamentals. We continue to be cautious in the
telephone industry, and future purchases will be value-oriented to provide
downside protection.
Overall, we anticipate a continuation of the moderate growth, low inflation
environment that has characterized the domestic economy in recent years. Steady
economic growth should push corporate profits modestly higher during 1997 and
provide continued support for stock prices. However, we see 1997 as a year of
increased concern for the stock market. Valuations are extended, which suggests
the potential for a significant decline in U.S. stock prices. For example, a
return of the rapid gross domestic product growth experienced in early 1996
could trigger a correction and convince the Federal Reserve Board to raise
interest rates.
With this in mind, a review of your portfolio's asset mix is especially
appropriate at this time. Stock prices have appreciated substantially over the
last six years and dramatically over the last two. This performance may well
have increased your portfolio's equity exposure above levels you considered
appropriate a few years ago.

[SIG]
Alan T. Sachtleben
Chief Investment Officer
Equity Investments

[SIG]
Mary Jayne Maly
Portfolio Manager

Please see footnotes on page three

6
<PAGE> 8
PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS 84.3%
ELECTRIC UTILITIES 46.8%
Allegheny Power Systems, Inc. .............................. 100,000 $ 3,037,500
Boston Edison Co. .......................................... 120,000 3,225,000
Carolina Power & Light Co. ................................. 80,000 2,920,000
CMS Energy Corp. ........................................... 97,000 3,261,625
DTE Energy Co. ............................................. 112,000 3,626,000
Edison International........................................ 215,000 4,273,125
FPL Group, Inc. ............................................ 74,000 3,404,000
GPU, Inc. .................................................. 104,175 3,502,885
Houston Industries, Inc. ................................... 169,000 3,823,625
Illinova Corp. ............................................. 138,000 3,795,000
New York St Electric & Gas Corp. ........................... 68,000 1,470,500
Niagara Mohawk Power Corp. (b).............................. 174,000 1,718,250
Nipsco Industries, Inc. .................................... 80,000 3,170,000
Northeast Utilities......................................... 135,000 1,788,750
Ohio Edison Co. ............................................ 138,000 3,139,500
Peco Energy Co. ............................................ 75,000 1,893,750
Pinnacle West Capital Corp. ................................ 115,400 3,663,950
Public Service Co. of New Mexico............................ 200,000 3,925,000
Sierra Pacific Resources.................................... 100,000 2,875,000
Southern Co. ............................................... 146,000 3,303,250
Texas Utilities Co. ........................................ 70,000 2,852,500
Tucson Electric Power Co. (b)............................... 84,000 1,396,500
Unicom Corp. ............................................... 117,000 3,173,625
------------
69,239,335
------------
OIL, GAS, PIPELINE AND DISTRIBUTION 14.6%
Baltimore Gas & Electric Co. ............................... 142,000 3,798,500
Coastal Corp. .............................................. 34,000 1,661,750
Columbia Gas Systems Inc. .................................. 28,000 1,781,500
El Paso Natural Gas Co. .................................... 43,000 2,171,500
Enron Corp. ................................................ 38,000 1,638,750
MCN Corp. .................................................. 75,000 2,165,625
MCN Corp. - Preferred (Convertible into 26,822 common
shares)................................................... 32,200 889,525
Nicor Inc. ................................................. 92,211 3,296,543
Southwest Gas Corp. ........................................ 100,000 1,925,000
Williams Cos. Inc. - Preferred (Convertible into 58,595
common shares)............................................ 25,000 2,212,500
------------
21,541,193
------------
</TABLE>

See Notes to Financial Statements

7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
--------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS 6.2%
Bay Apartment Communities, Inc. ............................ 82,500 $ 2,970,000
Cali Realty Corp. .......................................... 105,000 3,241,875
Meditrust................................................... 75,000 3,000,000
------------
9,211,875
------------
TELECOMMUNICATIONS 16.7%
Ameritech Corp. ............................................ 39,670 2,404,994
AT & T Corp. ............................................... 38,600 1,679,100
Bellsouth Corp. ............................................ 56,000 2,261,000
Cable & Wireless PLC - ADR (United Kingdom)................. 76,000 1,871,500
Cincinnati Bell, Inc. ...................................... 43,000 2,649,875
Frontier Corp. ............................................. 50,000 1,131,250
GTE Corp. .................................................. 40,000 1,820,000
Lucent Technologies, Inc. .................................. 31,291 1,447,209
Nynex Corp. ................................................ 34,000 1,636,250
Pasifik Satelit Nusantara - ADR (Indonesia) (b)............. 115,000 1,380,000
Portugal Telecom SA - ADR (Portugal) (b).................... 80,200 2,265,650
SBC Communications, Inc. ................................... 42,000 2,173,500
Sprint Corp. - Preferred (Convertible into 50,216 common
shares of Southern New England Telecommunications Corp.).. 57,900 2,077,162
------------
24,797,490
------------
TOTAL COMMON AND PREFERRED STOCKS....................................... 124,789,893
------------
</TABLE>

See Notes to Financial Statements

8
<PAGE> 10

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FIXED INCOME SECURITIES 11.0%
CABLE TELEVISION 1.4%
$1,000 Continental Cablevision Inc. ................... 8.300% 05/15/06 $ 1,068,785
1,000 Cox Communications Inc. ........................ 6.875 06/15/05 987,183
------------
2,055,968
------------
ENERGY 0.7%
1,000 NGC Corp. ...................................... 6.750 12/15/05 984,194
------------
ELECTRIC UTILITIES 3.6%
1,000 Endesa Overseas Chile........................... 7.200 04/01/06 993,865
500 Idaho Power Co. ................................ 8.000 03/15/04 532,053
700 Iowa Electric Light & Pwr Co. .................. 8.625 05/15/01 753,933
1,000 Texas Utilities Electric Co. ................... 8.250 04/01/04 1,071,755
1,000 Union Electric Co. ............................. 7.375 12/15/04 1,033,329
1,000 Virginia Electric & Pwr Co...................... 6.625 04/01/03 995,100
------------
5,380,035
------------
OIL, GAS, PIPELINE AND DISTRIBUTION 2.8%
500 Colorado Interstate Gas Co. .................... 10.000 06/15/05 592,560
1,000 Enron Corp. .................................... 7.125 05/15/07 1,007,705
330 Laclede Gas Co. ................................ 8.500 11/15/04 359,314
500 Panhandle Eastern Pipeline Co. ................. 7.875 08/15/04 522,666
400 Southwest Gas Corp. ............................ 9.750 06/15/02 445,605
100 Texas Eastern Transmission Corp. ............... 8.000 07/15/02 105,156
1,090 Texas Gas Transmission Corp. ................... 8.625 04/01/04 1,191,809
------------
4,224,815
------------
TELECOMMUNICATIONS 2.5%
1,000 360 Communications.............................. 7.125 03/01/03 989,846
900 GTE Corp. ...................................... 9.375 12/01/00 988,913
1,000 Sprint Corp. ................................... 8.125 07/15/02 1,064,124
617 United Telecommunications Kansas................ 9.750 04/01/00 671,548
------------
3,714,431
------------
TOTAL FIXED INCOME SECURITIES................................................ 16,359,443
------------
TOTAL LONG-TERM INVESTMENTS 95.3%
(Cost $128,062,135) (a)...................................................... 141,149,336
SHORT-TERM INVESTMENTS AT AMORTIZED COST 4.9%............................... 7,208,698
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%)................................ (286,026)
------------
NET ASSETS 100.0%........................................................... $148,072,008
============
</TABLE>

(a) At December 31, 1996 for federal income tax purposes, cost is $128,062,135;
the aggregate gross unrealized appreciation is $15,568,065 and the aggregate
gross unrealized depreciation is $2,480,995, resulting in net unrealized
appreciation including foreign currency translation of other assets and
liabilities of $13,087,070.

(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

9
<PAGE> 11

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $128,062,135)
(Note 1).................................................. $141,149,336
Short-Term Investments (Note 1)............................. 7,208,698
Cash........................................................ 6,358
Receivables:
Dividends................................................. 500,666
Interest.................................................. 236,616
Fund Shares Sold.......................................... 100,180
Securities Sold........................................... 76,311
Unamortized Organizational Expenses (Note 1)................ 36,061
Other....................................................... 14,097
------------
Total Assets.......................................... 149,328,323
------------
LIABILITIES:
Payables:
Income and Capital Gain Distributions..................... 620,475
Fund Shares Repurchased................................... 272,040
Distributor and Affiliates (Notes 2 and 5)................ 128,338
Investment Advisory Fee (Note 2).......................... 81,193
Accrued Expenses............................................ 91,591
Deferred Compensation and Retirement Plans (Note 2)......... 62,678
------------
Total Liabilities..................................... 1,256,315
------------
NET ASSETS.................................................. $148,072,008
============
NET ASSETS CONSIST OF:
Capital (Note 3)............................................ $132,896,913
Net Unrealized Appreciation on Securities................... 13,087,070
Accumulated Net Realized Gain on Securities................. 2,126,676
Accumulated Distributions in Excess of Net Investment Income
(Note 1).................................................. (38,651)
------------
NET ASSETS.................................................. $148,072,008
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $54,719,777 and 3,464,548 shares of
beneficial interest issued and outstanding)............. $ 15.79
Maximum sales charge (5.75%* of offering price)......... .96
------------
Maximum offering price to public........................ $ 16.75
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $88,337,887 and 5,594,804 shares of
beneficial interest issued and outstanding)............. $ 15.79
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $5,014,344 and 317,712 shares of
beneficial interest issued and outstanding)............. $ 15.78
============
</TABLE>

*On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

10
<PAGE> 12

STATEMENT OF OPERATIONS

For the Six Months Ended December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $155,797).... $ 3,810,148
Interest.................................................... 691,341
------------
Total Income............................................ 4,501,489
------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $69,404, $446,535 and $24,717, respectively)
(Note 5).................................................. 540,656
Investment Advisory Fee (Note 2)............................ 486,764
Shareholder Services (Note 2)............................... 136,994
Custody..................................................... 46,430
Trustees Fees and Expenses (Note 2)......................... 18,288
Amortization of Organizational Expenses (Note 1)............ 11,592
Legal (Note 2).............................................. 6,440
Other....................................................... 165,856
------------
Total Expenses.......................................... 1,413,020
Less Expenses Reimbursed (Note 2)....................... 5,041
------------
Net Expenses............................................ 1,407,979
------------
NET INVESTMENT INCOME....................................... $ 3,093,510
============
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Realized Gain/Loss on Securities:
Investments............................................... $ 5,478,730
Foreign Currency Transactions............................. 992
------------
Net Realized Gain on Securities............................. 5,479,722
------------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period................................... 11,904,947
------------
End of the Period:
Investments............................................. 13,087,201
Foreign Currency Translation............................ (131)
------------
13,087,070
------------
Net Unrealized Appreciation on Securities During the
Period.................................................... 1,182,123
------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES.............. $ 6,661,845
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 9,755,355
============
</TABLE>

See Notes to Financial Statements

11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS

For the Six Months Ended December 31, 1996
and the Year Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended
1996 June 30, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 3,093,510 $ 4,873,693
Net Realized Gain on Securities.......................... 5,479,722 12,374,245
Net Unrealized Appreciation on
Securities During the Period........................... 1,182,123 11,585,780
------------ ------------
Change in Net Assets from Operations..................... 9,755,355 28,833,718
------------ ------------
Distributions from Net Investment Income................. (3,111,101) (6,356,230)
Distributions in Excess of Net Investment Income (Note
1)..................................................... (39,643) -0-
------------ ------------
Total Distributions from and in Excess of Net Investment
Income*................................................ (3,150,744) (6,356,230)
Distributions from Net Realized Gain on Securities (Note
1)*.................................................... (1,861,394) -0-
------------ ------------
Total Distributions...................................... (5,012,138) (6,356,230)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... 4,743,217 22,477,488
------------ ------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold................................ 8,702,140 44,796,872
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 4,139,713 5,057,133
Cost of Shares Repurchased............................... (25,072,051) (49,434,577)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... (12,230,198) 419,428
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS.................... (7,486,981) 22,896,916
NET ASSETS:
Beginning of the Period.................................. 155,558,989 132,662,073
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $(38,651) and $17,591,
respectively).......................................... $148,072,008 $155,558,989
============ ============
</TABLE>

<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended
*Distributions by Class 1996 June 30, 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of Net
Investment Income:
Class A Shares....................... $(1,285,012) $(2,717,536)
Class B Shares....................... (1,766,502) (3,509,438)
Class C Shares....................... (99,230) (129,256)
----------- -----------
$(3,150,744) $(6,356,230)
=========== ===========
Distributions from Net Realized Gain on
Securities:
Class A Shares....................... $ (683,737) $ -0-
Class B Shares....................... (1,114,278) -0-
Class C Shares....................... (63,379) -0-
----------- -----------
Total Distributions................ $(1,861,394) $ -0-
=========== ===========
</TABLE>

See Notes to Financial Statements

12
<PAGE> 14

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
From July 28, 1995
Six Months Year Year (Commencement
Ended Ended Ended of Investment
December 31, June 30, June 30, Operations) to
Class A Shares 1996 1996 1995 June 30, 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................... $15.298 $13.386 $12.906 $ 14.300
------- ------- ------- --------
Net Investment Income.................. .361 .538 .595 .479
Net Realized and Unrealized Gain/Loss
on Securities........................ .706 2.077 .485 (1.513)
------- ------- ------- --------
Total from Investment Operations....... 1.067 2.615 1.080 (1.034)
------- ------- ------- --------
Less:
Distributions from and in Excess of
Net Investment Income (Note 1)..... .370 .703 .600 .323
Distributions from and in Excess of
Net Realized Gain on Securities
(Note 1)........................... .201 -0- -0- .037
------- ------- ------- --------
Total Distributions.................... .571 .703 .600 .360
------- ------- ------- --------
Net Asset Value, End of the Period..... $15.794 $15.298 $13.386 $ 12.906
======= ======= ======= ========
Total Return (a)....................... 7.11%* 19.93% 8.70% (7.38%)*
Net Assets at End of the Period
(In millions)........................ $ 54.7 $ 57.7 $ 50.4 $ 51.5
Ratio of Expenses to Average Net Assets
(b).................................. 1.41% 1.38% 1.34% 1.34%
Ratio of Net Investment Income to
Average Net Assets (b)............... 4.63% 3.61% 4.55% 4.10%
Portfolio Turnover..................... 45%* 121% 109% 102%*
Average Commission Paid Per Equity
Share Traded (c)..................... $ .0589 $ .0590 -- --
</TABLE>

*Non-Annualized

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than
0.01%.

(c) Represents the average brokerage commissions paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure is not applicable for years beginning prior to June 30, 1995.

See Notes to Financial Statements

13
<PAGE> 15

FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
From July 28, 1995
Six Months Year Year (Commencement
Ended Ended Ended of Investment
December 31, June 30, June 30, Operations) to
Class B Shares 1996 1996 1995 June 30, 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................. $15.296 $13.356 $12.880 $14.300
------- ------- ------- -------
Net Investment Income.................... .300 .426 .507 .394
Net Realized and Unrealized Gain/Loss on
Securities............................. .707 2.080 .461 (1.519)
------- ------- ------- -------
Total from Investment Operations......... 1.007 2.506 .968 (1.125)
------- ------- ------- -------

Less:
Distributions from and in Excess of
Net Investment Income (Note 1)....... .313 .566 .492 .258

Distributions from and in Excess of
Net Realized Gain on Securities
(Note 1)............................. .201 -0- -0- .037
------- ------- ------- -------
Total Distributions...................... .514 .566 .492 .295
------- ------- ------- -------
Net Asset Value, End of the Period....... $15.789 $15.296 $13.356 $12.880
======= ======= ======= =======
Total Return (a)......................... 6.72%* 19.08% 7.80% (8.02%)*
Net Assets at End of the Period
(In millions).......................... $ 88.3 $ 92.9 $ 81.0 $83.7
Ratio of Expenses to Average Net Assets
(b).................................... 2.17% 2.13% 2.05% 2.06%
Ratio of Net Investment Income to
Average Net Assets (b)................. 3.87% 2.86% 3.84% 3.36%
Portfolio Turnover....................... 45%* 121% 109% 102%*
Average Commission Paid Per Equity
Share Traded (c)....................... $ .0589 $ .0590 -- --
</TABLE>

*Non-Annualized

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than
0.01%.

See Notes to Financial Statements

14
<PAGE> 16

FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Six Months Year Year From August 13, 1993
Ended Ended Ended (Commencement
December 31, June 30, June 30, Distribution) to
Class C Shares 1996 1996 1995 June 30, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................ $15.290 $13.356 $12.868 $14.460
------- ------- ------- -------
Net Investment Income................... .292 .470 .482 .330
Net Realized and Unrealized Gain/Loss on
Securities............................ .715 2.030 .498 (1.627)
------- ------- ------- -------
Total from Investment Operations........ 1.007 2.500 .980 (1.297)
------- ------- ------- -------

Less:
Distributions from and in Excess of
Net Investment Income (Note 1)...... .313 .566 .492 .258

Distributions from and in Excess of
Net Realized Gain on Securities
(Note 1)............................ .201 -0- -0- .037
------- ------- ------- -------
Total Distributions..................... .514 .566 .492 .295
------- ------- ------- -------
Net Asset Value, End of the Period...... $15.783 $15.290 $13.356 $12.868
======= ======= ======= =======
Total Return (a)........................ 6.72%* 19.00% 7.88% (9.11%)*
Net Assets at End of the Period (In
millions)............................. $ 5.0 $ 5.0 $ 1.3 $ 1.1
Ratio of Expenses to Average Net Assets
(b)................................... 2.17% 2.13% 2.09% 2.05%
Ratio of Net Investment Income to
Average Net Assets (b)................ 3.84% 2.78% 3.80% 3.38%
Portfolio Turnover...................... 45%* 121% 109% 102%*
Average Commission Paid Per Equity Share
Traded (c)............................ $ .0589 $ .0590 -- --
</TABLE>

*Non-Annualized

(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.

(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than
0.01%.

See Notes to Financial Statements

15
<PAGE> 17

NOTES TO FINANCIAL STATEMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital Utility Fund (the "Fund") is organized as a series
of the Van Kampen American Capital Equity Trust, a Delaware business trust and
is registered as a diversified open-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to provide its shareholders with capital appreciation and current income,
through investment in common stocks and income securities of companies engaged
in the utilities industry. The Fund commenced investment operations on July 28,
1993, with two classes of common shares, Class A and Class B shares. The
distribution of the Fund's Class C shares commenced on August 13, 1993.

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--Portfolio securities are valued by using market
quotations or prices provided by market makers. Any securities for which current
market quotations are not readily available are valued at their fair value as
determined in good faith using procedures established by the Board of Trustees.
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 purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At December 31, 1996, there were no
when issued or delayed delivery purchase commitments.

C. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date;
interest income is recorded on an accrual basis. Bond discount is amortized over
the expected life of each applicable security.

16
<PAGE> 18

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

D. ORGANIZATIONAL EXPENSES--The Fund has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Fund's organization in the amount of $115,000. These costs
are being amortized on a straight line basis over the 60 month period ending
July 28, 1998. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") has agreed that in the event any of the initial shares of the Fund
originally purchased by VKAC are redeemed by the Fund during the amortization
period, the Fund will be reimbursed for any unamortized organizational expenses
in the same proportion as the number of shares redeemed bears to the number of
initial shares held at the time of redemption.

E. 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.

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 such losses against any future realized capital
gains. At June 30, 1996, the Fund had an accumulated capital loss carryforward
for tax purposes of $1,490,660, which will expire on June 30, 2003. Net realized
gains or losses may differ for financial and tax reporting purposes primarily as
a result of post October 31 losses which are not recognized for tax purposes
until the first day of the following fiscal year.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
quarterly from net investment income. Net investment income for federal income
tax purposes includes gains and losses realized on foreign currency
transactions. These realized gains and losses are included as net realized gains
or losses for financial reporting purposes. Permanent book and tax basis
differences relating to these items totaling $992 were reclassified from
accumulated net realized gain/loss on securities to accumulated undistributed
net investment income.

Net realized gains, if any, are distributed annually. Distributions from net
realized gains for book purposes may include short-term capital gains and gains
on option and futures transactions. All short-term capital gains and a portion
of option and futures gains are included as ordinary income for tax purposes.

17
<PAGE> 19

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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 $500 million...................................... .65 of 1%
Next $500 million....................................... .60 of 1%
Over $1 billion......................................... .55 of 1%
</TABLE>

Certain legal expenses are paid to 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 December 31, 1996, the Fund recognized expenses of
approximately $12,200 representing VKAC's cost of providing accounting, cash
management and legal services to the Fund.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the six months ended
December 31, 1996, the Fund recognized expenses of approximately $104,800,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers of
VKAC. During the period, the Adviser reimbursed the Fund for certain trustees'
compensation in connection with the July, 1995 increase in the number of
trustees of the Fund.
The Fund has implemented deferred compensation and retirement plans for its
Trustees. Under the deferred compensation plan, Trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those Trustees who are not officers of VKAC.
At December 31, 1996, VKAC owned 11,367, 100 and 100 shares of Classes A, B
and C, respectively.

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.

18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

At December 31, 1996, capital aggregated $49,078,570, $79,414,631 and
$4,403,712 for Classes A, B and C, respectively. For the year ended December 31,
1996, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
================================================================================
<S> <C> <C>
Sales:
Class A.......................................... 269,206 $ 4,119,827
Class B.......................................... 269,617 4,099,615
Class C.......................................... 31,599 482,698
---------- ------------
Total Sales........................................ 570,422 $ 8,702,140
========== ============
Dividend Reinvestment:
Class A.......................................... 108,761 $ 1,652,601
Class B.......................................... 156,788 2,384,023
Class C.......................................... 6,786 103,089
---------- ------------
Total Dividend Reinvestment........................ 272,335 $ 4,139,713
========== ============
Repurchases:
Class A.......................................... (682,060) $(10,514,863)
Class B.......................................... (908,016) (13,864,627)
Class C.......................................... (45,174) (692,561)
---------- ------------
Total Repurchases.................................. (1,635,250) $(25,072,051)
========== ============
</TABLE>

19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

At June 30, 1996, capital aggregated $53,821,005, $86,795,620 and $4,510,486
for Classes A, B and C, respectively. For the year ended June 30, 1996,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.......................................... 1,081,909 $ 14,643,191
Class B.......................................... 1,829,596 24,638,568
Class C.......................................... 391,241 5,515,113
---------- ------------
Total Sales........................................ 3,302,746 $ 44,796,872
========== ============
Dividend Reinvestment:
Class A.......................................... 150,482 $ 2,178,398
Class B.......................................... 193,231 2,794,761
Class C.......................................... 5,689 83,974
---------- ------------
Total Dividend Reinvestment........................ 349,402 $ 5,057,133
========== ============
Repurchases:
Class A.......................................... (1,228,535) $(17,887,971)
Class B.......................................... (2,010,741) (29,087,995)
Class C.......................................... (167,791) (2,458,611)
---------- ------------
Total Repurchases.................................. (3,407,067) $(49,434,577)
========== ============
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within six years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear

20
<PAGE> 22

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

the expense of their respective deferred sales arrangements, including higher
distribution and service fees and incremental transfer agency costs.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C>
First.............................................. 4.00% 1.00%
Second............................................. 3.75% None
Third.............................................. 3.50% None
Fourth............................................. 2.50% None
Fifth.............................................. 1.50% None
Sixth.............................................. 1.00% None
Seventh and Thereafter............................. None None
</TABLE>

For the year ended December 31, 1996, VKAC, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$6,200 and CDSC on redeemed shares of approximately $211,800. Sales charges do
not represent expenses of the Fund.
On September 27, 1995, the Fund acquired all of the assets and liabilities
of the Van Kampen American Capital Utilities Income Fund (the "AC Fund"),
through a tax free reorganization approved by AC Fund shareholders on September
21, 1995. The Fund issued 606,825, 1,173,732 and 219,180 shares of Classes A, B
and C valued at $8,495,564, $16,432,324 and $3,068,523, respectively, in
exchange for AC Fund's net assets. Included in these net assets was a capital
loss carryforward of $357,695 which is included in accumulated net realized
gain/loss on securities and cumulative book and tax basis timing differences of
$2,408 which is a component of undistributed net investment income. The shares
issued in connection with this transaction are included in common share sales
for the current period. Combined net assets on the date of acquisition were
$160,940,399.

4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $65,025,432 and $82,762,078,
respectively.

21
<PAGE> 23

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

5. 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% for Class A net assets and 1.00%
each for Class B and Class C net assets are accrued daily. Included in these
fees for the six-months ended December 31, 1996, are payments to VKAC of
approximately $335,700.

22
<PAGE> 24

FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL

GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund

EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund

FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income

TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund

MORGAN STANLEY FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
Worldwide High Income Fund

Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds, or
1-800-282-4404 for Morgan Stanley retail funds.

23
<PAGE> 25

VAN KAMPEN AMERICAN CAPITAL UTILITY FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
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*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund, as defined in the Investment Company Act of
1940.
(C) Van Kampen American Capital Distributors, Inc., 1997 All rights reserved.
(SM) denotes a service mark of Van Kampen American Capital Distributors, 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.
RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25, 1996,
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of KPMG Peat Marwick LLP as independent
public accountants. With regard to the approval of a new investment advisory
agreement between Van Kampen American Capital Investment Advisory Corp. and the
Fund, 7,210,355 shares voted for the proposal, 103,949 shares voted against and
534,659 shares abstained. With regard to the approval of certain changes to the
Fund's fundamental investment policies with respect to investment in other
investment companies, 4,704,786 shares voted for the proposal, 165,175 shares
voted against and 537,378 shares abstained. With regard to the ratification of
KPMG Peat Marwick LLP as independent public accountants for the Fund, 7,286,740
shares voted for the proposal, 59,726 shares voted against and 502,497 shares
abstained.

24
<PAGE> 26
TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio Highlights............................. 5
Portfolio Management Review...................... 6
Portfolio of Investments......................... 9
Statement of Assets and Liabilities.............. 15
Statement of Operations.......................... 16
Statement of Changes in Net Assets............... 17
Financial Highlights............................. 18
Notes to Financial Statements.................... 21
</TABLE>

BALF SAR 2/97
<PAGE> 27

LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital Balanced
Fund has continued to generate solid
investment performance. As noted in
earlier reports, VK/AC Holding Inc., [PHOTO]
the parent company of Van Kampen
American Capital, Inc., was acquired
by Morgan Stanley Group Inc., a world
leader in asset management and DENNIS J. MCDONNELL AND DON G. POWELL
investment banking. The transaction
was completed in October, and we are
excited about the opportunities it creates for investors. As part of the
acquisition, Van Kampen American Capital became the distributor of Morgan
Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW
The U.S. economy experienced moderate growth and low inflation during the
reporting period. At the beginning of 1996, economists were concerned that the
tepid economic pace of late 1995 might continue, possibly leading to a recession
by year end. That assumption soon came into question, however, when non-farm
payrolls increased by a stunning 705,000 in February, the biggest one-month jump
in 13 years. Then, a larger-than-expected 4.7 percent rate in real GDP (the
nation's gross domestic product, adjusted for inflation) during the second
quarter confirmed that the economy was back in a strong-growth mode. By summer,
the earlier talk of recession and rate cuts had changed to concerns about
economic overheating and the possibility of interest rate hikes.
Despite mounting evidence of inflation, the Federal Reserve held to a stable
monetary policy, believing the supply-and-demand imbalances in the commodity
markets were temporary and that burdensome consumer debt loads would eventually
slow the economy without the need for higher interest rates. Events during the
second half of 1996 proved the wisdom of Federal Reserve policy; real GDP growth
moderated to 2.0 percent in the third quarter while commodity pieces receded.
For the year, core producer prices rose by 0.6 percent, the second-lowest annual
increase on record. Including the volatile food and energy sectors, however,
prices at the retail level rose by 3.3 percent.

MARKET REVIEW

The combination of steady growth and benign inflation provided the lift for
equity prices to soar still farther into record territory during the past six
months. For the year, the Standard & Poor's 500-Stock Index and the Dow Jones
Industrial Average posted returns of 22.90 percent and 26.01 percent,
respectively, following their 37.44 percent and 33.5 percent advance in 1995.
Downside volatility also returned for the first time since the current bull
market began in October 1990. After climbing steadily through the first four

Continued on page two

1
<PAGE> 28

months of 1996, stock prices suddenly hit turbulence, with the S&P 500-Stock
Industrial Index falling by about 12 percent between late May and mid-July. The
NASDAQ market, which includes many technology stocks, experienced an even
stronger correction.
The sharp drop in stock prices was caused by fears that the Fed would raise
interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996, with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

OUTLOOK

We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, while low
inflation should allow stocks to maintain current valuation levels. While we do
not anticipate a continuation of the huge gains enjoyed during the last two
years, we believe that further advances in the broad equity market are likely
and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might persuade the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers will
be to the financial market's liking.
Your Fund's performance during 1996 has illustrated the benefits of owning a
diversified portfolio of common stocks. While not every year can be equally
profitable, we believe that equities will remain the best-performing asset class
over the long term.
Additional details about your Fund, including a question and answer section
with your portfolio management team, are provided in this report. We appreciate
your continued confidence in your investment with Van Kampen American Capital.

FUND UPDATE
The Trustees of the Balanced Fund have approved the Fund's reorganization
into the Van Kampen American Capital Equity Income Fund. The reorganization is
subject to shareholder approval. If approved, Balanced Fund shareholders will
receive shares of the Equity Income Fund in exchange for their current shares.
Similar to the Balanced Fund, the Equity Income Fund seeks to generate the
highest possible income consistent with safety of principal, with a secondary
objective of long-term growth of capital.

Continued on page three

2
<PAGE> 29

You will receive a proxy statement and voting card in the near future. The
proxy is designed to provide you with information about the proposed
reorganization and to request your participation in the proxy process.
Throughout the history of the Balanced Fund, the support of our shareholders
and our commitment to a disciplined investment approach have been important to
our long-term performance record. Thank you for your continued confidence in Van
Kampen American Capital and in your Fund's management team.

Sincerely,

[SIG]
DON G. POWELL

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
DENNIS J. MCDONNELL

President
Van Kampen American Capital
Investment Advisory Corp.

3
<PAGE> 30

PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1996

VAN KAMPEN AMERICAN CAPITAL BALANCED FUND

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS

Six-month total return based on
NAV(1)............................... 7.78% 7.51% 7.51%
Six-month total return(2).............. 1.58% 3.51% 6.51%
One-year total return(2)............... 6.69% 8.54% 11.54%
Life-of-Fund average
annual total return(2)............... 11.11% 11.85% 13.01%
Commencement date...................... 06/24/94 06/24/94 06/24/94
</TABLE>

(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 (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).

4
<PAGE> 31

PORTFOLIO HIGHLIGHTS

VAN KAMPEN AMERICAN CAPITAL BALANCED FUND

TOP TEN HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF
DEC. 31, 1996
<S> <C>
U.S. Treasury Bond...................................... 14.3%
U.S. Treasury Note...................................... 13.8%
U.S. Treasury Note...................................... 13.3%
WMX Technologies, Inc. ................................. 2.7%
Philip Morris Cos., Inc. ............................... 2.6%
Tele-Communications, Inc. .............................. 2.2%
RJR Nabisco Holdings Corp. ............................. 2.1%
MCI Communications Corp. ............................... 1.9%
Time Warner, Inc. ...................................... 1.8%
AT & T Corp. ........................................... 1.5%
</TABLE>

TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996 AS OF JUNE 30, 1996
<S> <C> <C> <C>
Government................. 41.4% Government................. 40.1%
Electric Utilities......... 6.2% Electric Utilities......... 6.8%
Insurance.................. 5.8% Oil and Gas................ 4.7%
Tobacco.................... 5.6% Pharmaceuticals............ 4.2%
Telecommunications......... 5.5% Natural Gas Pipeline and
Distribution............. 3.8%

</TABLE>

ASSET ALLOCATION

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
<S> <C>
Stocks........................ 45.0%
Bonds......................... 31.8%
Cash and Short-Term [Pie Chart]
Investments................. 21.4%
Other......................... 1.8%
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
<S> <C>
Stocks........................ 51.8%
Bonds......................... 34.6%
Cash and Short-Term [Pie Chart]
Investments................... 11.4%
Other......................... 2.2%
</TABLE>

5
<PAGE> 32

PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL BALANCED FUND

We recently spoke with the management team of the Van Kampen American Capital
Balanced Fund about the key events and economic forces that shaped the markets
during the six months ended December 31, 1996. The team is led by Alan T.
Sachtleben, chief investment officer for equity investments and B. Robert Baker,
Jr., portfolio manager. The following excerpts reflect their views on the Fund's
performance during the period.

Q WHAT FACTORS DROVE THE STOCK AND BOND MARKETS UPWARD OVER THE PAST SIX
MONTHS? HOW DID THEY AFFECT THE FUND?

A The combination of steady economic growth, minimal inflationary fears, and
better-than-expected corporate earnings drove the equity market higher
during the second half of 1996. As the reporting period began, the market
was in the late stages of a correction. Between May and mid-July, the S&P 500
Industrial Index fell 11.6 percent, while the NASDAQ Index dropped even more.
This correction was short-lived, as fears of a rate hike by the Federal Reserve
Board proved to be unfounded and economic growth moderated. Large-capitalization
companies, particularly stocks of technology companies, led a broad market
rebound in the third quarter. Equities finished the year with one of their
strongest post-election runs in history as the markets applauded the re-election
of the status quo (a Democrat in the White House and a Republican majority in
Congress).
The bond market recovered nicely from its flat performance during the first
half of the year. In response to declining employment growth and lackluster
consumer spending reports, investors began bidding up prices for bonds in
September and October. This renewed strength in the bond market also helped to
push stocks higher. Because we invest in both stocks and bonds, the strength of
these markets over the past six months had a very positive impact on the Fund's
return.

Q HOW DID YOU ALLOCATE THE FUND'S ASSETS BETWEEN STOCKS AND BONDS DURING THE
REPORTING PERIOD?

A We began the period with approximately 50 percent of the Fund's net assets
invested in stocks. The remainder was invested primarily in fixed-income
instruments, with a minimal position in cash. As the stock market grew stronger,
we believed stocks were somewhat overvalued, while the bond market appeared to
offer greater potential for price appreciation. As a result, we underweighted
stocks during the latter part of the period. This underweighting caused the Fund
to marginally underperform its Lipper peer group for the six-month period ended
December 31, 1996, as stock prices sustained a strong rebound.

Q HOW DID THE FUND PERFORM OVER THE LAST SIX MONTHS?

A The Fund achieved a total return of 7.78 percent (Class A shares at net
asset value). By comparison, the Standard & Poor's 500-Stock Index returned
11.65 percent, while the Lipper Balanced Fund Index returned 8.19 percent. The
S&P 500 Index is a broad-based, unmanaged index that reflects the general
performance of the

6
<PAGE> 33

stock market, and the Lipper Balanced Fund Index reflects the average
performance of the largest balanced funds. Keep in mind that these indices are
statistical composites that do not reflect any commissions, fees or sales
charges that would be incurred by an investor purchasing the securities they
represent. Please refer to chart on page four for additional Fund performance
results.

Q WHAT IS YOUR OVERALL STRATEGY TO SEEK TO MEET THE FUND'S OBJECTIVE?

A Because this is a balanced fund, we seek a combination of income and
capital appreciation. To achieve the proper asset allocation mix, we perform a
great deal of in-depth research to determine the expected returns from both
the stock and bond markets. Then we allocate the Fund's assets based upon the
difference in those anticipated returns, favoring the stronger performing
sector.
In choosing stocks for the portfolio, we utilize a "bottom up" approach. In
other words, we focus on individual stocks, rather than sector trends or
existing market conditions. We analyze the attractiveness of individual
companies by using detailed valuation methods. Simply stated, we look for
undervalued stocks, which are stocks we believe to be priced lower than their
intrinsic value or future potential. Then, we try to identify a catalyst that
could move the stock price from being undervalued to being fairly valued. That
catalyst could include new management, restructuring, reorganization, or a
regulatory or legal change. When we find an undervalued stock with a potential
catalyst, we consider adding the stock to the Fund's portfolio.

Q WHERE DID YOU FIND THE GREATEST INVESTMENT OPPORTUNITIES DURING THE
REPORTING PERIOD?

A The Fund's financial services holdings added to its positive performance.
Financial service stocks, particularly bank stocks, went through a rough period
in the late 1980s and early 1990s. Today, many of these institutions are much
more profitable, more heavily capitalized, and experiencing better-than-
expected earnings. Two holdings that performed very well were Chase Manhattan
(price appreciation of 27 percent over the six-month period) and BankAmerica
(up 32 percent).
At year end, the Fund's largest holdings were in utilities, energy (which
includes Natural Gas Pipeline and Distribution and Oil and Gas), and finance
(which includes Banking, Financial Services and Insurance). We increased our
weighting in consumer services, focusing on cable stocks, which we believed were
undervalued due to competition and exaggerated regulatory concerns. We added to
our cable holdings, including Tele-Communications, Inc. (TCI), late in the third
quarter and early in the fourth. Finally, oil and gas prices appreciated
throughout the period. As a result, the Fund's natural gas and other energy
holdings performed well.

Q WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?

A We will continue to rely on our "bottom up" approach to choose the stock
portion of the Fund's portfolio. By buying what we believe are undervalued
stocks, we attempt to increase our potential return while limiting the
Fund's exposure to risk. Our

7
<PAGE> 34

strong value orientation gives our portfolio a unique flavor when compared to
other balanced funds and should continue to serve the Fund well.
Because we expect a continuation of moderate growth and low inflation, which
have characterized the domestic economy in recent years, we do not intend to
make major asset allocation adjustments to the Fund. We will maintain
approximately 50 percent exposure to stocks, given the positive prospects for
the equity market and renewed strength in the bond market.
Despite these positive prospects, we have to remember that the period
between January 1, 1995 and December 31, 1996 was the third-best two-year period
in the stock market's history. Valuations are extended, which suggests the
potential for a significant decline in U.S. stock prices. Such a correction may
be triggered by a return of the rapid GDP growth experienced during the first
half of 1996, which could persuade the Fed to raise interest rates.
As always, equity investing involves risks. Any broad market sell-off or
correction would have a negative impact on the Fund. However, we believe our
research capabilities, disciplined investment approach, and bond allocation will
allow us to select potential top performers and maintain a balanced portfolio,
regardless of the market environment.

[SIG]

Alan T. Sachtleben

Chief Investment Officer
Equity Investments

[SIG]

B. Robert Baker, Jr.
Portfolio Manager

Please see footnotes on page four

8
<PAGE> 35

PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 46.5%
AUTOMOBILE 0.3%
Chrysler Corp............................................... 1,200 $ 39,600
Ford Motor Co............................................... 800 25,500
-----------
65,100
-----------
BANKING 2.0%
BankAmerica Corp. .......................................... 800 79,800
Bankers Trust New York Corp................................. 600 51,750
Chase Manhattan Corp........................................ 1,100 98,175
J.P. Morgan & Co., Inc. .................................... 1,000 97,625
PNC Bank Corp. ............................................. 1,500 56,437
-----------
383,787
-----------
BROADCAST, RADIO & TELEVISION 2.0%
Cox Communications, Inc., Class A (b)....................... 2,600 60,125
Tele-Communications, Inc., Class A (b)...................... 25,600 334,400
-----------
394,525
-----------
CHEMICAL 1.3%
Betz Laboratories, Inc. including Common Callable Rights
expiring 9/19/98.......................................... 1,000 58,500
Dow Chemical Co. ........................................... 900 70,537
Lyondell Petrochemical Co. ................................. 1,800 39,600
Praxair, Inc. .............................................. 2,000 92,250
-----------
260,887
-----------
CONSUMER DURABLES 1.9%
Caterpillar, Inc............................................ 400 30,100
Cooper Tire & Rubber........................................ 1,500 29,625
Ingersoll Rand Co........................................... 1,800 80,100
Johnson Controls, Inc....................................... 200 16,575
LucasVarity PLC - ADR (United Kingdom) (b).................. 1,300 49,400
Masco Corp.................................................. 800 28,800
Maytag Corp. ............................................... 2,600 51,350
Newell Co. ................................................. 900 28,350
Pitney Bowes, Inc. ......................................... 400 21,800
Stewart & Stevenson Services, Inc. ......................... 1,200 34,950
-----------
371,050
-----------
CONTAINERS, PACKAGING & GLASS 0.2%
Crown Cork & Seal, Inc. .................................... 800 43,500
-----------
</TABLE>

See Notes to Financial Statements

9
<PAGE> 36

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED/CONGLOMERATE MANUFACTURING 0.5%
Dover Corp. ................................................ 800 $ 40,200
Rockwell International Corp................................. 400 24,350
TRW, Inc.................................................... 600 29,700
-----------
94,250
-----------
ELECTRIC UTILITIES 4.9%
Baltimore Gas & Electric Co. ............................... 1,100 29,425
Boston Edison Co............................................ 1,300 34,938
Carolina Power & Light Co................................... 900 32,850
Central & South West Corp................................... 1,000 25,625
CMS Energy Corp............................................. 1,000 33,625
DTE Energy Co............................................... 2,100 67,987
Entergy Corp. .............................................. 1,100 30,525
FPL Group, Inc.............................................. 700 32,200
GPU, Inc. .................................................. 1,200 40,350
Houston Industries, Inc..................................... 3,800 85,975
Idaho Power Co.............................................. 1,700 52,912
Illinova Corp............................................... 2,300 63,250
Nipsco Industries, Inc...................................... 500 19,813
Oklahoma Gas & Electric Co.................................. 2,600 108,550
Pacificorp.................................................. 1,100 22,550
Peco Energy Co.............................................. 2,080 52,520
Pinnacle West Capital Corp.................................. 1,400 44,450
Public Service Co. of New Mexico............................ 2,100 41,212
Sierra Pacific Resources.................................... 700 20,125
Southwestern Public Service Co. ............................ 1,000 35,375
Texas Utilities Co. ........................................ 2,100 85,575
-----------
959,832
-----------
ENERGY 1.1%
Repsol SA - ADR (Spain)..................................... 2,200 83,875
Total SA - ADR (France)..................................... 924 36,225
YPF Sociedad Anonima - ADR (Argentina), Class D............. 3,600 90,900
-----------
211,000
-----------
ENGINEERING & CONSTRUCTION 0.6%
Bouygues Offshore SA - ADR (France) (b)..................... 4,600 59,225
J. Ray McDermott SA (b)..................................... 2,900 63,800
-----------
123,025
-----------
</TABLE>

See Notes to Financial Statements

10
<PAGE> 37

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
ENVIRONMENTAL 2.6%
Browning Ferris Industries, Inc. ........................... 3,500 $ 91,875
WMX Technologies, Inc. ..................................... 12,700 414,337
-----------
506,212
-----------
FINANCIAL SERVICES 0.9%
Bear Stearns Cos., Inc. .................................... 3,125 87,109
First USA, Inc. ............................................ 200 6,925
Great Western Financial Corp. .............................. 1,000 29,000
Travelers Group, Inc. ...................................... 1,066 48,370
-----------
171,404
-----------
FOOD 0.2%
Quaker Oats Co. ............................................ 800 30,500
-----------
HEALTH CARE 0.9%
Mallinckrodt, Inc. ......................................... 3,800 167,675
Wellpoint Health Networks, Inc., Class A (b)................ 300 10,313
-----------
177,988
-----------
INSURANCE 4.6%
Aetna, Inc. ................................................ 2,500 200,000
AFLAC, Inc. ................................................ 1,900 81,224
Allstate Corp. ............................................. 900 52,088
AMBAC, Inc. ................................................ 1,000 66,375
American Bankers Insurance Group, Inc. ..................... 2,600 132,925
CIGNA Corp. ................................................ 800 109,300
CMAC Investment Corp. ...................................... 2,200 80,850
Everest Reinsurance Holdings................................ 1,800 51,750
MBIA, Inc. ................................................. 1,200 121,500
-----------
896,012
-----------
LEISURE/ENTERTAINMENT 1.7%
Harcourt General, Inc. ..................................... 1,200 55,350
Time Warner, Inc. .......................................... 7,300 273,750
-----------
329,100
-----------
MINING, STEEL, IRON & NON-PRECIOUS METAL 0.9%
Bethlehem Steel Corp. (b)................................... 13,500 121,500
LTV Corp. .................................................. 4,600 54,625
-----------
176,125
-----------
</TABLE>

See Notes to Financial Statements

11
<PAGE> 38

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
NATURAL GAS PIPELINE AND DISTRIBUTION 1.5%
Coastal Corp. .............................................. 1,100 $ 53,762
Coflexip SA - ADR (France) (b).............................. 1,300 34,125
Pacific Enterprises......................................... 1,200 36,450
PanEnergy Corp. ............................................ 3,700 166,500
Sonat, Inc. ................................................ 200 10,300
-----------
301,137
-----------
OIL & GAS 2.8%
Amerada Hess Corp. ......................................... 1,700 98,387
Amoco Corp. ................................................ 800 64,400
Atlantic Richfield Co. ..................................... 300 39,750
British Petroleum PLC - ADR (United Kingdom)................ 300 42,413
Occidental Petroleum Corp. ................................. 1,900 44,413
Seagull Energy Corp. (b).................................... 2,400 52,800
Texaco, Inc. ............................................... 700 68,687
Unocal Corp. ............................................... 1,700 69,062
USX Marathon Group.......................................... 2,500 59,688
-----------
539,600
-----------
PAPER 1.5%
Boise Cascade Corp. ........................................ 5,500 174,625
Mead Corp. ................................................. 500 29,063
Weyerhaeuser Co. ........................................... 1,100 52,112
Willamette Industries, Inc. ................................ 600 41,775
-----------
297,575
-----------
PERSONAL & NON-DURABLE 0.4%
First Brands Corp........................................... 1,800 51,075
Tambrands, Inc. ............................................ 700 28,613
-----------
79,688
-----------
PHARMACEUTICALS 1.3%
American Home Products Corp. ............................... 2,300 134,838
Schering Plough Corp. ...................................... 500 32,375
SmithKline Beecham PLC - ADR (United Kingdom)............... 500 34,000
Warner Lambert Co. ......................................... 700 52,500
-----------
253,713
-----------
PRINTING, PUBLISHING & BROADCASTING 0.2%
Gannett, Inc. .............................................. 600 44,925
-----------
</TABLE>

See Notes to Financial Statements

12
<PAGE> 39

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
RETAIL 2.2%
Dayton Hudson Corp. ........................................ 1,900 $ 74,575
Dillard Department Stores, Inc., Class A.................... 2,100 64,838
Federated Department Stores, Inc. (b)....................... 3,700 126,262
Kroger Co. (b).............................................. 1,900 88,350
Pier 1 Imports, Inc. ....................................... 2,300 40,538
Tupperware Corp. ........................................... 600 32,175
-----------
426,738
-----------
TECHNOLOGY 1.2%
Avnet, Inc. ................................................ 1,200 69,900
Computer Associates International, Inc...................... 500 24,875
Gateway 2000, Inc. (b)...................................... 600 32,138
Hewlett Packard Co. ........................................ 800 40,200
SunGard Data Systems, Inc. (b).............................. 1,500 59,250
-----------
226,363
-----------
TELECOMMUNICATIONS 4.4%
Ameritech Corp. ............................................ 475 28,797
AT & T Corp. ............................................... 5,300 230,550
Bell Atlantic Corp.......................................... 700 45,325
Bellsouth Corp.............................................. 600 24,225
Ericsson L M Telephone Co. - ADR (Sweden), Class B.......... 1,500 45,281
MCI Communications Corp. ................................... 9,100 297,456
Nokia Corp. - ADR (Finland)................................. 700 40,338
SBC Communications, Inc..................................... 1,100 56,925
Sprint Corp. ............................................... 2,200 87,725
-----------
856,622
-----------
TOBACCO 4.4%
American Brands, Inc........................................ 2,700 133,988
Philip Morris Cos., Inc. ................................... 3,600 405,450
RJR Nabisco Holdings Corp. ................................. 9,600 326,400
-----------
865,838
-----------
TOTAL COMMON STOCKS......................................... 9,086,496
-----------
U.S. GOVERNMENT SECURITIES 32.9%
U.S. Treasury Bond ($2,100,000 par, 7.250% coupon, 05/15/16
maturity)................................................. 2,220,414
U.S. Treasury Note ($2,000,000 par, 6.875% coupon, 05/15/06
maturity)................................................. 2,063,440
U.S. Treasury Note ($2,000,000 par, 7.500% coupon, 02/15/05
maturity)................................................. 2,142,190
-----------
TOTAL U.S. GOVERNMENT SECURITIES.................................... 6,426,044
-----------
TOTAL LONG-TERM INVESTMENTS 79.4%
(Cost $14,442,422) (a)............................................ 15,512,540
-----------
</TABLE>

See Notes to Financial Statements

13
<PAGE> 40

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Market Value
- -----------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS AT AMORTIZED COST 22.1%
Federal Farm Credit Bank Consolidated Discount Note ($700,000 par,
5.580% coupon, 01/06/97 maturity)................................... $ 699,349
Federal National Mortgage Association Discount Note ($200,000 par,
5.600% coupon, 01/13/97 maturity)................................... 199,595
Student Loan Marketing Discount Note ($3,415,000 par, 6.500% coupon,
01/02/97 maturity).................................................. 3,413,767
-----------
TOTAL SHORT-TERM INVESTMENTS AT AMORTIZED COST...................... 4,312,711
LIABILITIES IN EXCESS OF OTHER ASSETS (1.5%)....................... (298,023)
-----------
NET ASSETS 100.0%.................................................. $19,527,228
===========
</TABLE>

(a) At December 31, 1996, cost for federal income tax purposes is $14,442,422;
the aggregate gross unrealized appreciation is $1,183,660 and the aggregate
gross unrealized depreciation is $113,542, resulting in net unrealized
appreciation of $1,070,118.

(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

14
<PAGE> 41

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $14,442,422)
(Note 1).................................................. $15,512,540
Short-Term Investments (Note 1)............................. 4,312,711
Cash........................................................ 4,966
Receivables:
Securities Sold........................................... 167,172
Interest.................................................. 94,277
Fund Shares Sold.......................................... 31,479
Dividends................................................. 21,404
Unamortized Organizational Expenses (Note 1)................ 39,581
-----------
Total Assets............................................ 20,184,130
-----------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 303,233
Income and Capital Gain Distributions..................... 171,471
Securities Purchased...................................... 147,007
Distributor and Affiliates (Notes 2 and 5)................ 24,001
Deferred Compensation and Retirement Plans (Note 2)......... 11,190
-----------
Total Liabilities....................................... 656,902
-----------
NET ASSETS.................................................. $19,527,228
===========
NET ASSETS CONSIST OF:
Capital (Note 3)............................................ $18,211,366
Net Unrealized Appreciation on Securities................... 1,070,118
Accumulated Net Realized Gain on Securities................. 211,340
Accumulated Undistributed Net Investment Income............. 34,404
-----------
NET ASSETS.................................................. $19,527,228
===========
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $8,487,486 and 529,507 shares of
beneficial interest issued and outstanding)............. $ 16.03
Maximum sales charge (5.75%* of offering price)......... .98
-----------
Maximum offering price to public........................ $ 17.01
===========
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $9,795,585 and 611,090 shares of
beneficial interest issued and outstanding)............. $ 16.03
===========
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $1,244,157 and 77,618 shares of beneficial
interest issued and outstanding)........................ $ 16.03
===========
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

15
<PAGE> 42

STATEMENT OF OPERATIONS

For the Six Months Ended December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 285,828
Dividends................................................... 105,699
----------
Total Income............................................ 391,527
----------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 61,088
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $9,214, $44,690 and $5,703, respectively)
(Note 5).................................................. 59,607
Custody..................................................... 49,861
Registration................................................ 27,000
Printing.................................................... 16,560
Shareholder Services (Note 2)............................... 16,145
Audit....................................................... 9,200
Amortization of Organizational Expenses (Note 1)............ 8,066
Cash Management (Note 2).................................... 6,733
Legal (Note 2).............................................. 4,600
Trustees Fees and Expenses (Note 2)......................... 2,889
Other....................................................... 1,163
----------
Total Expenses.......................................... 262,912
Less Fees Waived and Expenses Reimbursed ($61,088 and
$120,973, respectively) (Note 2)...................... 182,061
----------
Net Expenses.......................................... 80,851
----------
NET INVESTMENT INCOME....................................... $ 310,676
==========
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Net Realized Gain on Investments............................ $ 301,337
----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period................................... 372,401
End of the Period:
Investments............................................. 1,070,118
----------
Net Unrealized Appreciation on Securities During the
Period.................................................... 697,717
----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES.............. $ 999,054
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,309,730
==========
</TABLE>

See Notes to Financial Statements

16
<PAGE> 43

STATEMENT OF CHANGES IN NET ASSETS

For the Six Months Ended December 31, 1996
and the Year Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1996 June 30, 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 310,676 $ 418,057
Net Realized Gain on Securities...................... 301,337 1,765,158
Net Unrealized Appreciation/Depreciation on
Securities......................................... 697,717 (436,305)
----------- -----------
Change in Net Assets from Operations................. 1,309,730 1,746,910
----------- -----------
Distributions from Net Investment Income:
Class A Shares..................................... (133,147) (197,797)
Class B Shares..................................... (133,689) (216,743)
Class C Shares..................................... (17,136) (25,849)
----------- -----------
(283,972) (440,389)
----------- -----------
Distributions from Net Realized Gain on Securities
(Note 1):
Class A Shares..................................... (476,642) (297,718)
Class B Shares..................................... (546,779) (408,895)
Class C Shares..................................... (66,170) (49,391)
----------- -----------
(1,089,591) (756,004)
----------- -----------
Total Distributions.................................. (1,373,563) (1,196,393)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (63,833) 550,517
----------- -----------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold............................ 4,317,322 5,236,767
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 1,174,819 972,782
Cost of Shares Repurchased........................... (1,709,251) (3,021,589)
----------- -----------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... 3,782,890 3,187,960
----------- -----------
TOTAL INCREASE IN NET ASSETS......................... 3,719,057 3,738,477
NET ASSETS:
Beginning of the Period.............................. 15,808,171 12,069,694
----------- -----------
End of the Period (Including accumulated
undistributed net investment income of $34,404 and
$7,700, respectively).............................. $19,527,228 $15,808,171
=========== ===========
</TABLE>

See Notes to Financial Statements

17
<PAGE> 44

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
From June 24, 1994
(Commencement of
Six Months Ended Year Ended Investment Operations)
Class A Shares December 31, 1996 June 30, 1996 to June 30, 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $16.052 $15.388 $14.300
------- ------- -------
Net Investment Income.............. .323 .572 .572
Net Realized and Unrealized Gain on
Securities....................... .901 1.678 1.041
------- ------- -------
Total from Investment Operations..... 1.224 2.250 1.613
------- ------- -------
Less:
Distributions from Net Investment
Income........................... .300 .600 .525
Distributions from Net Realized
Gain on Securities (Note 1)...... .947 .986 -0-
------- ------- -------
Total Distributions.................. 1.247 1.586 .525
------- ------- -------
Net Asset Value, End of the Period... $16.029 $16.052 $15.388
======= ======= =======
Total Return*(a)..................... 7.78%** 15.07% 11.53%**
Net Assets at End of the Period (In
millions).......................... $ 8.5 $ 6.5 $ 4.8
Ratio of Expenses to Average Net
Assets*............................ .49% .59% 1.15%
Ratio of Net Investment Income to
Average Net Assets*................ 4.03% 3.63% 4.01%
Portfolio Turnover................... 63%** 177% 121%**
Average Commission Paid Per Equity
Share Trade (b).................... $ .060 $ .048 --
* If certain expenses had not been
assumed by VKAC, total return would
have been lower and the ratios
would have been as follows:
Ratio of Expenses to Average Net
Assets............................. 2.40% 3.09% 2.76%
Ratio of Net Investment Income to
Average Net Assets................. 2.11% 1.13% 2.40%
</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) Represents the average brokerage commissions paid per equity share traded
during the period where commissions were applicable. This disclosure is not
applicable for periods prior to June 30, 1996.

See Notes to Financial Statements

18
<PAGE> 45

FINANCIAL HIGHLIGHTS (CONTINUED)

The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
From June 24, 1994
(Commencement of
Six Months Ended Year Ended Investment Operations)
Class B Shares December 31, 1996 June 30, 1996 to June 30, 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................ $16.037 $15.389 $14.300
------- ------- -------
Net Investment Income............. .264 .459 .464
Net Realized and Unrealized Gain
on Securities................... .922 1.667 1.056
------- ------- -------
Total from Investment
Operations...................... 1.186 2.126 1.520
------- ------- -------
Less:
Distributions from Net Investment
Income.......................... .246 .492 .431
Distributions from Net Realized
Gain on Securities (Note 1)..... .947 .986 -0-
------- ------- -------
Total Distributions................. 1.193 1.478 .431
------- ------- -------
Net Asset Value, End of the
Period............................ $16.030 $16.037 $15.389
======= ======= =======
Total Return*(a).................... 7.51%** 14.25% 10.82%**
Net Assets at End of the Period (In
millions)......................... $ 9.8 $ 8.2 $ 6.6
Ratio of Expenses to Average Net
Assets*........................... 1.26% 1.34% 1.88%
Ratio of Net Investment Income to
Average Net Assets*............... 3.26% 2.88% 3.27%
Portfolio Turnover.................. 63%** 177% 121%**
Average Commission Paid Per Equity
Share Trade (b)................... $ .060 $ .048 --
* If certain expenses had not been
assumed by VKAC, total return
would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................ 3.17% 3.84% 3.48%
Ratio of Net Investment Income to
Average Net Assets................ 1.34% .38% 1.67%
</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.

See Notes to Financial Statements

19
<PAGE> 46

FINANCIAL HIGHLIGHTS (CONTINUED)

The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
From June 24, 1994
(Commencement of
Six Months Ended Year Ended Investment Operations)
Class C Shares December 31, 1996 June 30, 1996 to June 30, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $16.038 $15.388 $14.300
------- ------- -------
Net Investment Income.............. .264 .466 .426
Net Realized and Unrealized Gain on
Securities....................... .920 1.662 1.093
------- ------- -------
Total from Investment Operations..... 1.184 2.128 1.519
------- ------- -------
Less:
Distributions from Net Investment
Income........................... .246 .492 .431
Distributions from Net Realized
Gain on Securities (Note 1)...... .947 .986 -0-
------- ------- -------
Total Distributions.................. 1.193 1.478 .431
------- ------- -------
Net Asset Value, End of the Period... $16.029 $16.038 $15.388
======= ======= =======
Total Return* (a).................... 7.51%** 14.25% 10.82%**
Net Assets at End of the Period (In
millions).......................... $ 1.2 $ 1.1 $ .8
Ratio of Expenses to Average Net
Assets*............................ 1.29% 1.34% 1.90%
Ratio of Net Investment Income to
Average Net Assets*................ 3.22% 2.88% 3.19%
Portfolio Turnover................... 63%** 177% 121%**
Average Commission Paid Per Equity
Share Trade (b).................... $ .060 $ .048 --
* If certain expenses had not been
assumed by the Adviser, total
return would have been lower and
the ratios would have been as
follows:
Ratio of Expenses to Average Net
Assets............................. 3.21% 3.84% 3.48%
Ratio of Net Investment Income to
Average Net Assets................. 1.30% .38% 1.61%
</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.

See Notes to Financial Statements

20
<PAGE> 47

NOTES TO FINANCIAL STATEMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital Balanced Fund (the "Fund") is organized as a series
of the Van Kampen American Capital Equity Trust, a Delaware business trust and
is registered as a diversified open-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to provide its shareholders with current income, while also seeking to provide
shareholders with capital growth. The Fund commenced investment operations on
June 24, 1994, and has outstanding three classes of common shares, Classes A, B
and C.

A. SECURITY VALUATION--Investments in securities listed on a securities exchange
shall be valued at their sale price as of the close of such securities exchange.
Investments in securities not listed on a securities exchange shall be valued
based on their last quoted bid price or, if not available, their fair value as
determined by the Board of Trustees or its delegate. Fixed income investments
are stated at value using market quotations or, if such valuations are not
available, estimates obtained from yield data relating to instruments or
securities with similar characteristics 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.

21
<PAGE> 48

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

The Fund invests 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 American Capital 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. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Bond discount is amortized over
the expected life of each applicable security.

D. ORGANIZATIONAL EXPENSES--The Fund has agreed to reimburse Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Fund's organization in the amount of $80,000.
These costs are being amortized on a straight line basis over the 60 month
period ending June 23, 1999. Van Kampen American Capital Investment Advisory
Corp. (the "Adviser") has agreed that in the event any of the initial shares of
the Fund originally purchased by VKAC are redeemed during the amortization
period, the Fund will be reimbursed for any unamortized organizational expenses
in the same proportion as the number of shares redeemed bears to the number of
initial shares held at the time of redemption.

Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays quarterly
dividends from net investment income. Net realized gains, if any, are
distributed annually.

22
<PAGE> 49

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

Distributions from net realized gains for book purposes may include short-term
capital gains which 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:

<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- ---------------------------------------------------------------------
<S> <C>
First $500 million...................................... .70 of 1%
Over $500 million....................................... .65 of 1%
</TABLE>

During the period, the Adviser reimbursed the Fund for certain trustees'
compensation in connection with the July, 1995 increase in the number of
trustees of the Fund. This reimbursement is expected to continue through June
30, 1997.

Certain legal expenses are paid to 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 December 31, 1996, the Fund incurred expenses of
approximately $11,300 representing VKAC's cost of providing accounting, cash
management and legal services to the Fund all of which was waived by VKAC.

ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the six months ended
December 31, 1996, the Fund incurred expenses of approximately $6,100,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit, all of which was assumed by VKAC.

Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers of
VKAC.

The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.

At December 31, 1996, VKAC owned 100 shares each of Classes A, B and C.

23
<PAGE> 50

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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 December 31, 1996, capital aggregated $7,972,805, $9,084,452 and
$1,154,109 for Classes A, B and C, respectively. For the six months ended
December 31, 1996, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A....................................... 141,729 $ 2,323,654
Class B....................................... 108,336 1,766,090
Class C....................................... 14,109 227,578
-------- -----------
Total Sales..................................... 264,174 $ 4,317,322
======== ===========
Dividend Reinvestment:
Class A....................................... 36,105 $ 573,198
Class B....................................... 35,713 566,239
Class C....................................... 2,231 35,382
-------- -----------
Total Dividend Reinvestment..................... 74,049 $ 1,174,819
======== ===========
Repurchases:
Class A....................................... (54,153) $ (882,644)
Class B....................................... (45,956) (740,995)
Class C....................................... (5,233) (85,612)
-------- -----------
Total Repurchases............................... (105,342) $(1,709,251)
======== ===========
</TABLE>

24
<PAGE> 51

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

At June 30, 1996, capital aggregated $5,958,597, $7,493,118 and $976,761 for
Classes A, B and C, respectively. For the year ended June 30, 1996, transactions
were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A....................................... 160,539 $ 2,556,624
Class B....................................... 149,768 2,395,715
Class C....................................... 17,813 284,428
-------- -----------
Total Sales..................................... 328,120 $ 5,236,767
======== ===========
Dividend Reinvestment:
Class A....................................... 27,877 $ 437,407
Class B....................................... 33,104 518,661
Class C....................................... 1,066 16,714
-------- -----------
Total Dividend Reinvestment..................... 62,047 $ 972,782
======== ===========
Repurchases:
Class A....................................... (91,336) $(1,459,621)
Class B....................................... (96,683) (1,543,634)
Class C....................................... (1,160) (18,334)
-------- -----------
Total Repurchases............................... (189,179) $(3,021,589)
======== ===========
</TABLE>

25
<PAGE> 52

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

the expense of their respective deferred sales arrangements, including higher
distribution and service fees and incremental transfer agency costs.

<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
Year of Redemption Class B Class C
- --------------------------------------------------------------------------
<S> <C> <C>
First........................................... 4.00% 1.00%
Second.......................................... 3.75% None
Third........................................... 3.50% None
Fourth.......................................... 2.50% None
Fifth........................................... 1.50% None
Sixth........................................... 1.00% None
Seventh and Thereafter.......................... None None
</TABLE>

For the period ended December 31, 1996, VKAC, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$7,900 and received CDSC on redeemed shares of approximately $10,300. Sales
charges do not represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales, excluding
short-term investments, were $9,808,002 and $9,138,974, respectively.

5. 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% for Class A net assets and 1.00%
each for Class B and Class C net assets are accrued daily. Included in these
fees for the six months ended December 31, 1996, are payments to VKAC of
approximately $33,800.

26
<PAGE> 53

FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL

GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund

27
<PAGE> 54

VAN KAMPEN AMERICAN CAPITAL BALANCED FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
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*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund, as defined in
the Investment Company Act of 1940.

(SM) denotes a service mark of
Van Kampen American Capital Distributors, 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.

RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25, 1996,
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of KPMG Peat Marwick LLP as independent
public accountants. With regard to the approval of a new investment advisory
agreement between Van Kampen American Capital Investment Advisory Corp. and the
Fund, 739,720 shares voted for the proposal, 5,043 shares voted against and
59,018 shares abstained. With regard to the approval of certain changes to the
Fund's fundamental investment policies with respect to investment in other
investment companies, 474,337 shares voted for the proposal, 9,087 shares voted
against and 61,355 shares abstained. With regard to the ratification of KPMG
Peat Marwick LLP as independent public accountants for the Fund, 771,675 shares
votes for the proposal, 3,069 shares voted against and 48,762 shares abstained.

28
<PAGE> 55
VAN KAMPEN AMERICAN CAPITAL

VALUE FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1996

-----A Wealth of Knowledge - A Knowledge of Wealth(sm)-----
VAN KAMPEN AMERICAN CAPITAL

<PAGE> 56

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . 1
Portfolio Management Review . . . . . . . . . . . . . . . . . . 3
Portfolio of Investments . . . . . . . . . . . . . . . . . . . 5
Statement of Assets and Liabilities . . . . . . . . . . . . . . 7
Statement of Operations . . . . . . . . . . . . . . . . . . . . 8
Statement of Changes in Net Assets . . . . . . . . . . . . . . 9
Financial Highlights . . . . . . . . . . . . . . . . . . . . . 10
Notes to Financial Statements . . . . . . . . . . . . . . . . . 13
</TABLE>

<PAGE> 57

LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,

We are pleased to report that the Van Kampen American Capital Value Fund
has continued to generate solid investment performance. As noted in earlier
reports, VK/AC Holding Inc., the parent company of Van Kampen American Capital,
Inc., was acquired by Morgan Stanley Group Inc., a world leader in asset
management and investment banking. The transaction was completed in October,
and we are excited about the opportunities it creates for investors. As part of
the acquisition, Van Kampen American Capital became the distributor of Morgan
Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW
The U.S. economy experienced moderate growth and low inflation during
the reporting period. At the beginning of 1996, economists were concerned that
the tepid economic pace of late 1995 might continue, possibly leading to a
recession by year end. That assumption soon came into question, however, when
non-farm payrolls increased by a stunning 705,000 in February, the biggest
one-month jump in 13 years. Then, a larger-than-expected 4.7 percent growth
rate in real GDP (the nation's gross domestic product, adjusted for inflation)
during the second quarter confirmed that the economy was back in a
strong-growth mode. By summer, the earlier talk of recession and rate cuts had
changed to concerns about economic overheating and the possibility of interest
rate hikes.
Despite mounting evidence of inflation, the Federal Reserve held to a
stable monetary policy, believing the supply-and-demand imbalances in the
commodity markets were temporary and that burdensome consumer debt loads would
eventually slow the economy without the need for higher interest rates. Events
during the second half of 1996 proved the wisdom of Federal Reserve policy;
real GDP growth moderated to 2.0 percent in the third quarter while commodity
pieces receded. For the year, core producer prices rose by 0.6 percent, the
second-lowest annual increase on record. Including the volatile food and energy
sectors, however, prices at the retail level rose by 3.3 percent.

MARKET REVIEW
The combination of steady growth and benign inflation provided the
catalyst for equity prices to soar still farther into record territory during
the past six months. For the year, the Standard & Poor's 500-Stock Index and
the Dow Jones Industrial Average posted returns of 22.90 percent and 26.01
percent, respectively, following their 37.44 percent and 33.45 percent advance
in 1995. Downside volatility also returned for the first time since the current
bull market began in October 1990. After climbing steadily through the first
four months of 1996, stock prices suddenly hit turbulence and the S&P 500-Stock
Industrial Index fell by about 12 percent between late May and mid-July. The
NASDAQ market, which includes many technology stocks, experienced an even
stronger correction.

1 Continued on page two

<PAGE> 58

The sharp drop in stock prices was caused by fears that the Fed would
raise interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap
and value cousins during 1996, with the financial, technology, and energy
sectors turning in the best returns among industry groups. The most dramatic
news was made in the initial public offering (IPO) market, where volume broke
records that were set the previous year. During the first half of the year,
widespread speculation led to overpricing among many IPO issues, especially
those from high-tech industries. Then, after the dust had cleared from the
mid-year inflation scare, sobriety returned to the IPO market and prices became
more realistic.

OUTLOOK
We expect a continuation of the moderate growth, low inflation
environment that has characterized the domestic economy in recent years.
Steady economic growth may push corporate profits modestly higher during 1997,
while low inflation should allow stocks to maintain current valuation levels.
While we do not anticipate a continuation of the huge gains enjoyed during the
last two years, we believe that further advances in the broad equity market are
likely and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might convince the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers to
be viewed positively by the financial markets.
Your Fund's performance during 1996 has dramatically illustrated the
benefits of owning a diversified portfolio of common stocks. While not every
year can be equally profitable, we believe that equities will remain the
best-performing asset class over the long term.
Additional details about your Fund, including a question and answer
section with your portfolio management team, are provided in this report. We
appreciate your continued confidence in your investment with Van Kampen
American Capital.

Sincerely,

[SIG]
Don G. Powell

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell

President
Van Kampen American Capital
Investment Advisory Corp.

2
<PAGE> 59

PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL VALUE FUND

We recently spoke with the management team of the Van Kampen American Capital
Value Fund about the key events and economic forces that shaped the markets
during the reporting period. The team is led by Bret W. Stanley, co-portfolio
manager, James A. Gilligan, co-portfolio manager, and Alan T. Sachtleben, chief
investment officer of equity investments. The following excerpts reflect their
views on the Fund's performance during the six-month period ended December 31,
1996.

Q WHAT ECONOMIC FACTORS DROVE THE MARKET UPWARD DURING THE REPORTING PERIOD?
HOW DID THEY AFFECT THE FUND?

A Stock market averages continued to advance over the past six months,
buoyed by a favorable economic environment. The economy grew at an
uneven but generally moderate pace during the second half of 1996.
Despite solid economic growth and fairly full resource utilization,
inflation remained at historically low levels. This translated into declining
bond market yields, which, in turn, supported an upward move in stock valuation
levels.
Other positive factors included strong corporate earnings, which came
in slightly higher than expected and supported the ongoing rise in stock
prices. Healthy investment flows into equity mutual funds aided the market as
well. The Fund benefited from these favorable market conditions and from
disciplined stock selection during the period.

Q WHAT IS YOUR INVESTMENT STRATEGY FOR THE VALUE FUND?

A In general, we rely on a "bottom-up" approach to stock selection, meaning
that we concentrate on individual securities, rather than on economic
forecasts or interest rate predictions. Our strategy for managing the
Value Fund involves identifying stocks that we believe are selling at a
discount to their intrinsic value -- in other words, stocks that are
undervalued relative to their worth.
We generally look for three types of value situations. First, we
investigate companies with a high return of capital that are selling at an
attractive valuation. Second, we seek out restructuring businesses that may be
able to increase their earning power substantially by reducing their cost
structure or divesting loss-making operations. Finally, the most common value
opportunity arises when a short-term problem, such as disappointing quarterly
earnings, creates negative investor sentiment in the marketplace. In each of
these situations, we also require a security to have 50 percent appreciation
potential during the two- to three-year expected holding period -- thereby
seeking to increase the return of the Fund while potentially limiting the risk
of a permanent loss of capital.

Q HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED
DECEMBER 31, 1996?

A The Fund recorded a favorable performance, with a total return of 12.61
percent (Class A shares at net asset value). By comparison, the Standard
& Poor's 500-Stock Index produced a total return of 11.65 percent, and the
Standard and Poor's Mid-Cap Index returned

3
<PAGE> 60

9.11 percent during the same period. Keep in mind that both indexes are
broad-based and unmanaged. Neither index includes any commissions or fees that
would be paid by an investor purchasing the securities they represent.

Q WHICH SECTORS AND HOLDINGS POSTED THE GREATEST GAINS OVER THE
REPORTING PERIOD?

A We select securities that meet our valuation criteria, rather than
maintaining defined sector allocations, so our sector weightings are a
reflection of where we found good value on a stock-by-stock basis. Over
the reporting period, the Fund benefited from its holdings in technology,
health care, and producer manufacturing.
In general, we were underweighted in technology, because this sector
had relatively unattractive valuations. However, the Fund did benefit from its
holding in Nokia, a wireless communications equipment company. We also had a
fair weighting in health care, particularly sector-leader HMOs.
A good example of our valuation strategy at work is our holding in
Sunbeam, a home appliance manufacturer. Early in the year, Sunbeam was out of
favor on Wall Street, and its stock was selling at a considerable discount to
its intrinsic value. Later in the year, Sunbeam appointed a new Chief Executive
Officer with a reputation for strong turnaround tactics, and the stock price
rose amidst expectations of future profitability. The stock became one of the
Fund's top performers, rising from approximately $15 per share to $25 per share
by year end -- an appreciation of roughly 65 percent.

Q WHAT IS YOUR OUTLOOK FOR THE FUND OVER THE NEXT SIX MONTHS?

A We are cautiously optimistic about the Fund's performance. We expect a
continuation of the moderate GDP growth and low inflation that have
characterized the domestic economy in recent years. In addition, steady
economic growth may push corporate profits modestly higher in 1997, providing
continued support for stock prices.
However, we see 1997 as a year of increased risks for the stock
market. Valuations are extended, which suggests the potential for a significant
decline in U.S. stock prices. Such a correction might, for example, be
triggered by a return of the rapid economic growth experienced in early 1996,
which could persuade the Fed to raise interest rates. A high valuation
environment can favor value funds, because funds that emphasize undervalued
stocks and are theoretically better positioned to weather a down market than
funds that hold fairly valued securities.
We continue to focus on the disciplined stock selection process that
has served us well since the Fund's inception. We have modestly increased our
weighting in financial services, consumer services and health care, and we
anticipate reducing our holdings in technology and consumer durables.

[SIG]
Alan T. Sachtleben

Chief Investment Officer
Equity Investments

[SIG]
Bret W. Stanley

Co-Portfolio Manager

[SIG]
James A. Gilligan

Co-Portfolio Manager

4
<PAGE> 61
VAN KAMPEN AMERICAN CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS
December 31, 1996 (Unaudited)
================================================================================

<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
CONSUMER DISTRIBUTION 10.1%
AnnTaylor Stores Corp. (b) 480 $ 8,400
Federated Department Stores, Inc. (b) 190 6,484
General Nutrition Companies, Inc. (b) 370 6,244
Talbots, Inc. 270 7,728
---------
28,856
---------

Consumer Durables 5.4%
Newell Co. 230 7,245
Sunbeam Oster, Inc. 320 8,240
---------
15,485
---------

CONSUMER NON-DURABLES 5.2%
Nabisco Holdings Corp., Class A 210 8,164
Philip Morris Cos., Inc. 60 6,757
---------
14,921
---------

CONSUMER SERVICES 5.5%
Bell and Howell Co. (b) 350 8,313
H & R Block, Inc. 260 7,540
---------
15,853
---------

FINANCE 16.2%
Aetna, Inc. 140 11,200
American Bankers Insurance Group, Inc. 100 5,113
Chase Manhattan Corp. 80 7,140
Equitable Iowa Cos. 200 9,175
Horace Mann Educators Corp. 190 7,671
TIG Holdings, Inc. 180 6,097
---------
46,396
---------

HEALTH CARE 14.6%
American Home Products Corp. 100 5,863
Foundation Health Corp. (b) 145 4,604
Nellcor Puritan Bennett, Inc. (b) 340 7,437
PacifiCare Health Systems, Inc., Class B (b) 120 10,230
Teva Pharmaceutical Industries Ltd. - ADR (Israel) 100 5,025
Watson Pharmaceuticals, Inc. (b) 190 8,538
---------
41,697
---------
</TABLE>

See Notes to Financial Statements

<PAGE> 62

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996 (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
PRODUCER MANUFACTURING 19.3%
Belden, Inc. 160 $ 5,920
Century Aluminum Co. 340 5,865
Corning, Inc. 150 6,938
Johnson Controls, Inc. 110 9,116
Keystone International, Inc. 380 7,647
Stewart & Stevenson Services, Inc. 450 13,106
WMX Technologies, Inc. 200 6,525
---------
55,117
---------

RAW MATERIALS/PROCESSING INDUSTRIES 7.1%
Alumax, Inc. (b) 140 4,673
Boise Cascade Corp. 220 6,985
Crown Cork & Seal, Inc. 160 8,700
---------
20,358
---------

TECHNOLOGY 10.9%
Elsag Bailey Process Automation N.V. (b) 330 6,188
General Instrument Corp. (b) 270 5,839
General Signal Corp. 75 3,206
Harris Corp., Delaware 100 6,862
Nokia Corp. - ADR (Finland) 160 9,220
---------
31,315
---------

UTILITIES 4.6%
AT & T Corp. 300 13,050
---------

TOTAL LONG-TERM INVESTMENTS 98.9%
(Cost $250,893) (a) 283,048

OTHER ASSETS IN EXCESS OF LIABILITIES 1.1% 3,276
---------

NET ASSETS 100.0% $ 286,324
=========
</TABLE>

(a) At December 31, 1996, for federal income tax purposes, cost is $250,893,
the aggregate gross unrealized appreciation is $38,675 and the aggregate gross
unrealized depreciation is $6,520 resulting in net unrealized appreciation of
$32,155.
(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

<PAGE> 63
VAN KAMPEN AMERICAN CAPITAL VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>

Investments, at Market Value (Cost $250,893) (Note 1) $ 283,048
Cash 15,333
Receivables:
Distributor 7,117
Investments Sold 6,389
Dividends 353
Unamortized Organizational Expenses (Note 1) 32,069
-----------
Total Assets 344,309
-----------

LIABILITIES:

Payables:
Organizational Expenses 40,000
Income and Capital Gain Distributions 12,660
Deferred Compensation and Retirement Plans (Note 2) 5,325
-----------

Total Liabilities 57,985
-----------

NET ASSETS $ 286,324
===========
NET ASSETS CONSIST OF:
Capital (Note 3) $ 237,074
Net Unrealized Appreciation on Investments 32,155
Accumulated Net Realized Gain on Investments 17,175
Accumulated Distributions in Excess of Net Investment Income (Note 1) (80)
-----------

NET ASSETS $ 286,324
===========

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$127,566 and 10,454 shares of beneficial interest issued and outstanding) $ 12.20
Maximum sales charge (5.75%* of offering price) 0.74
-----------

Maximum offering price to public $ 12.94
===========

Class B Shares:
Net asset value and offering price per share (Based on net assets of $79,379
and 6,500 shares of beneficial interest issued and outstanding) $ 12.21
===========

Class C Shares:
Net asset value and offering price per share (Based on net assets of $79,379
and 6,500 shares of beneficial interest issued and outstanding) $ 12.21
===========

* On sales of $50,000 or more, the sales charge will be reduced.
</TABLE>

See Notes to Financial Statements

<PAGE> 64
VAN KAMPEN AMERICAN CAPITAL VALUE FUND

STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,593
----------
EXPENSES:
Shareholder Services (Note 2) 7,800
Trustees Fees and Expenses (Note 2) 5,001
Amortization of Organizational Expenses (Note 1) 4,032
Audit 3,750
Accounting 1,200
Legal (Note 2) 1,200
Investment Advisory Fee (Note 2) 1,029
Printing 600
Custody (Note 1) 244
----------

Total Expenses 24,856
Less: Fees Deferred and Expenses Reimbursed ($1,029 and $21,811,
respectively) (Note 2) 22,840
Earnings Credits on Cash Balances (Note 1) 244
----------
Net Expenses 1,772
----------

NET INVESTMENT LOSS $ (179)
==========

REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments $ 21,989
----------

Net Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period 20,556
End of the Period 32,155
----------
Net Unrealized Appreciation on Investments During the Period 11,599
----------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 33,588
==========

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 33,409
==========

</TABLE>

See Notes to Financial Statements

<PAGE> 65
VAN KAMPEN AMERICAN CAPITAL VALUE FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1996 and the Period
December 27, 1995 (Commencement of Investment Operations) to June 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended Period Ended
December 31, 1996 June 30, 1996
----------------- -------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income/Loss $ (179) $ 495
Net Realized Gain on Investments 21,989 9,524
Net Unrealized Appreciation on Investments During the Period 11,599 20,556
----------- -----------

Change in Net Assets from Operations 33,409 30,575
----------- -----------

Distributions from Net Investment Income:
Class A Shares (174) -0-
Class B Shares (111) -0-
Class C Shares (111) -0-
----------- -----------
(396) -0-
----------- -----------

Distributions from Net Realized Gain on Investments (Note 1):
Class A Shares (6,330) -0-
Class B Shares (4,004) -0-
Class C Shares (4,004) -0-
----------- -----------
(14,338) -0-
----------- -----------

Total Distributions (14,734) -0-
----------- -----------

NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES 18,675 30,575
----------- -----------

FROM CAPITAL TRANSACTIONS (Note 3):
Proceeds from Shares Sold -0- 35,000
Net Asset Value of Shares Issued Through Dividend Reinvestment 2,074 -0-
----------- -----------

NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 2,074 35,000
----------- -----------

TOTAL INCREASE IN NET ASSETS 20,749 65,575

NET ASSETS:
Beginning of the Period 265,575 200,000
----------- -----------
End of the Period (Including accumulated undistributed net investment
income of ($80) and $495, respectively) $ 286,324 $ 265,575
=========== ===========
</TABLE>

See Notes to Financial Statements

<PAGE> 66

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS A SHARES DECEMBER 31, 1996 JUNE 30, 1996
=========================================================================================================
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.409 $ 10.000
----------- -----------
Net Investment Income/Loss (0.008) 0.018
Net Realized and Unrealized Gain on Investments 1.435 1.391
----------- -----------

Total from Investment Operations 1.427 1.409
----------- -----------

Less:
Distributions from Net Investment Income 0.017 -0-
Distributions from Net Realized Gain on Investments 0.616 -0-
----------- -----------
Total Distributions 0.633 -0-
----------- -----------

Net Asset Value, End of the Period $ 12.203 $ 11.409
------------ -----------

Total Return * (a) 12.61%** 14.00%**

Net Assets at End of the Period (In thousands) $127.6 $117.2

Ratio of Expenses to Average Net Assets* (b) 1.48% 1.38%

Ratio of Net Investment Income to Average Net Assets* -0.13% 0.38%

Portfolio Turnover 66%** 41%**

Average Commission Paid Per Equity Share Traded (c) $0.0302 $0.0250

*If certain expenses had not been waived or reimbursed by VKAC, Total
Return would have been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (b) 18.24% 17.57%

Ratio of Net Investment Income to Average Net Assets -16.89% -15.81%

</TABLE>
** Non-Annualized

(a) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.

(b) The Ratios of Expenses to Average Net Assets do not reflect credits
earned on overnight cash balances. If these credits were reflected as a
reduction of expenses, the ratios would decrease by .18% and .08% for the
periods ended on December 31, 1996 and June 30, 1996, respectively. (Note
1)

(c) Represents the average brokerage commissions paid on equity transactions
entered into during the period where commissions were applicable.

See Notes to Financial Statements

10
<PAGE> 67

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS B SHARES DECEMBER 31, 1996 JUNE 30, 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.410 $ 10.000
------------ -----------
Net Investment Income/Loss (0.008) 0.024
Net Realized and Unrealized Gain on Investments 1.443 1.386
------------ -----------

Total from Investment Operations 1.435 1.410
------------ -----------

Less:
Distributions from Net Investment Income 0.017 -0-
Distributions from Net Realized Gain on Investments 0.616 -0-
------------ -----------
Total Distributions 0.633 -0-
------------ -----------
Net Asset Value, End of the Period $ 12.212 $ 11.410
============ ===========

Total Return * (a) 12.61%** 14.00%**

Net Assets at End of the Period (In thousands) $79.4 $74.2

Ratio of Expenses to Average Net Assets* (b) 1.48% 1.38%

Ratio of Net Investment Income to Average Net Assets* -0.13% 0.44%

Portfolio Turnover 66%** 41%**

Average Commission Paid Per Equity Share Traded (c) $0.0302 $0.0250

*If certain expenses had not been waived or reimbursed by VKAC, Total
Return would have been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (b) 18.24% 17.57%

Ratio of Net Investment Income to Average Net Assets -16.89% -15.75%
</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.

(c) Represents the average brokerage commissions paid on equity transactions
entered into during the period where commissions were applicable.

See Notes to Financial Statements

11
<PAGE> 68

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS C SHARES DECEMBER 31, 1996 JUNE 30, 1996
=====================================================================================================
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.410 $ 10.000
------------ -----------
Net Investment Income/Loss (0.008) 0.024
Net Realized and Unrealized Gain on Investments 1.443 1.386
------------ -----------

Total from Investment Operations 1.435 1.410
------------ -----------

Less:
Distributions from Net Investment Income 0.017 -0-
Distributions from Net Realized Gain on Investments 0.616 -0-
------------ -----------
Total Distributions 0.633 -0-
------------ -----------

Net Asset Value, End of the Period $ 12.212 $ 11.410
============ ===========

Total Return * (a) 12.61%** 14.00%**

Net Assets at End of the Period (In thousands) $79.4 $74.2

Ratio of Expenses to Average Net Assets* (b) 1.48% 1.38%

Ratio of Net Investment Income to Average Net Assets* -0.13% 0.44%

Portfolio Turnover 66%** 41%**

Average Commission Paid Per Equity Share Traded (c) $0.0302 $0.0250

*If certain expenses had not been waived or reimbursed by VKAC, Total
Return would have been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (b) 18.24% 17.57%

Ratio of Net Investment Income to Average Net Assets -16.89% -15.75%
</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.

(c) Represents the average brokerage commissions paid on equity transactions
entered into during the period where commissions were applicable.

See Notes to Financial Statements

<PAGE> 69
VAN KAMPEN AMERICAN CAPITAL
VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital Value Fund (the "Fund") is organized as a series of
Van Kampen American Capital Equity Trust (the "Trust"), 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 long-term growth of capital by investing
primarily in a diversified portfolio of common stocks and other equity
securities of medium and larger capitalization companies. The Fund commenced
investment operations on December 27, 1995, with three classes of common
shares, Class A, Class B and Class C.

The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

A. SECURITY VALUATION - Investments in securities listed on a securities
exchange are valued at their sales price as of the close of such securities
exchange or, if not available, their fair value as determined 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 account along with other investment
companies advised by Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of
the custodian bank. The seller is required to maintain the value of the
underlying security at not less than the repurchase proceeds due the Fund.

C. INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.

D. ORGANIZATIONAL EXPENSES - The Fund will reimburse Van Kampen Kampen
American Capital Distributors, Inc. or its affiliates ("collectively VKAC") for
costs incurred in connection with the Fund's organization in the amount of
$40,000. These costs are being amortized on a straight line basis over the 60
month period ending December 27, 2000. The Adviser has agreed that in the
event any of the initial shares of the Fund originally purchased by VKAC are
redeemed during the amortization period, the Fund will be reimbursed for any
unamortized organizational expenses in the same proportion as the number of
shares redeemed bears to the number of initial shares held at the time of
redemption.

E. FEDERAL INCOME TAXES - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable income
and gains to its shareholders. Therefore, no provision for federal income
taxes is required.

F. DISTRIBUTION OF INCOME AND GAINS - The Fund declares and pays
dividends annually from net investment income and net realized gains on
securities, if any. Distributions from net realized gains for book purposes
may include short-term capital gains. Due to inherent differences in the
recognition of certain expenses under generally accepted accounting principles
and federal income tax purposes, the amount of net investment income may differ
between book and federal income tax purposes for a particular period. These
differences are temporary in nature, but may result in book basis distributions
in excess of net investment income for certain periods.

G. EXPENSE REDUCTIONS - During the six months ended December 31, 1996, the
Fund's custody fee was reduced by $244 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 $500 million .75%

Next $500 million .70%

Over $1 billion .65%
</TABLE>

Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

13
<PAGE> 70
VAN KAMPEN AMERICAN CAPITAL
VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

For the period ended December 31, 1996, the Fund incurred expenses of
approximately $1,200 representing VKAC's cost of providing accounting services
to the Fund. These services are provided by VKAC at cost. All of this cost has
been waived by VKAC.

ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the six months
ended December 31, 1996, the Fund recognized expenses of approximately $7,500,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit. All of this expense has been assumed by VKAC.

Certain officers and trustees of the Fund are also officers and
directors of VKAC. The Fund does not compensate its officers or trustees who
are officers of VKAC.

The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer
all or a portion of their compensation to a later date. The retirement plan
covers those trustees who are not officers of VKAC.

At December 31, 1996, VKAC owned 7,000 shares of Class A and 6,500 shares
each of Classes B and C.

3. CAPITAL TRANSACTIONS

The Fund has outstanding three classes 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 December 31, 1996, capital aggregated $107,074, $65,000 and $65,000
for Classes A, B and C, respectively. For the period ended December 31, 1996,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Dividend Reinvestment:

Class A 177 $ 2,074
======= =======
</TABLE>

At June 30, 1996, capital aggregated $105,000, $65,000 and $65,000 for
Classes A, B and C, respectively. For the period ended June 30, 1996,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Sales:

Class A 3,277 $35,000
======= =======
</TABLE>

Class B and Class C shares are offered without a front end sales charge,
but are subject to a contingent deferred sales charge (CDSC). The CDSC will
be imposed on most redemptions made within five years of the purchase for Class
B and one year of the purchase for Class C as detailed in the following
schedule. The Class B and Class C shares bear the expense of their respective
deferred sales arrangements, including higher distribution and service fees and
incremental transfer agency costs.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
VALUE
-------------------
CLASS B CLASS C
YEAR OF REDEMPTION SHARES SHARES
- ------------------------------------------------
<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>

4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $172,969 and $179,896,
respectively.

The Fund's net assets are subject to annual fees under the Plans of up to
.25% for Class A shares and 1.00% each for Class B and Class C shares. No fees
related to the Plans have been accrued by the Fund as the Fund is currently
owned solely by affiliated persons.

14
<PAGE> 71

VAN KAMPEN AMERICAN CAPITAL VALUE FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
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*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund as defined in the
Investment Company Act of 1940.

- -- denotes a service mark of Van Kampen American Capital
Distributors, 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.

RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25, 1996
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of KPMG Peat Marwick LLP as
independent public accountants. With regard to the approval of a new
investment advisory agreement between Van Kampen American Capital Investment
Advisory Corp. and the Fund, 20,000 shares voted for the proposal, 0 shares
voted against and 0 shares abstained. With regard to the approval of certain
changes to the Fund's fundamental investment policies with respect to
investment in other investment companies, 20,000 shares voted for the proposal,
0 shares voted against and 0 shares abstained. With regard to the ratification
of KPMG Peat Marwick LLP as independent public accountants for the Fund, 20,000
shares voted for the proposal, 0 shares voted against and 0 shares abstained.

15
<PAGE> 72
VAN KAMPEN AMERICAN CAPITAL

GREAT AMERICAN
COMPANIES FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1996

-----A Wealth of Knowledge - A Knowledge of Wealth(sm)-----
VAN KAMPEN AMERICAN CAPITAL

<PAGE> 73

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Portfolio Management Review...................... 3
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 7
Statement of Operations.......................... 8
Statement of Changes in Net Assets............... 9
Financial Highlights............................. 10
Notes to Financial Statements.................... 13
</TABLE>

<PAGE> 74
LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,

We are pleased to report that the Van Kampen American Capital Great
American Companies Fund has continued to generate solid investment performance.
As noted in earlier reports, VK/AC Holding Inc., the parent company of Van
Kampen American Capital, Inc., was acquired by Morgan Stanley Group Inc., a
world leader in asset management and investment banking. The transaction was
completed in October, and we are excited about the opportunities it creates for
investors. As part of the acquisition, Van Kampen American Capital became the
distributor of Morgan Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW
The U.S. economy experienced moderate growth and low inflation during the
reporting period. At the beginning of 1996, economists were concerned that the
tepid economic pace of late 1995 might continue, possibly leading to a
recession by year end. That assumption soon came into question, however, when
non-farm payrolls increased by a stunning 705,000 in February, the biggest
one-month jump in 13 years. Then, a larger-than-expected 4.7 percent growth
rate in real GDP (the nation's gross domestic product, adjusted for inflation)
during the second quarter confirmed that the economy was back in a
strong-growth mode. By summer, the earlier talk of recession and rate cuts had
changed to concerns about economic overheating and the possibility of interest
rate hikes.
Despite mounting evidence of inflation, the Federal Reserve held to a
stable monetary policy, believing the supply-and-demand imbalances in the
commodity markets were temporary and that burdensome consumer debt loads would
eventually slow the economy without the need for higher interest rates. Events
during the second half of 1996 proved the wisdom of Federal Reserve policy;
real GDP growth moderated to 2.0 percent in the third quarter while commodity
prices receded. For the year, core producer prices rose by 0.6 percent, the
second-lowest annual increase on record. Including the volatile food and energy
sectors, however, prices at the retail level rose by 3.3 percent.

MARKET REVIEW
The combination of steady growth and benign inflation provided the
catalyst for equity prices to soar still farther into record territory during
the past six months. For the year, the Standard & Poor's 500-Stock Index and
the Dow Jones Industrial Average posted returns of 22.90 percent and 26.01
percent, respectively, following their 37.44 percent and 33.45 percent advance
in 1995. Downside volatility also returned for the first time since the current
bull market began in October 1990. After climbing steadily through the first
four months of 1996, stock prices suddenly hit turbulence, and the S&P
500-Stock Industrial Index fell by about 12 percent between late May and
mid-July. The NASDAQ market, which includes many technology stocks, experienced
an even stronger correction.

1 Continued on page two
<PAGE> 75

The sharp drop in stock prices was caused by fears that the Fed would
raise interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996 with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

OUTLOOK
We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, while low
inflation should allow stocks to maintain current valuation levels. While we do
not anticipate a continuation of the huge gains enjoyed during the last two
years, we believe that further advances in the broad equity market are likely
and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might convince the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers to
be viewed positively by the financial markets.
Your Fund's performance during 1996 has dramatically illustrated the
benefits of owning a diversified portfolio of common stocks. While not every
year can be equally profitable, we believe that equities will remain the
best-performing asset class over the long term.
Additional details about your Fund, including a question and answer
section with your portfolio management team, are provided in this report. We
appreciate your continued confidence in your investment with Van Kampen
American Capital.

Sincerely,

[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.

<PAGE> 76
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

We recently spoke with the management team of the Van Kampen American Capital
Great American Companies Fund about the key events and economic forces that
shaped the markets during the reporting period. The team includes Evan Harrel,
co-portfolio manager, Stephen L. Boyd, co-portfolio manager, and Alan T.
Sachtleben, chief investment officer of equity investments. The following
excerpts reflect their views on the Fund's performance during the six-month
period ended December 31, 1996.

Q WHAT ECONOMIC FACTORS DROVE THE MARKET UPWARD DURING THE REPORTING PERIOD?
HOW DID THEY AFFECT THE FUND?

A Stock market averages continued to advance over the past six months,
buoyed by a favorable economic environment. The economy grew at an uneven
but generally moderate pace during the second half of 1996. Despite solid
economic growth and fairly full resource utilization, inflation remained at
historically low levels. This translated into declining bond market yields,
which, in turn, supported an upward move in stock valuation levels.
Other positive factors included favorable corporate earnings, which came
in slightly higher than expected and supported the ongoing rise in stock
prices. Healthy investment flows into equity mutual funds aided the market as
well. In general, large, well-established companies generated better sales and
earnings than their smaller competitors, and the Fund's emphasis on
large-capitalization stocks companies worked to its benefit.

Q WHAT IS YOUR INVESTMENT STRATEGY FOR THE GREAT AMERICAN COMPANIES FUND?

A The Fund invests in successful, established U.S. companies that are
traditionally market leaders in their respective fields, and we believe
they should outperform the market as a whole over the long run.
Typically, the performance of these companies has been more stable than the
overall market, and by investing in these securities, we expect to potentially
reduce our level of risk during volatile market environments.
Although quality is our primary consideration, we make sure the securities
in the Fund's portfolio have attractive valuations relative to their growth
rates. Finally, we make sure the Fund is well-diversified across a variety of
market sectors in order to maintain exposure to high-quality companies across a
spectrum of industries.
We use a "bottom-up" stock selection process, which means we evaluate our
acquisitions on a stock-by-stock basis, rather than maintaining defined sector
allocations. Our strategy of purchasing attractively valued, high-quality
companies regardless of sector has served the Fund very well since its
inception.

Q HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED DECEMBER 31,
1996?

A We were pleased with the Fund's total return of 12.50 percent(1) (Class A
shares at net asset value). By comparison, the Standard & Poor's 500-Stock
Index produced a total return of 11.65 percent, and the Lipper Growth Fund
Index, which more closely resembles the Fund, returned 8.82 percent over the
period.

<PAGE> 77

Keep in mind that the S&P 500-Stock Index is a broad-based, unmanaged
index that reflects general stock market performance, and the Lipper index
reflects the average performance of the largest growth funds. Neither index
includes any commissions, sales charges, or fees that would be paid by an
investor purchasing the securities they represents.

Q WHICH SECTORS AND HOLDINGS POSTED THE GREATEST GAINS OVER THE REPORTING
PERIOD?

A Performance was uneven across the various economic sectors. In particular,
earnings among many industrial commodity companies were disappointing, but
profits were strong in energy, finance, technology, and a broad range of
consumer staple and pharmaceutical companies. These profit trends were
generally reflected in stock performance, and the Fund benefited from
substantial exposure to many securities in these sectors.
Our largest weightings as of December 31, 1996, included technology and
financial services, which were two of the best-performing sectors during the
year. Financial services companies enjoyed solid returns, due to the continuing
decline in interest rates, while technology stocks profited from a continuation
of consumer demand for computer products.

Q WHAT IS YOUR OUTLOOK FOR THE FUND OVER THE NEXT SIX MONTHS?

A We are relatively optimistic about the Fund's performance. We expect a
continuation of the moderate GDP growth and low inflation that have
characterized the domestic economy in recent years. In addition, steady
economic growth may push corporate profits modestly higher in 1997, providing
continued support for stock prices.
However, we see 1997 as a year of increased risks for the stock market.
Valuations are extended, which suggests the potential for a significant decline
in U.S. stock prices. Such a correction might, for example, be triggered by a
return of the rapid economic growth experienced in early 1996, which could
persuade the Fed to raise interest rates.
In light of these conditions, we intend to remain focused on stocks that we
believe have competitive positions in the marketplace and are poised to grow
earnings in 1997. Also, we will make sure that valuations appear reasonable
relative to growth rates, because if economic growth slows considerably,
earnings growth will become increasingly difficult to achieve.

[SIG] [SIG] [SIG]
Alan T. Sachtleben Evan Harrel Stephen L. Boyd
Chief Investment Officer Co-Portfolio Manager Co-Portfolio Manager
Equity Investments

4
<PAGE> 78
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 103.1%
CONSUMER DISTRIBUTION 12.5%
Autozone, Inc. (b) 200 $ 5,500
Dollar General Corp. 312 9,984
Duckwall-ALCO Stores, Inc. (b) 300 4,275
Kroger Co. (b) 135 6,277
Safeway, Inc. (b) 100 4,275
------------
30,311
------------

CONSUMER DURABLES 4.4%
Armstrong World Industries, Inc. 100 6,950
Black & Decker Corp. 125 3,766
------------
10,716
------------

CONSUMER NON-DURABLES 11.7%
Anheuser-Busch Cos., Inc. 130 5,200
Avon Products, Inc. 125 7,141
CPC International, Inc. 55 4,262
Kimberly Clark Corp. 50 4,762
Philip Morris Cos., Inc. 30 3,379
Ralcorp Holdings, Inc. 175 3,697
------------
28,441
------------

CONSUMER SERVICES 6.7%
Cox Communications, Inc., Class A (b) 250 5,781
Host Marriott Corp. (b) 300 4,800
TCI Satellite Entertainment, Inc., Class A (b) 40 395
Tele-Communications, Inc., Class A (b) 400 5,225
------------
16,201
------------

ENERGY 10.0%
Amoco Corp. 70 5,635
Exxon Corp. 60 5,880
Unocal Corp. 175 7,109
Williams Companies, Inc. 150 5,625
------------
24,249
------------

FINANCE 13.0%
Aetna, Inc. 75 6,000
American International Group, Inc. 40 4,330
Federal National Mortgage Association 160 5,960
Green Tree Financial Corp. 200 7,725
MGIC Investment Corp. 100 7,600
------------
31,615
------------

HEALTH CARE 1.6%
Merck & Co., Inc. 50 3,963
------------
</TABLE>

See Notes to Financial Statements
5

<PAGE> 79

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
PRODUCER MANUFACTURING 14.0%
Corning, Inc. 150 $ 6,937
Emerson Electric Co. 70 6,772
Honeywell, Inc. 100 6,575
Ingersoll Rand Co. 120 5,340
Kent Electronics Corp. (b) 200 5,150
WMX Technologies, Inc. 100 3,263
-----------
34,037
-----------

RAW MATERIALS/PROCESSING INDUSTRIES 7.9%
Air Products & Chemicals, Inc. 100 6,913
Sherwin Williams Co. 120 6,720
Union Carbide Corp. 135 5,518
-----------
19,151
-----------

TECHNOLOGY 13.7%
America Online, Inc. (b) 100 3,325
Boeing Co. 50 5,319
Intel Corp. 65 8,511
International Business Machines Corp. 40 6,040
Lucent Technologies, Inc. 100 4,625
Texas Instruments, Inc. 85 5,418
-----------
33,238
-----------

TRANSPORTATION 3.1%
Burlington Northern Santa Fe 50 4,319
Southwest Airlines Co. 150 3,319
-----------
7,638
-----------

UTILITIES 4.5%
AT & T Corp. 100 4,350
MCI Communications Corp. 200 6,538
-----------
10,888
-----------

TOTAL COMMON STOCK 103.1%
(Cost $209,036) (a) 250,448
OTHER ASSETS IN EXCESS OF LIABILITIES (3.1%) (7,618)
-----------
NET ASSETS 100.0% $ 242,830
===========
</TABLE>

(a) At December 31, 1996, for federal income tax purposes, cost of investments
is $209,036, the gross aggregrate unrealized appreciation is $43,518 and the
gross aggregate unrealized depreciation is $2,106, resulting in net unrealized
appreciation of $41,412.

(b) Non-income producing security as this stock does not currently declare
dividends.

See Notes to Financial Statements

6
<PAGE> 80
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (Unaudited)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Long-Term Investments, at Market Value (Cost $209,036) (Note 1) $ 250,448
Cash 16,276
Receivables:
Distributor 7,547
Dividends 186
Unamortized Organizational Expenses (Note 1) 32,069
-------------
Total Assets 306,526
-------------

LIABILITIES:

Payables:
Organizational Expenses 40,000
Income Distributions 18,370
Deferred Compensation and Retirement Plans (Note 2) 5,326
-------------

Total Liabilities 63,696
-------------

NET ASSETS $ 242,830
=============
NET ASSETS CONSIST OF:
Capital (Note 3) $ 200,000
Net Unrealized Appreciation on Investments 41,412
Accumulated Net Realized Gain on Investments 1,418
-------------

NET ASSETS $ 242,830
=============

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$84,990 and 7,000 shares of beneficial interest issued and outstanding) $12.14
Maximum sales charge (5.75%* of offering price) 0.74
-------------
Maximum offering price to public $12.88
=============

Class B Shares:
Net asset value and offering price per share (Based on net assets of $78,920
and 6,500 shares of beneficial interest issued and outstanding) $12.14
=============

Class C Shares:
Net asset value and offering price per share (Based on net assets of $78,920
and 6,500 shares of beneficial interest issued and outstanding) $12.14
=============
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

<PAGE> 81
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)

- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,507
-------------
EXPENSES:

Shareholder Services (Note 2) 7,800
Trustees Fees and Expenses (Note 2) 5,003
Amortization of Organizational Expenses (Note 1) 4,031
Audit 3,750
Legal (Note 2) 1,200
Investment Advisory Fee (Note 2) 841
Custody 569
Other 1,800
-------------

Total Expenses 24,994
Less: Fees Waived and Expenses Reimbursed (Note 2) 22,924
Earnings Credits on Cash Balances 569
-------------

Net Expenses 1,501
-------------

NET INVESTMENT INCOME $ 6
=============

REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:

Net Realized Gain on Investments $ 8,814
-------------

Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period 21,475

End of the Period 41,412
-------------

Net Unrealized Appreciation on Investments During the Period 19,937
-------------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 28,751
=============

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 28,757
=============
</TABLE>

See Notes to Financial Statements

8
<PAGE> 82
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1996 and the Period December 27, 1995
(Commencement of Investment Operations) to June 30, 1996 (Unaudited)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1996 JUNE 30, 1996
----------------- -------------
FROM INVESTMENT ACTIVITIES:
<S> <C> <C>
Operations:
Net Investment Income $ 6 $ 373
Net Realized Gain on Investments 8,814 10,594
Net Unrealized Appreciation on Investments During the Period 19,937 21,475
----------- -------------

Change in Net Assets from Operations 28,757 32,442
----------- -------------

Distributions from Net Investment Income:

Class A Shares (133) ---
Class B Shares (123) ---
Class C Shares (123) ---
----------- -------------

(379) ---
----------- -------------

Distributions from Net Realized Gain on Investments (Note 1):

Class A Shares (6,296) ---
Class B Shares (5,847) ---
Class C Shares (5,847) ---
----------- -------------

(17,990) ---
----------- -------------

Total Distributions (18,369) ---
----------- -------------

TOTAL INCREASE IN NET ASSETS 10,388 32,442

NET ASSETS:
Beginning of the Period 232,442 200,000
----------- -------------
End of the Period (Including accumulated undistributed net investment
income of $0 and $373, respectively) $ 242,830 $ 232,442
=========== =============
</TABLE>

See Notes to Financial Statements

<PAGE> 83
VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 27, 1996
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS A SHARES DECEMBER 31, 1996 JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.622 $ 10.000
----------- -----------
Net Investment Income 0.000 0.019
Net Realized and Unrealized Gain on Investments 1.438 1.603
----------- -----------

Total from Investment Operations 1.438 1.622
----------- -----------

Less:
Distributions from Net Investment Income 0.019 ---
Distributions from Net Realized Gain on Investments (Note 1) 0.900 ---
----------- -----------

Total Distributions 0.919 ---
----------- -----------

Net Asset Value, End of the Period $ 12.141 $ 11.622
=========== ===========

Total Return * (a) 12.50%** 16.10%**

Net Assets at End of the Period (In thousands) $85.0 $81.4

Ratio of Expenses to Average Net Assets* (c) 1.72% 1.37%

Ratio of Net Investment Income to Average Net Assets* 0.00% 0.33%

Portfolio Turnover 44%** 48%**

Average Commission Paid Per Equity Share Traded (b) $0.0370 $0.025

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.81% 18.46%

Ratio of Net Investment Income to Average Net Assets (19.08%) (16.76%)
</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) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable.

(c) The Ratios of Expenses to Average Net Assets do not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .47% and .13% for the period ended
on December 31, 1996 and June 30, 1996, respectively. (Note 1)

See Notes to Financial Statements

<PAGE> 84

VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 27, 1996
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS B SHARES DECEMBER 31, 1996 JUNE 30, 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.622 $ 10.000
------------ -----------
Net Investment Income 0.000 0.019
Net Realized and Unrealized Gain on Investments 1.439 1.603
------------ -----------
Total from Investment Operations 1.439 1.622
------------ -----------

Less:
Distributions from Net Investment Income 0.019 ---
Distributions from Net Realized Gain on Investments (Note 1) 0.900 ---
------------ -----------

Total Distributions 0.919 ---
------------ -----------

Net Asset Value, End of the Period $ 12.142 $ 11.622
============ ===========

Total Return * (a) 12.50%** 16.10%**

Net Assets at End of the Period (In thousands) $78.9 $75.5

Ratio of Expenses to Average Net Assets* (c) 1.72% 1.37%

Ratio of Net Investment Income to Average Net Assets* 0.00% 0.33%

Portfolio Turnover 44%** 48%**

Average Commission Paid Per Equity Share Traded (b) $0.0370 $0.025

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.81% 18.46%

Ratio of Net Investment Income to Average Net Assets (19.08%) (16.76%)
</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) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable.

See Notes to Financial Statements

<PAGE> 85

VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

DECEMBER 27, 1996
(COMMENCEMENT
SIX MONTHS OF INVESTMENT
ENDED OPERATIONS) TO
CLASS C SHARES DECEMBER 31, 1996 JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.622 $ 10.000
------------- -----------
Net Investment Income 0.000 0.019
Net Realized and Unrealized Gain on Investments 1.439 1.603
------------- -----------

Total from Investment Operations 1.439 1.622
------------- -----------

Less:
Distributions from Net Investment Income 0.019 ---
Distributions from Net Realized Gain on Investments (Note 1) 0.900 ---
------------- -----------

Total Distributions 0.919 ---
------------- -----------

Net Asset Value, End of the Period $ 12.142 $ 11.622
============= ===========

Total Return * (a) 12.50%** 16.10%**

Net Assets at End of the Period (In thousands) $78.9 $75.5

Ratio of Expenses to Average Net Assets* (c) 1.72% 1.37%

Ratio of Net Investment Income to Average Net Assets* 0.00% 0.33%

Portfolio Turnover 44%** 48%**

Average Commission Paid Per Equity Share Traded (b) $0.0370 $0.025

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.81% 18.46%

Ratio of Net Investment Income to Average Net Assets (19.08%) (16.76%)
</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) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable.

See Notes to Financial Statements

<PAGE> 86
VAN KAMPEN AMERICAN CAPITAL
GREAT AMERICAN COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital Great American Companies Fund (the "Fund") is
organized as a series of Van Kampen American Capital Equity Trust, a Delaware
business trust (the "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 long-term growth of
capital by investing principally in common stocks and other equity securities.
The Fund commenced investment operations on December 27, 1995, with three
classes of common shares, Class A, Class B and Class C shares.
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. Investments in securities not listed on a securities exchange are
valued based on their last quoted bid price or, if not available, their fair
value as determined 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 American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the
underlying security at not less than the repurchase proceeds due the Fund.

C. INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.

D. ORGANIZATIONAL INCOME - The Fund will reimburse Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Fund's organization in the amount of $40,000.
These costs are being amortized on a straight line basis over the 60 month
period ending December 27, 2000. The Adviser has agreed that in the event any
of the initial shares of the Fund originally purchased by VKAC are redeemed
during the amortization period, the Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

E. 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.

F. DISTRIBUTION OF INCOME AND GAINS - The Fund declares and pays dividends
annually from net investment income and, if any, net realized gains.
Distributions from net realized gains for book purpose may include short-term
capital gains. All short-term gains are included in ordinary income for tax
purposes.

G. EXPENSE REDUCTIONS - During the six months ended December 31, 1996, the
Fund's custody fee was reduced by $569 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 $500 million .70 of 1%
Next $500 million .65 of 1%
Over $1 billion .60 of 1%
</TABLE>

Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

13
<PAGE> 87
VAN KAMPEN AMERICAN CAPITAL
GREAT AMERICAN COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

For the six months ended December 31, 1996, the Fund incurred expenses of
$1,200, all of which was subsequently assumed by VKAC, representing VKAC's
cost of providing accounting services to the Fund. These services are provided
by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Advisor,
serves as the shareholder servicing agent for the Fund. For the six months
ended December 31, 1996, the Fund recognized expenses of approximately $7,500,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit. All of this expense has been assumed by VKAC.
Certain officers and trustees of the Fund are also officers and directors
of VKAC. The Fund does not compensate its officers or trustees who are
officers of VKAC.
The Fund has implemented deferred compensation and retirement plans for
its trustees. Under the deferred compensation plan, trustees may elect to
defer all or a portion of their compensation to a later date. The retirement
plan covers those trustees who are not officers of VKAC.
At December 31, 1996, VKAC owned all shares of Classes A, B and C,
respectively.

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 December 31 and June
30, 1996, capital aggregated $70,000, $65,000 and $65,000 for Classes A, B and
C, respectively.
Class B and Class C shares are offered without a front end sales charge,
but are subject to a contingent deferred sales charge (CDSC). The CDSC will be
imposed on most redemptions made within five years of the purchase for Class B
and one year of the purchase for Class C as detailed in the following schedule.
The Class B and C shares bear the expense of their respective deferred sales
arrangements, including higher distribution and service fees and incremental
transfer agency costs.

<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
-------------------
Class B Class C
Year of Redemption Shares Shares
- -------------------- ------- -------
<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>

4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $111,070 and $98,458,
respectively.

5. 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.
The Fund's net assets are subject to annual fees under the Plans of up to
.25% for Class A net assets and 1.00% each for Class B and Class C net assets.
No fees related to the Plans have been accrued by the Fund as the Fund is
currently owned solely by affiliated persons.

<PAGE> 88

VAN KAMPEN AMERICAN CAPITAL GREAT AMERICAN COMPANIES FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
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*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund as defined in
the Investment Company Act of 1940.

- -- denotes a service mark of Van Kampen American Capital
Distributors, 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.

RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25,
1996, where shareholders voted on a new investment advisory agreement, changes
to investment policies and the ratification of KPMG Peat Marwick LLP as
independent public accountants. With regard to the approval of a new
investment advisory agreement between Van Kampen American Capital Investment
Advisory Corp. and the Fund, 20,000 shares voted for the proposal, 0 shares
voted against and 0 shares abstained. With regard to the approval of certain
changes to the Fund's fundamental investment policies with respect to
investment in other investment companies, 20,000 shares voted for the proposal,
0 shares voted against and 0 shares abstained. With regard to the ratification
of KPMG Peat Marwick LLP as independent public accountants for the Fund, 20,000
shares voted for the proposal, 0 shares voted against and 0 shares abstained.

15
<PAGE> 89

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 3
Portfolio Highlights............................. 4
Portfolio Management Review...................... 5
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>

GF SAR 2/97
<PAGE> 90

LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital Growth
Fund has generated solid investment
performance on behalf of our
shareholders. As noted in earlier
reports, VK/AC Holding Inc., the
parent company of Van Kampen American
Capital, Inc., was acquired by Morgan [PHOTO]
Stanley Group Inc., a world leader in
asset management and investment DENNIS J. MCDONNELL AND DON G. POWELL
banking. The transaction was completed
in October, and we are excited about
the opportunities it creates for investors. As part of the acquisition, Van
Kampen American Capital became the distributor of Morgan Stanley retail funds on
January 2, 1997.

ECONOMIC REVIEW

The U.S. economy experienced moderate growth and low inflation during the
reporting period. At the beginning of 1996, economists were concerned that the
tepid economic pace of late 1995 might continue, possibly leading to a recession
by year end. That assumption soon came into question, however, when non-farm
payrolls increased by a stunning 705,000 in February, the biggest one-month jump
in 13 years. Then, a larger-than-expected 4.7 percent rate in real GDP (the
nation's gross domestic product, adjusted for inflation) during the second
quarter confirmed that the economy was back in a strong-growth mode. By summer,
earlier talk of recession and rate cuts had changed to concerns about economic
overheating and the possibility of interest rate hikes.

Despite mounting evidence of inflation, the Federal Reserve Board held to a
stable monetary policy, believing the supply-and-demand imbalances in the
commodity markets were temporary and that burdensome consumer debt loads would
eventually slow the economy without the need for higher interest rates. Events
during the second half of 1996 proved the wisdom of Federal Reserve policy; real
GDP growth moderated to 2.0 percent in the third quarter while commodity prices
receded. For the year, core producer prices rose by 0.6 percent, the
second-lowest annual increase on record. Including the volatile food and energy
sectors, however, prices at the retail level rose by 3.3 percent.

MARKET REVIEW

The combination of steady growth and benign inflation provided the lift for
equity prices to soar still farther into record territory during the past six
months. For the year, the Standard & Poor's 500-Stock Index and the Dow Jones
Industrial Average posted returns of 22.90 percent and 26.01 percent,
respectively, following their 37.44 percent and 33.50 percent advances in 1995.
Downside volatility also returned for the first time since the

Continued on page two

1
<PAGE> 91

current bull market began in October 1990. After climbing steadily through the
first four months of 1996, stock prices suddenly hit turbulence, with the S&P
500-Stock Industrial Index falling by about 12 percent between late May and
mid-July. The NASDAQ market, which includes many technology stocks, experienced
an even stronger correction.
The sharp drop in stock prices was caused by fears that the Fed would raise
interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996, with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

OUTLOOK
We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, while low
inflation should allow stocks to maintain current valuation levels. While we do
not anticipate a continuation of the huge gains enjoyed during the last two
years, we believe that further advances in the broad equity market are likely
and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might persuade the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers will
be to the financial market's liking.
Your Fund's performance during 1996 has illustrated the benefits of owning a
diversified portfolio of common stocks. While not every year can be equally
profitable, we believe that equities will remain the best-performing asset class
over the long-term.
Additional details about your Fund, including a question and answer section
with your portfolio management team, are provided in this report. We appreciate
your continued confidence in your investment with Van Kampen American Capital.

Sincerely,

[SIG]
Don G. Powell

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell

President
Van Kampen American Capital
Investment Advisory Corp.

2
<PAGE> 92

PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1996

VAN KAMPEN AMERICAN CAPITAL GROWTH FUND

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
Six-month total return based on NAV(1)... 19.84% 19.84% 19.84%
Six-month total return(2)................ 12.30% 14.19% 18.19%
One-year total return(2)................. 52.74% 57.99% 60.99%
Life-of-Fund average annual total
return(2).............................. 52.60% 58.08% 61.72%
Commencement Date........................ 12/27/95 12/27/95 12/27/95
</TABLE>

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.

During this period, certain fees were waived and expenses were reimbursed by the
Fund's adviser which had a material effect on the Fund's total return. The Fund
commenced operation in 1995 with limited capital invested primarily by the
adviser's affiliates. As of December 31, 1996, the Fund had not engaged in a
broad continuous public offering, had limited public investors, and was not
subject to redemption requests. The Fund's adviser believes that the portfolio
has been managed substantially the same as if the Fund had opened for investment
to all public investors. No assurance can be given, however, that the Fund's
investment performance would have been the same during the period if the Fund
had been broadly distributed. Past performance cannot guarantee future results.

3
<PAGE> 93

PORTFOLIO HIGHLIGHTS

VAN KAMPEN AMERICAN CAPITAL GROWTH FUND

TOP TEN HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996 AS OF JUNE 30, 1996
<S> <C> <C>
Philip Morris Cos.,
Inc. ............... 5.2% ................. 2.8%
Conseco, Inc. ........ 3.2% ................. N/A
Federal National
Mortgage Assn. ..... 3.1% ................. N/A
Sun Microsystems,
Inc. ............... 2.4% ................. 2.0%
ESC Medical Systems
Ltd. .............. 2.4% ................. 1.4%
Altera Corp. ......... 2.3% ................. N/A
Aspect
Telecommunications
Corp. .............. 2.3% ................. 1.7%
Money Store, Inc. .... 2.3% ................. 1.5%
Ascend Communications,
Inc. ............... 2.3% ................. 1.1%
Safeway, Inc. ........ 2.3% ................. N/A
</TABLE>

N/A = Not Applicable

TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996 AS OF JUNE 30, 1996
<S> <C> <C>
Technology ........... 32% .................. 41%
Health Care .......... 17% .................. 10%
Finance .............. 17% .................. 7%
Consumer Services .... 12% .................. 13%
Consumer
Distribution ....... 12% .................. 7%
</TABLE>

4
<PAGE> 94

PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL GROWTH FUND

We recently spoke with the management team of the Van Kampen American Capital
Growth Fund about the key events and economic forces that shaped the markets
during the past six months. The team is led by Jeff D. New, portfolio manager,
and Alan T. Sachtleben, chief investment officer for equity investments. The
following excerpts reflect their view on the Fund's performance during the
six-month period ended December 31, 1996.

Q WHAT ECONOMIC FACTORS DROVE THE STOCK MARKET UPWARD DURING THE PAST SIX
MONTHS?

A The stock market averages continued to advance during the past six months,
buoyed by a favorable economic environment. The economy grew at an uneven
but generally modest pace during the second half of 1996. A sluggish third
quarter was followed by a strong fourth quarter, bolstered by increased export
demand. Corporate earnings were favorable and achieved levels that were slightly
better than what had been expected at the beginning of the period. This provided
support for the ongoing rise in stock prices. The market was further aided by
healthy investment flows into equity mutual funds. In general, large,
well-established companies generated better sales and earnings than their
smaller competitors, and the Fund's emphasis on these companies worked to its
benefits.
Subdued inflation provided further support for the securities markets.
Despite continuing economic growth, and nearly full resource utilization,
inflation remained at historically low levels. This translated into declining
bond market yields, which supported a sympathetic upward move in stock valuation
levels.
While profits advanced nicely for the economy as a whole, performance was
uneven among the various economic sectors. Historically, stocks of growth
companies such as consumer non-durables, finance and technology have done well
in this type of market.

Q DURING THE REPORTING PERIOD, WHAT STRATEGIES DID YOU UTILIZE TO MEET THE
FUND'S OBJECTIVE?

A We have an extremely disciplined stock selection process: we look for
companies with positive future fundamentals at an attractive current
price. To that end, we actively search for stocks that possess one of the
following traits: consistent or accelerating earnings growth, a positive
fundamental change (such as new management), or better-than-expected
fundamentals. We only want to own stocks with at least one of these
characteristics and with an attractive or reasonable price.
We also believe strongly in talking with the management teams behind the
companies in whose stocks we invest. This is the single most valuable way in
which we spend our time. These discussions help us determine if a company has an
effective business philosophy and if management is disciplined in implementing
it. During any given year, we will have in-depth discussions with 300 to 400
management teams.

5
<PAGE> 95

Q WHICH OF THE FUND'S HOLDINGS POSTED THE GREATEST GAINS DURING THE
REPORTING PERIOD?

A By the end of the year, the Fund's largest weightings were in the
technology, financial services, and health-care sectors, some of the
best-performing sectors in 1996. We focused on these sectors because many
technology and financial services companies exhibited the two features we look
for when selecting stocks for the portfolio: positive fundamentals (including
strong future earnings potential) and attractive price levels. In the technology
sector, companies such as BMC Software, a computer software publisher, and
Aspect Telecommunications, a telecommunications equipment company, both had a
positive impact on the Fund. In terms of price appreciation, these companies
were up 38 percent and 28 percent, respectively, for the six-month period ended
December 31, 1996.
In the financial services arena, several companies were consolidating and
buying back stock, which created attractive valuations and enhanced the
prospects of strong future earnings growth. Two standouts in this sector were
Conseco, a life insurance company, and SunAmerica, a financial services company.
In terms of price appreciation, these companies were up 59 percent and 55
percent, respectively, for the period. These securities were not necessarily
owned during the entire six-month period. For additional Fund portfolio
highlights, please refer to page four.

Q HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED DECEMBER 31, 1996?

A The Fund achieved a six-month total return of 19.84 percent(1) (Class A
shares at net asset value). By comparison, the Standard & Poor's 500-Stock
Index returned 11.65 percent, and the Lipper Growth Fund Average produced
a total return of 8.29 percent for the same period. Longer term, we are pleased
to report that the Fund achieved a 12-month total return of 61.99 percent(1)
(Class A shares at net asset value) for the period ended December 31, 1996.
The S&P 500-Stock Index is a broad-based, unmanaged index that reflects the
general performance of the stock market, and the Lipper Growth Fund Average
reflects the average performance of all growth funds. Keep in mind that these
indices are unmanaged statistical composites that do not reflect any
commissions, fees, or sales charges that would be incurred by an investor
purchasing the securities they represent. Please refer to the chart on page
three for additional Fund performance results.

Q WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEXT SIX MONTHS?

A We expect a continuation of the moderate growth and low inflation that
have characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, providing
continued support for stock prices. However, we see 1997 as a year of increased
risks for the stock market. Valuations are extended, which suggests the
potential for a significant decline in U.S. stock prices. Such a correction
might, for example, be triggered by a return of the rapid GDP

6
<PAGE> 96

growth experienced during the first half of 1996, which could persuade the Fed
to raise interest rates.
With this in mind, a review of your portfolio's asset mix may be warranted
at this time. Stock prices have appreciated substantially over the last six
years and dramatically over the last two. This performance may well have
increased your portfolio's equity exposure above levels you considered
appropriate a few years ago.

[SIG.]

Alan T. Sachtleben
Chief Investment Officer
Equity Investments

[SIG.]

Jeff D. New
Portfolio Manager

Please see footnotes on page three

7
<PAGE> 97

PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 96.2%
CONSUMER DISTRIBUTION 11.5%
Bed Bath & Beyond, Inc. (b)................................. 550 $ 13,338
CDW Computer Centers, Inc. (b).............................. 300 17,794
Eagle Hardware & Garden (b)................................. 800 16,600
Just For Feet, Inc. (b)..................................... 500 13,125
Safeway, Inc. (b)........................................... 580 24,795
TJX Cos., Inc. ............................................. 500 23,687
U.S. Office Products Co. (b)................................ 600 20,475
----------
129,814
----------
CONSUMER NON-DURABLES 6.9%
Fila Holdings S.p.A. - ADR (Italy) (b)...................... 100 5,813
Nautica Enterprises, Inc. (b)............................... 140 3,535
Philip Morris Cos., Inc. ................................... 500 56,312
Tommy Hilfiger Corp. (b).................................... 250 12,000
----------
77,660
----------
CONSUMER SERVICES 11.2%
Boston Chicken, Inc. (b).................................... 550 19,731
HFS, Inc. (b)............................................... 300 17,925
Meredith Corp. ............................................. 350 18,463
Metro Networks, Inc. (b).................................... 900 22,725
Rental Service Corp. (b).................................... 900 24,750
Univision Communications, Inc., Class A (b)................. 600 22,200
----------
125,794
----------
FINANCE 16.1%
Aames Financial Corp. ...................................... 650 23,319
Conseco, Inc. .............................................. 550 35,062
Federal National Mortgage Association (b)................... 900 33,525
Green Tree Financial Corp. ................................. 500 19,313
Money Store, Inc. .......................................... 900 24,862
RAC Financial Group, Inc. (b)............................... 1,100 23,237
SunAmerica, Inc. ........................................... 500 22,188
----------
181,506
----------
HEALTHCARE 16.1%
ESC Medical Systems, Ltd. (b)............................... 1,000 25,500
Health Management Association, Inc. - Class A (b)........... 700 15,750
Healthsouth Corp. (b)....................................... 600 23,175
Johnson & Johnson........................................... 350 17,413
Medicis Pharmaceutical Corp. - Class A (b).................. 400 17,600
Merck & Co., Inc. .......................................... 250 19,812
</TABLE>

See Notes to Financial Statements

8
<PAGE> 98

<TABLE>
<CAPTION>
Security
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>

HEALTHCARE (CONTINUED)

Pfizer, Inc. ............................................... 250 $ 20,719
Renal Treatment Centers, Inc. (b)........................... 700 17,850
Universal Health Services, Inc. - Class B (b)............... 800 22,900
----------
180,719
----------
PRODUCER MANUFACTURING 2.0%
United Waste Systems, Inc. (b).............................. 650 22,344
----------
RAW MATERIALS/PROCESSING INDUSTRIES 1.8%
Praxair, Inc. .............................................. 450 20,756
----------
TECHNOLOGY 30.6%
3Com Corp. (b).............................................. 190 13,941
ADC Telecommunications, Inc. (b)............................ 400 12,450
Altera Corp. (b)............................................ 350 25,441
Ascend Communications, Inc. (b)............................. 400 24,850
Aspect Telecommunications Corp. (b)......................... 400 25,400
BMC Industries, Inc. ....................................... 600 18,900
BMC Software, Inc. (b)...................................... 550 22,756
Cisco Systems, Inc. (b)..................................... 350 22,269
Compuware Corp. (b)......................................... 300 15,037
DSP Communications, Inc. (b)................................ 1,000 19,375
Intel Corp. ................................................ 150 19,641
McAfee Associates, Inc. (b)................................. 270 11,880
National Instruments Corp. (b).............................. 650 20,800
PairGain Technologies, Inc. (b)............................. 400 12,175
Read-Rite Corp. (b)......................................... 500 12,625
Sun Microsystems, Inc. (b).................................. 1,000 25,687
Tellabs, Inc. (b)........................................... 400 15,050
Tollgrade Communications, Inc. (b).......................... 220 6,820
Viasoft, Inc. (b)........................................... 200 9,450
Wind River Systems, Inc. (b)................................ 200 9,475
----------
344,022
----------
TOTAL LONG-TERM INVESTMENTS 96.2%
(Cost $1,028,895) (a)............................................. 1,082,615
OTHER ASSETS IN EXCESS OF LIABILITIES 3.8%......................... 42,704
----------
NET ASSETS 100.0%.................................................. $1,125,319
==========
</TABLE>

(a) At December 31, 1996, for federal income tax purposes cost is $1,028,895;
the aggregate gross unrealized appreciation is $70,654 and the aggregate
gross unrealized depreciation is $16,934, resulting in net unrealized
appreciation of $53,720.

(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

9
<PAGE> 99

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $1,028,895)
(Note 1).................................................. $1,082,615
Cash........................................................ 163,480
Receivables:
Investments Sold.......................................... 39,772
Dividends................................................. 642
Unamortized Organizational Expenses (Note 1)................ 32,069
Other....................................................... 6,728
----------
Total Assets............................................ 1,325,306
----------
LIABILITIES:
Payables:
Investments Purchased..................................... 109,482
Income and Capital Gain Distributions..................... 45,155
Organizational Expense.................................... 40,000
Deferred Compensation and Retirement Plans (Note 2)......... 5,350
----------
Total Liabilities....................................... 199,987
----------
NET ASSETS.................................................. $1,125,319
==========
NET ASSETS CONSIST OF:
Capital (Note 3)............................................ $1,037,676
Net Unrealized Appreciation on Investments.................. 53,720
Accumulated Net Realized Gain on Investments................ 36,157
Accumulated Net Investment Loss............................. (2,234)
----------
NET ASSETS.................................................. $1,125,319
==========
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,078,175 and 68,789 shares of beneficial
interest issued and outstanding)........................ $ 15.67
Maximum sales charge (5.75%* of offering price)......... .96
----------
Maximum offering price to public........................ $ 16.63
==========
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $23,599 and 1,506 shares of beneficial
interest issued and outstanding)........................ $ 15.67
==========
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $23,545 and 1,503 shares of beneficial
interest issued and outstanding)........................ $ 15.67
==========
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements

10
<PAGE> 100

STATEMENT OF OPERATIONS

For the Six Months Ended December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 1,134
-------
EXPENSES:
Shareholder Services (Note 2)............................... 7,800
Trustees Fees and Expenses (Note 2)......................... 5,027
Amortization of Organizational Expenses (Note 1)............ 4,031
Audit Expense............................................... 3,750
Investment Advisory Fee (Note 2)............................ 1,942
Accounting.................................................. 1,200
Legal (Note 2).............................................. 1,200
Custody..................................................... 922
Printing.................................................... 600
Other....................................................... 167
-------
Total Expenses.......................................... 26,639
Less:
Fees Deferred and Expenses Reimbursed ($1,942 and
$20,407, respectively).............................. 22,349
Credits Earned on Cash Balances (Note 1).............. 922
=======
Net Expenses.......................................... 3,368
-------
NET INVESTMENT LOSS......................................... $(2,234)
=======
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments............................ $60,859
-------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 58,219
End of the Period......................................... 53,720
-------
Net Unrealized Depreciation on Investments During the
Period.................................................... (4,499)
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. $56,360
=======
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $54,126
=======
</TABLE>

See Notes to Financial Statements

11
<PAGE> 101

STATEMENT OF CHANGES IN NET ASSETS

For the Six Months Ended December 31, 1996 and the Period from
December 27, 1995 (Commencement of Investment Operations)
to June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months Ended Period Ended
December 31, 1996 June 30, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss......................................... $ (2,234) $ (1,030)
Net Realized Gain on Investments............................ 60,859 23,514
Net Unrealized Appreciation/Depreciation on Investments
During the Period......................................... (4,499) 58,219
---------- --------
Change in Net Assets from Operations........................ 54,126 80,703
---------- --------
Distributions from Net Realized Gain on Investments (Note
1):
Class A Shares............................................ (45,210) -0-
Class B Shares............................................ (988) -0-
Class C Shares............................................ (988) -0-
---------- --------
(47,186) -0-
---------- --------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES......... 6,940 80,703
---------- --------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold................................... 964,248 35,843
Net Asset Value of Shares Issued Through Dividend
Reinvestment.............................................. 2,031 -0-
Cost of Shares Repurchased.................................. (164,446) -0-
---------- --------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS.......... 801,833 35,843
---------- --------
TOTAL INCREASE IN NET ASSETS................................ 808,773 116,546
NET ASSETS:
Beginning of the Period..................................... 316,546 200,000
---------- --------
End of the Period (Including accumulated net investment loss
of $2,234 and $0, respectively)........................... $1,125,319 $316,546
========== ========
</TABLE>

See Notes to Financial Statements

12
<PAGE> 102

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Six Months Ended Investment Operations)
Class A Shares December 31, 1996(a) to June 30, 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period......... $ 13.696 $10.000
-------- -------
Net Investment Loss............................ (.065) (.044)
Net Realized and Unrealized Gain on
Securities................................... 2.702 3.740
-------- -------
Total from Investment Operations................. 2.637 3.696
Less Distributions from Net Realized Gain on
Investments (Note 1)........................... .659 -0-
-------- -------
Net Asset Value, End of the Period............... $ 15.674 $13.696
======== =======
Total Return* (b)................................ 19.84%** 37.00%**
Net Assets at End of the Period (In thousands)... $1,078.2 $138.5
Ratio of Expenses to Average Net Assets* (c)..... 1.66% 1.46%
Ratio of Net Investment Income to Average Net
Assets*........................................ (.82%) (.79%)
Portfolio Turnover............................... 77%** 94%**
Average Commission Paid Per Equity Share Traded
(d)............................................ $ .0292 $ .0280
* If certain fees had not been assumed by VKAC,
Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net Assets (c)...... 10.28% 15.69%
Ratio of Net Investment Income to Average Net
Assets......................................... (9.45%) (15.02%)
</TABLE>

** Non-Annualized

(a) Based on average 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) The Ratios of Expenses to Average Net Assets do not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .36% and .16% for the periods
ended on December 31, 1996 and June 30, 1996, respectively. (Note 1)

(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.

See Notes to Financial Statements

13
<PAGE> 103

FINANCIAL HIGHLIGHTS (CONTINUED)

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Six Months Ended Investment Operations)
Class B Shares December 31, 1996(a) to June 30, 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period......... $13.695 $10.000
------- -------
Net Investment Loss............................ (.067) (.045)
Net Realized and Unrealized Gain on
Securities................................... 2.701 3.740
------- -------
Total from Investment Operations................. 2.634 3.695
Less Distributions from Net Realized Gain on
Investments (Note 1)........................... .659 -0-
------- -------
Net Asset Value, End of the Period............... $15.670 $13.695
======= =======
Total Return* (b)................................ 19.84%** 37.00%**
Net Assets at End of the Period (In thousands)... $23.6 $89.0
Ratio of Expenses to Average Net Assets* (c)..... 1.65% 1.46%
Ratio of Net Investment Income to Average Net
Assets*........................................ (.96%) (.74%)
Portfolio Turnover............................... 77%** 94%**
Average Commission Paid Per Equity Share Traded
(d)............................................ $ .0292 $ .0280
* If certain fees had not been assumed by VKAC,
Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net Assets (c)...... 10.28% 15.70%
Ratio of Net Investment Income to Average Net
Assets......................................... (9.59%) (14.97%)
</TABLE>

** Non-Annualized

(a) Based on average 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) The Ratios of Expenses to Average Net Assets do not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .36% and .16% for the periods
ended on December 31, 1996 and June 30, 1996, respectively. (Note 1)

See Notes to Financial Statements

14
<PAGE> 104

FINANCIAL HIGHLIGHTS (CONTINUED)

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
December 27, 1995
(Commencement of
Six Months Ended Investment Operations)
Class C Shares December 31, 1996(a) to June 30, 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period......... $13.695 $10.000
------- -------
Net Investment Loss............................ (.067) (.045)
Net Realized and Unrealized Gain on
Securities................................... 2.696 3.740
------- -------
Total from Investment Operations................. 2.629 3.695
Less Distributions from Net Realized Gain on
Investments (Note 1)........................... .659 -0-
------- -------
Net Asset Value, End of the Period............... $15.665 $13.695
======= =======
Total Return* (b)................................ 19.84%** 37.00%**
Net Assets at End of the Period (In thousands)... $23.5 $89.0
Ratio of Expenses to Average Net Assets* (c)..... 1.65% 1.46%
Ratio of Net Investment Income to Average Net
Assets*........................................ (.96%) (.74%)
Portfolio Turnover............................... 77%** 94%**
Average Commission Paid Per Equity Share Traded
(d)............................................ $ .0292 $ .0280
* If certain fees had not been assumed by VKAC,
Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net Assets (c)...... 10.28% 15.70%
Ratio of Net Investment Income to Average Net
Assets......................................... (9.59%) (14.97%)
</TABLE>

** Non-Annualized

(a) Based on average 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) The Ratios of Expenses to Average Net Assets do not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .36% and .16% for the periods
ended on December 31, 1996 and June 30, 1996, respectively. (Note 1)

See Notes to Financial Statements

15
<PAGE> 105

NOTES TO FINANCIAL STATEMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital 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's investment objective is to seek capital growth by investing primarily in
a diversified portfolio of common stocks and other equity securities of growth
companies. The Fund commenced investment operations on December 27, 1995, with
three classes of common shares, Class A, Class B and Class C.

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.
Investments in securities not listed on a securities exchange are valued based
on their last quoted bid price or, if not available, their fair value as
determined 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 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 American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.

16
<PAGE> 106

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

C. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.

D. ORGANIZATIONAL EXPENSES--The Fund has agreed to reimburse Van Kampen American
Capital Distributors, Inc. or its affiliates ("collectively VKAC") for costs
incurred in connection with the Fund's organization in the amount of $40,000.
These costs are being amortized on a straight line basis over the 60 month
period ending December 27, 2000. The Adviser has agreed that in the event any of
the initial shares of the Fund originally purchased by VKAC are redeemed during
the amortization period, the Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually. Distributions from net realized gains for book purposes may include
short-term capital gains, which are included in ordinary income for tax
purposes.

G. EXPENSE REDUCTIONS--During the six months ended December 31, 1996, the Fund's
custody fee was reduced by $922 as a result of credits earned on overnight
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 $500 million...................................... .75 of 1%
Next $500 million...................................... .70 of 1%
Over $1 billion........................................ .65 of 1%
</TABLE>

17
<PAGE> 107

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

VKAC has agreed to waive fees or reimburse certain expenses through June 30,
1998 to the extent necessary so that the net expense based upon Average Net
Assets would not exceed 1.30%, 2.05% and 2.05% for Classes A, B and C shares,
respectively.

Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

For the six months ended December 31, 1996, the Fund recognized expenses of
approximately $1,200 representing VKAC's cost of providing accounting services
to the Fund. These services are provided by VKAC at cost. All of this cost has
been waived by VKAC.

ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the six months ended
December 31, 1996, the Fund recognized expenses of approximately $7,500,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit. All of this expense has been assumed by VKAC.

Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers of
VKAC.

At December 31, 1996, VKAC owned 65,572 shares of Class A and 1,500 shares
each of Classes B and C, respectively.

18
<PAGE> 108

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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.

For the six months ended December 31, 1996, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A....................................... 58,572 $ 964,100
Class B....................................... 6 100
Class C....................................... 3 48
------ ---------
Total Sales..................................... 58,581 $ 964,248
====== =========
Dividend Reinvestment:
Class A....................................... 132 $ 2,031
Class B....................................... -0- -0-
Class C....................................... -0- -0-
------ ---------
Total Dividend Reinvestment..................... 132 $ 2,031
====== =========
Repurchases:
Class A....................................... (28) $ (346)
Class B....................................... (5,000) (82,050)
Class C....................................... (5,000) (82,050)
------- ---------
Total Repurchases............................... (10,028) $(164,446)
====== =========
</TABLE>

For the period ended June 30, 1996, transactions were as follows:

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC for Class B and C
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. The Class B and C

19
<PAGE> 109

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

shares bear the expense of their respective deferred sales arrangements,
including higher distribution and service fees and incremental transfer agency
costs.

<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>

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $1,105,724 and $376,876, respectively.

5. DISTRIBUTION AND SERVICE PLANS

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. No fees related to the
Plans have been accrued by the Fund as the Fund is currently owned solely by
affiliated persons.

20
<PAGE> 110

VAN KAMPEN AMERICAN CAPITAL GROWTH FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN

LINDA HUTTON HEAGY

R. CRAIG KENNEDY

DENNIS J. MCDONNELL*

JACK E. NELSON

JEROME L. ROBINSON

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*

ALAN T. SACHTLEBEN*

PAUL R. WOLKENBERG*
Vice Presidents
INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund, as defined in the Investment Company Act of
1940.

(SM) denotes a service mark of Van Kampen American Capital Distributors, Inc.
RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25, 1996 where
shareholders voted on a new investment advisory agreement, changes to investment
policies and the ratification of KPMG Peat Marwick LLP as independent public
accountants. With regard to the approval of a new investment advisory agreement
between Van Kampen American Capital Investment Advisory Corp. and the Fund,
20,000 shares voted for the proposal, 0 shares voted against and 0 shares
abstained. With regard to the approval of certain changes to the Fund's
fundamental investment policies with respect to investment in other investment
companies, 20,000 shares voted for the proposal, 0 shares voted against and 0
shares abstained. With regard to the ratification of KPMG Peat Marwick LLP as
independent public accountants for the Fund, 20,000 shares voted for the
proposal, 0 shares voted against and 0 shares abstained.
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.

21
<PAGE> 111
VAN KAMPEN AMERICAN CAPITAL

PROSPECTOR FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1996

-----A Wealth of Knowledge - A Knowledge of Wealth(sm)-----
VAN KAMPEN AMERICAN CAPITAL
<PAGE> 112

TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . 1
Portfolio Management Review . . . . . . . . . . . . . . . . . . . 3
Portfolio of Investments . . . . . . . . . . . . . . . . . . . . 5
Statement of Assets and Liabilities . . . . . . . . . . . . . . . 8
Statement of Operations . . . . . . . . . . . . . . . . . . . . . 9
Statement of Changes in Net Assets . . . . . . . . . . . . . . 10
Financial Highlights . . . . . . . . . . . . . . . . . . . . . 11
Notes to Financial Statements . . . . . . . . . . . . . . . . . 14

</TABLE>

<PAGE> 113
LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,

We are pleased to report that the Van Kampen American Capital
Prospector Fund has continued to generate solid investment performance. As
noted in earlier reports, VK/AC Holding Inc., the parent company of Van Kampen
American Capital, Inc., was acquired by Morgan Stanley Group Inc., a world
leader in asset management and investment banking. The transaction was
completed in October, and we are excited about the opportunities it creates for
investors. As part of the acquisition, Van Kampen American Capital became the
distributor of Morgan Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW
The U.S. economy experienced moderate growth and low inflation during the
reporting period. At the beginning of 1996, economists were concerned that the
tepid economic pace of late 1995 might continue, possibly leading to a
recession by year end. That assumption soon came into question, however, when
non-farm payrolls increased by a stunning 705,000 in February, the biggest
one-month jump in 13 years. Then, a larger-than-expected 4.7 percent growth
rate in real GDP (the nation's gross domestic product, adjusted for inflation)
during the second quarter confirmed that the economy was back in a
strong-growth mode. By summer, the earlier talk of recession and rate cuts had
changed to concerns about economic overheating and the possibility of interest
rate hikes.
Despite mounting evidence of inflation, the Federal Reserve held to a
stable monetary policy, believing the supply-and-demand imbalances in the
commodity markets were temporary and that burdensome consumer debt loads would
eventually slow the economy without the need for higher interest rates. Events
during the second half of 1996 proved the wisdom of Federal Reserve policy;
real GDP growth moderated to 2.0 percent in the third quarter while commodity
prices receded. For the year, core producer prices rose by
0.6 percent, the second-lowest annual increase on record. Including the
volatile food and energy sectors, however, prices at the retail level rose by
3.3 percent.

MARKET REVIEW
The combination of steady growth and benign inflation provided the
catalyst for equity prices to soar still farther into record territory during
the past six months. For the year, the Standard & Poor's 500-Stock Index and
the Dow Jones Industrial Average posted returns of
22.90 percent and 26.01 percent, respectively, following their 37.44 percent
and 33.45 percent advance in 1995. Downside volatility also returned for the
first time since the current bull market began in October 1990. After climbing
steadily through the first four months of 1996, stock prices suddenly hit
turbulence and the S&P 500-Stock Industrial Index fell by about
12 percent between late May and mid-July. The NASDAQ market, which includes
many technology stocks, experienced an even stronger correction.

Continued on page two

<PAGE> 114

The sharp drop in stock prices was caused by fears that the Fed would
raise interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996, with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

OUTLOOK
We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady economic
growth may push corporate profits modestly higher during 1997, while low
inflation should allow stocks to maintain current valuation levels. While we do
not anticipate a continuation of the huge gains enjoyed during the last two
years, we believe that further advances in the broad equity market are likely
and warranted.
We caution investors to expect bumps along the way. Stock prices have
appreciated dramatically during the past six years, and a correction is not
outside the realm of possibility. One trigger for a short-term decline would be
a return of the rapid GDP growth experienced during the first half of 1996, a
development that might convince the Fed to raise interest rates. However, our
view is that any such burst of above-trend economic strength would be
short-lived. During the full year, we expect real GDP and inflation numbers to
be viewed positively by the financial markets.
Your Fund's performance during 1996 has dramatically illustrated the
benefits of owning a diversified portfolio of common stocks. While not every
year can be equally profitable, we believe that equities will remain the
best-performing asset class over the long term.
Additional details about your Fund, including a question and answer
section with your portfolio management team, are provided in this report. We
appreciate your continued confidence in your investment with Van Kampen
American Capital.

Sincerely,

[SIG]
Don G. Powell

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell

President
Van Kampen American Capital
Investment Advisory Corp.

2
<PAGE> 115
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

We recently spoke with the management team of the Van Kampen American Capital
Prospector Fund about the key events and economic forces that shaped the
markets during the reporting period. The team is led by B. Robert Baker, Jr.,
co-portfolio manager, Jason Leder, co-portfolio manager, and Alan T.
Sachtleben, chief investment officer of equity investments. The following
excerpts reflect their views on the Fund's performance during the six-month
period ended December 31, 1996.

Q WHAT ECONOMIC FACTORS DROVE THE MARKET UPWARD DURING THE REPORTING
PERIOD? HOW DID THEY AFFECT THE FUND?

A Stock market averages continued to advance over the past six months, buoyed
by a favorable economic environment. The economy grew at an uneven but
generally moderate pace during the second half of 1996. Despite solid
economic growth and fairly full resource utilization, inflation remained at
historically low levels. This translated into declining bond market yields,
which, in turn, supported an upward move in stock valuation levels.
Other positive factors included favorable corporate earnings, which came
in slightly higher than expected and supported the ongoing rise in stock
prices. Healthy investment flows into equity mutual funds aided the market as
well. In general, large, well-established companies generated better sales and
earnings than their smaller competitors, and the Fund's emphasis on these
companies worked to its benefit.

Q WHAT IS YOUR INVESTMENT STRATEGY FOR THE PROSPECTOR FUND?

A In general, we rely on a "bottom-up" approach to stock selection, meaning
that we concentrate on individual securities, rather than on economic
forecasts or interest rate predictions. Our strategy for managing the
Prospector Fund involves pinpointing a limited number of large-capitalization
holdings that we believe are undervalued, and then identifying a catalyst that
would move the stock from being undervalued to being fairly valued. This
catalyst could include new management, restructuring, reorganization, or a
regulatory change. We expect these securities to generate high returns for the
Fund as they go from being undervalued to fairly valued. When stocks in the
portfolio achieve full valuation or expectations for a catalyst do not develop,
these securities are reduced or sold from the Fund.

Q HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED
DECEMBER 31, 1996?

A The Fund recorded favorable performance, with a total return of 14.13
percent(1) (Class A shares at net asset value). By comparison, the
Standard & Poor's 500-Stock Index produced a total return of 11.65
percent, and the Lipper Growth and Income Fund Index returned 11.28
percent. The S&P 500 Index is a broad-based,unmanaged index that reflects
general stock market performance, and the Lipper Index reflects the average
performance of the largest growth and income funds. Keep in mind that neither
index includes any commissions, sales charges, or fees that would be paid by
an investor purchasing the securities they represent.

<PAGE> 116

Q WHICH SECTORS AND HOLDINGS POSTED THE GREATEST GAINS OVER THE REPORTING
PERIOD?

A We select securities that meet our criteria, rather than maintaining
defined sector allocations, so our sector weightings are a reflection of
where we found good value on a stock-by-stock basis. As of December 31,
1996, 47 percent of the Fund's holdings were concentrated in the financial,
utility, and energy sectors. Consumer non-durables and consumer services also
comprised substantial positions in the portfolio.
Banks fared well in 1996 due to increased earnings and benign interest
rates, and Chase Manhattan Bank was a strong performer for the Fund. Gas and
oil prices went up throughout the year, which helped the performance of energy
stocks in the portfolio, including PanEnergy, a gas pipeline company.
Several of our holdings in the tobacco and cable sectors illustrate our
value strategy at work. In the third quarter, Philip Morris and RJR Nabisco,
strong companies with solid fundamentals, were selling at a discount to their
intrinsic values because of litigation concerns. We added both to our
portfolio, because we expect the stock prices of these well-established
companies to rebound to their fair value. Similarly, when cable stocks became
depressed late in the third quarter due to competition and regulatory concerns,
we added substantially to our cable holdings, including Tele-Communications,
Inc.

Q WHAT IS YOUR OUTLOOK FOR THE FUND OVER THE NEXT SIX MONTHS?

A We are cautiously optimistic about the Fund's performance. We expect a
continuation of the moderate GDP growth and low inflation that have
characterized the domestic economy in recent years. In addition, steady
economic growth may push corporate profits modestly higher in 1997, providing
continued support for stock prices.
However, we see 1997 as a year of increased risks for the stock market.
Valuations are extended, which suggests the potential for a significant decline
in U.S. stock prices. Such a correction might, for example, be triggered by a
return of the rapid economic growth experienced in early 1996, which could
persuade the Fed to raise interest rates. A high valuation environment can
favor value funds, because funds that emphasize undervalued stocks and are
theoretically better positioned to weather a down market than funds that hold
fairly valued securities.

[SIG]
Alan T. Sachtleben

Chief Investment Officer
Equity Investments

[SIG]
B. Robert Baker, Jr.

Co-Portfolio Manager

[SIG]
Jason Leder

Co-Portfolio Manager

<PAGE> 117
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES MARKET VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 103.5%
CONSUMER DISTRIBUTION 3.6%
Dillard Department Stores, Inc., Class A 70 $ 2,161
Pier 1 Imports, Inc. 360 6,345
------------
8,506
------------
CONSUMER DURABLES 2.1%
Maytag Corp. 130 2,568
Newell Co. 80 2,520
------------
5,088
------------

CONSUMER NON-DURABLES 11.4%
First Brands Corp. 100 2,838
Philip Morris Cos., Inc. 95 10,699
RJR Nabisco Holdings Corp. 300 10,200
Unilever NV - New York Shares (Netherlands) 21 3,680
------------
27,417
------------
CONSUMER SERVICES 7.6%
Cox Communications, Inc., Class A (b) 110 2,544
Tele-Communications, Inc., Class A (b) 620 8,098
Time Warner, Inc. 200 7,500
------------
18,142
------------
ENERGY 7.9%
Amerada Hess Corp. 90 5,209
British Petroleum PLC - ADR (United Kingdom) 20 2,828
Coflexip SA - ADR (France) (b) 105 2,756
PanEnergy Corp. 70 3,150
Texaco, Inc. 25 2,453
YPF Sociedad Anonima - ADR (Argentina) 100 2,525
------------
18,921
------------
FINANCE 24.2%
Aetna, Inc. 70 5,600
AFLAC, Inc. 195 8,336
Allstate Corp. 50 2,894
AMBAC, Inc. 45 2,987
American Bankers Insurance Group, Inc. 245 12,526
</TABLE>

See Notes to Financial Statements

<PAGE> 118

VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES MARKET VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
Bear Stearns Cos., Inc. 144 $ 4,014
Chase Manhattan Corp. 50 4,463
CMAC Investment Corp. 150 5,512
Conseco, Inc. 100 6,375
Everest Reinsurance Holdings 100 2,875
MBIA, Inc. 25 2,531
------------
58,113
------------

HEALTHCARE 7.1%
American Home Products Corp. 60 3,518
Lincare Holdings, Inc. (b) 170 6,970
Mallinckrodt, Inc. 50 2,206
Sierra Health Services, Inc. (b) 180 4,432
------------
17,126
------------
PRODUCER MANUFACTURING 7.8%
Bouygues Offshore SA - ADR (France) (b) 500 6,437
Stewart & Stevenson Services, Inc. 110 3,204
WMX Technologies, Inc. 280 9,135
------------
18,776
------------
RAW MATERIALS/PROCESSING INDUSTRIES 8.0%
Bethlehem Steel Corp. (b) 250 2,250
Boise Cascade Corp. 145 4,604
LTV Corp. 230 2,731
Lyondell Petrochemical Co. 100 2,200
Mead Corp. 80 4,650
Willamette Industries, Inc. 40 2,785
------------
19,220
------------
TECHNOLOGY 7.1%
Avnet, Inc. 130 7,573
BMC Software, Inc. (b) 55 2,276
Gateway 2000, Inc. (b) 40 2,142
Nokia Corp. - ADR (Finland) 45 2,593
SunGard Data Systems, Inc. (b) 60 2,370
------------
16,954
------------
TRANSPORTATION 2.1%
Canadian National Railway Co. 130 4,940
</TABLE> ------------

See Notes to Financial Statements

6
<PAGE> 119

VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES MARKET VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES 14.6%
AT & T Corp. 120 $ 5,220
Cincinnati Bell, Inc. 45 2,773
FPL Group, Inc. 45 2,070
Houston Industries, Inc. 100 2,263
Idaho Power Co. 80 2,490
Illinova Corp. 180 4,950
MCI Communications Corp. 220 7,191
NCR Corp. 7 236
Oklahoma Gas & Electric Co. 185 7,724
------------
34,917
------------

TOTAL LONG-TERM INVESTMENTS 103.5%
(Cost $215,365) (a) 248,120

LIABILITIES IN EXCESS OF OTHER ASSETS -3.5% (8,439)
------------

NET ASSETS 100.0% $ 239,681
</TABLE> ============

(a) At December 31, 1996, for federal income tax purposes, cost is $215,365;
the aggregate gross unrealized appreciation is $35,424 and the aggregate
gross unrealized depreciation is $2,669, resulting in net unrealized
appreciation of $32,755.

(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

<PAGE> 120
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:

Long-Term Investments, at Market Value (Cost $215,365) (Note 1) $ 248,120
Cash 12,904
Receivables:
Investments Sold 3,554
Dividends 383
Unamortized Organizational Expenses (Note 1) 32,025
Other 7,654
-----------
Total Assets 304,640
-----------

LIABILITIES:

Payables:
Organizational Expenses 40,000
Income and Capital Gain Distributions 16,700
Investments Purchased 2,934
Deferred Compensation and Retirement Plans (Note 2) 5,325
-----------
Total Liabilities 64,959
-----------
NET ASSETS $ 239,681
===========

NET ASSETS CONSIST OF:
Capital (Note 3) $ 200,000
Net Unrealized Appreciation on Investments 32,755
Accumulated Net Realized Gain on Investments 6,816
Accumulated Undistributed Net Investment Income 110
-----------
NET ASSETS $ 239,681
===========

MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$83,889 and 7,000 shares of beneficial interest issued and outstanding) $ 11.98
Maximum sales charge (5.75%* of offering price) 0.73
-----------
Maximum offering price to public $ 12.71
===========
Class B Shares:
Net asset value and offering price per share (Based on net assets of $77,896
and 6,500 shares of beneficial interest issued and outstanding) $ 11.98
===========
Class C Shares:
Net asset value and offering price per share (Based on net assets of $77,896
and 6,500 shares of beneficial interest issued and outstanding) $ 11.98
===========
</TABLE>

* On sales of $50,000 or more, the sales charge will be reduced.

See Notes to Financial Statements
8
<PAGE> 121
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 2,415
----------
EXPENSES:
Shareholder Services (Note 2) 7,800
Trustees Fees and Expenses (Note 2) 5,001
Amortization of Organizational Expenses (Note 1) 4,075
Audit 3,750
Accounting (Note 2) 1,200
Legal (Note 2) 1,200
Investment Advisory Fee (Note 2) 830
Printing 600
Custody 303
----------
Total Expenses 24,759
Less: Fees Deferred and Expenses Reimbursed
($830 and $22,155, respectively) (Note 2) 22,985
Credits Earned on Overnight Cash Balances (Note 1) 303
----------
Net Expenses 1,471
----------
NET INVESTMENT INCOME $ 944
==========

REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments $ 15,496
----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period 17,872
End of the Period 32,755
----------
Net Unrealized Appreciation on Investments During the Period 14,883
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 30,379
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 31,323
==========
</TABLE>

See Notes to Financial Statements
9
<PAGE> 122
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND
THE PERIOD DECEMBER 27, 1995 (COMMENCEMENT OF INVESTMENT OPERATIONS)
TO JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months Ended Period Ended
December 31, 1996 June 30, 1996
----------------- -------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:

Operations:
Net Investment Income $ 944 $ 1,439
Net Realized Gain on Investments 15,496 6,920
Net Unrealized Appreciation on Investments During the Period 14,883 17,872
----------- -----------

Change in Net Assets from Operations 31,323 26,231
----------- -----------

Distributions from Net Investment Income:
Class A Shares (612) (281)
Class B Shares (567) (123)
Class C Shares (567) (123)
----------- -----------
(1,746) (527)
----------- -----------

Distributions from Net Realized Gain on Investments (Note 1):
Class A Shares (5,460) 0
Class B Shares (5,070) 0
Class C Shares (5,070) 0
----------- -----------
(15,600) 0
----------- -----------
Total Distributions (17,346) (527)
----------- -----------

NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES 13,977 25,704

Beginning of the Period 225,704 200,000
----------- -----------
End of the Period (Including accumulated undistributed net investment
income of $110 and $912, respectively) $ 239,681 $ 225,704
=========== ===========
</TABLE>

See Notes to Financial Statements
10
<PAGE> 123
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE
OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
OF INVESTMENT
SIX MONTHS ENDED OPERATIONS) TO
CLASS A SHARES DECEMBER 31, 1996(A) JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.285 $ 10.000
----------- -----------
Net Investment Income 0.047 0.072
Net Realized and Unrealized Gain on Investments 1.519 1.239
----------- -----------
Total from Investment Operations 1.566 1.311
----------- -----------

Less:
Distributions from Net Investment Income 0.087 0.026
Distributions from Net Realized Gain on Investments (Note 1) 0.780 0.000
----------- -----------
Total Distributions 0.867 0.026
----------- -----------
Net Asset Value, End of the Period $ 11.984 $ 11.285
=========== ===========

Total Return* (b) 14.13%** 13.10%**

Net Assets at End of the Period (In thousands) $83.9 $79.0

Ratio of Expenses to Average Net Assets* (c) 1.50% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.80% 1.34%

Portfolio Turnover 78%** 69%**

Average Commission Paid Per Equity Share Traded (d) $0.0490 $0.0319

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.88% 20.75%

Ratio of Net Investment Income to Average Net Assets -18.59% -18.07%
</TABLE>

** Non-Annualized

(a) Based on average 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) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .26% and .07% for the periods
ending on December 31, 1996 and June 30, 1996, respectively.

(d) Represents the average brokerage commissions paid per equity share traded
during the periods for trades where commissions were applicable.

See Notes to Financial Statements
11
<PAGE> 124

VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

FINANCIAL HIGHLIGHTS (CONTINUED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE
OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
OF INVESTMENT
SIX MONTHS ENDED OPERATIONS) TO
CLASS B SHARES DECEMBER 31, 1996(A) JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.285 $ 10.000
----------- -----------
Net Investment Income 0.047 0.072
Net Realized and Unrealized Gain on Investments 1.519 1.239
----------- -----------
Total from Investment Operations 1.566 1.311
----------- -----------
Less:
Distributions from Net Investment Income 0.087 0.026
Distributions from Net Realized Gain on Investments (Note 1) 0.780 0.000
----------- -----------
Total Distributions 0.867 0.026
----------- -----------
Net Asset Value, End of the Period $ 11.984 $ 11.285
============ ===========
Total Return * (b) 14.13%** 13.19%**

Net Assets at End of the Period (In thousands) $77.9 $73.4

Ratio of Expenses to Average Net Assets* (c) 1.50% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.80% 1.34%

Portfolio Turnover 78%** 69%**

Average Commission Paid Per Equity Share Traded (d) $0.0490 $0.0319

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.86% 20.75%

Ratio of Net Investment Income to Average Net Assets -18.57% -18.07%
</TABLE>

** Non-Annualized

(a) Based on average 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.

(d) Represents the average brokerage commissions paid per equity share traded
during the periods for trades where commissions were applicable.

See Notes to Financial Statements
12
<PAGE> 125

VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND

<TABLE>
<CAPTION>
DECEMBER 27, 1995
(COMMENCEMENT
OF INVESTMENT
SIX MONTHS ENDED OPERATIONS) TO
CLASS C SHARES DECEMBER 31, 1996(A) JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period $ 11.285 $ 10.000
------------ -----------
Net Investment Income 0.047 0.072
Net Realized and Unrealized Gain on Investments 1.519 1.239
------------ -----------
Total from Investment Operations 1.566 1.311
------------ -----------
Less:
Distributions from Net Investment Income 0.087 0.026
Distributions from Net Realized Gain on Investments (Note 1) 0.780 0.000
------------ -----------
Total Distributions 0.867 0.026
------------ -----------
Net Asset Value, End of the Period $ 11.984 $ 11.285
============ ===========

Total Return * (b) 14.13%** 13.19%**

Net Assets at End of the Period (In thousands) $77.9 $73.4

Ratio of Expenses to Average Net Assets* (c) 1.50% 1.33%

Ratio of Net Investment Income to Average Net Assets* 0.80% 1.34%

Portfolio Turnover 78%** 69%**

Average Commission Paid Per Equity Share Traded (d) $0.0490 $0.0319

*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:

Ratio of Expenses to Average Net Assets (c) 20.86% 20.75%

Ratio of Net Investment Income to Average Net Assets -18.57% -18.07%
</TABLE>

** Non-Annualized

(a) Based on average 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.

(d) Represents the average brokerage commissions paid per equity share traded
during the periods for trades where commissions were applicable.

See Notes to Financial Statements
13

<PAGE> 126

VAN KAMPEN AMERICAN CAPITAL
PROSPECTOR FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Prospector Fund (the "Fund") is organized as a
series of Van Kampen American Capital Equity Trust, a Delaware business trust
(the "Trust") and is registered as a diversified open-end management investment
company under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek capital growth and income through investing
principally in income producing equity securities and other equity securities.
The Fund commenced investment operations on December 27, 1995, with three
classes of common shares, Class A, Class B and Class C shares.
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 or, if not available, their fair market value as determined in
accordance with procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued
at amortized cost.

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 American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.

C. INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.

D. ORGANIZATIONAL EXPENSES - The Fund will reimburse Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Fund's organization in the amount of $40,000.
These costs are being amortized on a straight line basis over the 60 month
period ending December 26, 2000. The Adviser has agreed that in the event any
of the initial shares of the Fund originally purchased by VKAC are redeemed
during the amortization period, the Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

E. FEDERAL INCOME TAXES - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income and gains,
if any, to its shareholders. Therefore, no provision for federal income taxes
is required.

F. DISTRIBUTION OF INCOME AND GAINS - The Fund declares and pays dividends
quarterly from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included in ordinary income for
tax purposes.

G. EXPENSE REDUCTIONS - During the six months ended December 31, 1996, the
Fund's custody fee was reduced by $303 as a result of credits earned on
overnight cash balances.

Average Net Assets % Per Annum
---------------------------- --------------
First $500 million .70%
Next $500 million .65%
Over $1 billion .60%

<PAGE> 127
VAN KAMPEN AMERICAN CAPITAL
PROSPECTOR FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 (UNAUDITED)

compensate its officers or trustees who are officers of VKAC.
The Fund has implemented deferred compensation and retirement plans for
its trustees. Under the deferred compensation plan, trustees may elect to
defer all or a portion of their compensation to a later date. The retirement
plan covers those trustees who are not officers of VKAC.
At December 31, 1996, VKAC owned all shares of Classes A, B and C,
respectively.

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 December 31, 1996 and
June 30, 1996, capital aggregated $70,000, $65,000 and $65,000 for Classes A,
B and C, respectively.
Class B and Class C shares are offered without a front end sales
charge, but are subject to a contingent deferred sales charge (CDSC). The CDSC
will be imposed on most redemptions made within five years of the purchase for
Class B and one year of the purchase for Class C as detailed in the following
schedule. The Class B and Class C shares bear the expense of their respective
deferred sales arrangements, including higher distribution and service fees
and incremental transfer agency costs.

Contingent Deferred
Sales Charge
Class B Class C
Year of Redemption Shares Shares
---------------------- ------ ------
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

4. INVESTMENT TRANSACTIONS
During the six months ended December 31, 1996, the cost of purchases and
proceeds from sales of investments, excluding short-term investments, were
$182,919 and $178,977, respectively.

5. 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.
The Fund's net assets are subject to annual fees under the Plans of up
to .25% for Class A net assets and 1.00% each for Class B and Class C net
assets. No fees related to the Plans have been accrued by the Fund as the Fund
is currently owned solely by affiliated persons.

15
<PAGE> 128
VAN KAMPEN AMERICAN CAPITAL PROSPECTOR FUND
- -------------------------------------------------------------------------------

BOARD OF TRUSTEES INVESTMENT ADVISER

J. MILES BRANAGAN VAN KAMPEN AMERICAN CAPITAL
LINDA HUTTON HEAGY INVESTMENT ADVISORY CORP.
R. CRAIG KENNEDY One Parkview Plaza
DENNIS J. MCDONNELL* Oakbrook Terrace, Illinois 60181
JACK E. NELSON
JEROME L. ROBINSON DISTRIBUTOR
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
OFFICERS Oakbrook Terrace, Illinois 60181

DENNIS J. MCDONNELL* SHAREHOLDER SERVICING AGENT
President
ACCESS INVESTOR SERVICES, INC.
RONALD A. NYBERG* P.O. Box 418256
Vice President and Secretary Kansas City, Missouri 64141-9256

EDWARD C. WOOD, III* CUSTODIAN
Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY
CURTIS W. MORELL* 225 Franklin Street
Vice President and Chief P.O. Box 1713
Accounting Officer Boston, Massachusetts 02105

JOHN L. SULLIVAN*
Treasurer LEGAL COUNSEL

TANYA M. LODEN* SKADDEN, ARPS, SLATE, MEAGHER &
Controller FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
PETER W. HEGEL*
ALAN T. SACHTLEBEN* INDEPENDENT ACCOUNTANTS
PAUL R. WOLKENBERG*
Vice Presidents KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund, as defined in the Investment
Company Act of 1940.
(Copyright) Van Kampen American Capital Distributors, Inc., 1997
All Rights Reserved.
sm denotes a service mark of Van Kampen American Capital Distributors, 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.

RESULTS OF SHAREHOLDER VOTES
- -------------------------------------------------------------------------------
A special meeting of Shareholders of the Fund was held on October 25, 1996,
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of KPMG Peat Marwick LLP as
independent public accountants. With regard to the approval of a new
investment advisory agreement between Van Kampen American Capital Investment
Advisory Corp. and the Fund, 20,000 shares voted for the proposal, 0 shares
voted against and 0 shares abstained. With regard to the approval of certain
changes to the Fund's fundamental investment policies with respect to
investment in other investment companies, 20,000 shares voted for the proposal,
0 shares voted against and 0 shares abstained. With regard to the ratification
of KPMG Peat Marwick LLP as independent public accountants for the Fund, 20,000
shares voted for the proposal, 0 shares voted against and 0 shares abstained.

16
<PAGE> 129

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 3
Portfolio Highlights............................. 4
Portfolio Management Review...................... 5
Portfolio of Investments......................... 8
Statement of Assets and Liabilities.............. 13
Statement of Operations.......................... 14
Statement of Changes in Net Assets............... 15
Financial Highlights............................. 16
Notes to Financial Statements.................... 19
</TABLE>

AGG SAR 2/97
<PAGE> 130
LETTER TO SHAREHOLDERS

January 31, 1997

Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital [PHOTO]
Aggressive Growth Fund has continued
to generate solid investment
performance on behalf of our
shareholders. As noted in earlier
reports, VK/AC Holding Inc., the
parent company of Van Kampen American
Capital, Inc., was acquired by Morgan DENNIS J. MCDONNELL AND DON G. POWELL
Stanley Group Inc., a world leader in
asset management and investment banking. The transaction was completed in
October, and we are excited about the opportunities it creates for investors. As
part of the acquisition, Van Kampen American Capital became the distributor of
Morgan Stanley retail funds on January 2, 1997.

ECONOMIC REVIEW

MARKET REVIEW

The combination of steady growth and benign inflation provided the lift for
equity prices to soar still farther into record territory during the past six
months. For the year, the Standard & Poor's 500-Stock Index and the Dow Jones
Industrial Average posted returns of 22.90 percent and 26.01 percent,
respectively, following their 37.44 percent and 33.50 percent advances in 1995.
Downside volatility also returned for the first time since the current bull
market began in October 1990. After climbing steadily through the first

Continued on page two

1
<PAGE> 131

four months of 1996, stock prices suddenly hit turbulence, with the S&P
500-Stock Industrial Index falling by about 12 percent between late May and
mid-July. The NASDAQ market, which includes many technology stocks, experienced
an even stronger correction.
The sharp drop in stock prices was caused by fears that the Fed would raise
interest rates in response to the stronger-than-expected GDP growth and
inflationary warning signals noted earlier. When subsequent data showed those
concerns to be overblown, broad-market indices recovered and climbed to a
succession of record highs by year end.
Large-capitalization and growth stocks outperformed their small-cap and
value cousins during 1996, with the financial, technology, and energy sectors
turning in the best returns among industry groups. The most dramatic news was
made in the initial public offering (IPO) market, where volume broke records
that were set the previous year. During the first half of the year, widespread
speculation led to overpricing among many IPO issues, especially those from
high-tech industries. Then, after the dust had cleared from the mid-year
inflation scare, sobriety returned to the IPO market and prices became more
realistic.

Sincerely,

[SIG]
Don G. Powell

Chairman
Van Kampen American Capital
Investment Advisory Corp.

[SIG]
Dennis J. McDonnell

President
Van Kampen American Capital
Investment Advisory Corp.

2
<PAGE> 132

PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1996

VAN KAMPEN AMERICAN CAPITAL AGGRESSIVE GROWTH FUND

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS

Six-month total return based on NAV(1)... 9.87% 9.55% 9.55%
Six-month total return(2)................ 3.51% 4.50% 8.56%
Since inception total return(2).......... .20% .85% 4.88%
Commencement date........................ 05/29/96 05/29/96 05/29/96
</TABLE>

3
<PAGE> 133

PORTFOLIO HIGHLIGHTS

VAN KAMPEN AMERICAN CAPITAL AGGRESSIVE GROWTH FUND

TOP TEN HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
<S> <C>
Centennial Technologies ..... 2.1%
Intel Corp. .................. 1.7%
Interstate Bakeries Corp. .... 1.6%
TJX Companies, Inc. .......... 1.5%
Ross Stores, Inc. ............ 1.4%
Conseco, Inc. ................ 1.4%
Cliffs Drilling Co. .......... 1.4%
Clarify, Inc. ................ 1.4%
Cooper Cameron Corp. ......... 1.4%
Dell Computer Corp. .......... 1.4%
</TABLE>

TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, 1996 JUNE 30, 1996
<S> <C> <C>
Technology ................. 42% ............ 29%
Energy ..................... 18% ............ 9%
Consumer Distribution ...... 11% ............ 11%
Consumer Services .......... 10% ............ 19%
Finance .................... 7% ............ N/A
</TABLE>

N/A = Not Applicable

4
<PAGE> 134

PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL AGGRESSIVE GROWTH FUND

We recently spoke with the management team of the Van Kampen American Capital
Aggressive Growth Fund about the key events and economic factors that shaped the
markets during the past six months. The team includes Gary M. Lewis, portfolio
manager, and Alan T. Sachtleben, chief investment officer for equity
investments. The following excerpts reflect their views on the Fund's
performance during the six month period ended December 31, 1996.

Q WHAT ECONOMIC FACTORS DROVE THE MARKET UPWARD DURING THE PAST CALENDAR
YEAR? HOW DID THEY AFFECT THE FUND?

A The positive combination of solid corporate earnings growth and subdued
inflationary fears produced a very market-friendly economy in calendar
1996. The Dow Jones Industrial Average rose 26.01 percent, and the NASDAQ
Composite Index climbed 22.71 percent.
Early in the year, several factors fueled equity performance. Unexpectedly
strong corporate earnings, a growing economy and record cash flows into mutual
funds pushed the already-healthy equity markets even higher in late January and
early February. The markets hit a snag in mid-February. Higher-than-expected
employment numbers prompted inflation concerns and decreased the likelihood of
further interest rate cuts by the Federal Reserve Board. The bond market rally
that had begun at the end of 1995 came to an abrupt halt. Through April and May,
concerns about inflation lingered, and small- and mid-size stocks led a broad
market correction.
This correction was short-lived, however, as bond and technology stocks
bounced back quickly. Soon after, large company stocks began their own recovery,
and by the end of July, technology and financial stocks were leading the equity
markets upward once again. Stocks continued their climb throughout the end of
the year, highlighted by post-election strength. Because the November elections
maintained the status quo of a Democratic president and Republican-controlled
Congress, the market had one of its strongest post-election gains in history.

Q WHICH INVESTMENTS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE
REPORTING PERIOD?

A We introduced the Fund on May 29, 1996, with an emphasis on small- and
mid-size stocks. Although our focus was on emerging companies, we
ultimately selected investments on the basis of a company's potential to
outperform earnings expectations. We invested in the highest growth companies in
each sector that met our rising earnings estimates and rising valuations
criteria. Energy and technology stocks met our stock-selection criteria during
the period, and stocks in these two sectors were among the top performers. By
the end of the calendar year, 18 percent of the Fund's long-term

5
<PAGE> 135

investments were invested in energy stocks. This high level is unusual for an
aggressive growth fund, but our bottom-up philosophy emphasizes individual stock
selection rather than sector allocation. Energy stocks benefited from new
technology that allowed for more in-depth exploration of oil fields, and by
rising oil and gas prices.
Technology, a more common aggressive growth holding, was increased to
approximately 42 percent of the Fund's long-term investments by year end. We
found outstanding opportunities in disk drive companies such as Western Digital
and Applied Magnetics, as they had good pricing and upside earnings. Dell
Computers and Intel, two large-capitalization companies, also met our criteria.
In addition, we found opportunity in sales-force automation software companies,
such as Clarify. Health care, a lagging sector in 1996, was held to 2 percent by
year end, because we could not find rising earnings estimates and proven
valuations.

Q WHAT IS YOUR OVERALL STRATEGY TO SEEK TO PROVIDE SHAREHOLDERS WITH A
STRONG RETURN, IN KEEPING WITH THE FUND'S OBJECTIVE?

A We look for rising earnings expectations, which we have found to be
important in predicting the success of a stock. Rising valuations are
important to us as well, so we track them carefully on a one- and
three-month basis. We also feel strongly about meeting with the management teams
behind the companies in whose stock we invest. These meetings help us determine
if a company has an effective business philosophy and if management is
disciplined in implementing it. We also learn about a company's opportunities
within its particular industry and decide if we have confidence in their ability
to maximize growth potential.

Q HOW DID THE FUND PERFORM IN THE LAST SIX MONTHS OF 1996?

A The Fund achieved a six-month total return of 9.87 percent(1) (Class A
shares at net asset value) as of December 31, 1996. By comparison, the
Standard & Poor's 500-Stock Index returned 11.65 percent for the period,
while the Lipper Capital Appreciation Fund Index returned 4.35 for the period.
Keep in mind that these indices are unmanaged statistical composites that do not
reflect any commissions, sales charges or fees that would be incurred by an
investor purchasing the securities they represent. Please refer to the chart on
page three for additional Fund performance results.

Q WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEXT SIX MONTHS?

A We expect a continuation of the moderate growth, low inflation environment
that has characterized the domestic economy in recent years. Steady
economic growth may push corporate profits modestly higher during 1997,
providing continued support for stock prices. However, we see 1997 as a year of
increased risks for the stock market.

6
<PAGE> 136

Valuations are extended, which suggests the potential for a significant decline
in U.S. stock prices. For example, such a correction might be triggered by a
return of the rapid gross domestic product growth experienced during the first
half of 1996, which could persuade the Fed to raise interest rates.
With this in mind, a review of your portfolio's asset mix may be especially
appropriate at this time. Stock prices have appreciated substantially over the
last six years and dramatically over the last two. This performance may have
increased your portfolio's equity exposure well above levels you considered
appropriate a few years ago.

[SIG]
Alan T. Sachtleben
Chief Investment Officer
Equity Investments

[SIG]
Gary M. Lewis
Portfolio Manager

Please see footnotes on page three

7
<PAGE> 137

PORTFOLIO OF INVESTMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
CONSUMER DISTRIBUTION 10.0%
Abercrombie & Fitch Co., Class A (b)........................ 54,700 $ 902,550
CDW Computer Centers, Inc. (b).............................. 18,000 1,067,625
CompUSA, Inc. (b)........................................... 30,000 618,750
Danka Business Systems PLC- ADR (United Kingdom)............ 30,000 1,061,250
Eagle Hardware & Garden, Inc. (b)........................... 65,000 1,348,750
Finish Line, Inc., Class A (b).............................. 50,000 1,056,250
Gucci Group NV.............................................. 17,000 1,085,875
Inacom Corp. (b)............................................ 50,000 2,000,000
Paul Harris Stores, Inc. (b)................................ 75,000 1,331,250
Pomeroy Computer Resources, Inc. (b)........................ 40,000 1,470,000
Ross Stores, Inc............................................ 45,000 2,250,000
TJX Cos., Inc............................................... 50,000 2,368,750
Tuesday Morning Corp. (b)................................... 30,000 641,250
------------
17,202,300
------------
CONSUMER NON-DURABLES 1.5%
Interstate Bakeries Corp.................................... 50,000 2,456,250
------------
CONSUMER SERVICES 9.6%
Billing Information Concepts Corp. (b)...................... 35,000 1,006,250
Caribiner International, Inc. (b)........................... 25,000 1,256,250
CKE Restaurants, Inc........................................ 40,000 1,440,000
Consolidated Graphics, Inc. (b)............................. 25,000 1,400,000
Doubletree Corp. (b)........................................ 40,000 1,800,000
HA-LO Industries, Inc. (b).................................. 50,000 1,375,000
International Network Services (b).......................... 15,700 473,944
Morningstar Group, Inc. (b)................................. 65,000 1,275,625
National TechTeam, Inc. (b)................................. 50,000 1,000,000
Regal Cinemas, Inc. (b)..................................... 35,000 1,076,250
Romac International, Inc. (b)............................... 20,000 440,000
Sitel Corp. (b)............................................. 64,000 904,000
Superior Consultant, Inc. (b)............................... 25,700 636,075
TMP Worldwide, Inc. (b)..................................... 50,000 637,500
Ultrak, Inc. (b)............................................ 28,000 854,000
XLConnect Solutions, Inc. (b)............................... 30,000 862,500
------------
16,437,394
------------
</TABLE>

See Notes to Financial Statements

8
<PAGE> 138

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>

ENERGY 16.4%
Atwood Oceanics, Inc. (b)................................... 24,000 $ 1,524,000
Benton Oil & Gas Co. (b).................................... 40,000 905,000
Chesapeake Energy Corp. (b)................................. 25,000 1,390,625
Cliffs Drilling Co. (b)..................................... 35,000 2,213,750
Comstock Resources, Inc. (b)................................ 75,000 975,000
Cooper Cameron Corp. (b).................................... 28,000 2,142,000
Diamond Offshore Drilling, Inc. (b)......................... 25,000 1,425,000
ENSCO International, Inc. (b)............................... 25,000 1,212,500
Falcon Drilling Co., Inc. (b)............................... 47,500 1,864,375
Flores & Rucks, Inc. (b).................................... 20,000 1,065,000
Forcenergy Gas Exploration, Inc. (b)........................ 55,000 1,993,750
Global Marine, Inc. (b)..................................... 55,000 1,134,375
Marine Drilling Cos., Inc. (b).............................. 70,000 1,378,125
NGC Corp. .................................................. 70,000 1,627,500
Noble Drilling Corp. (b).................................... 35,000 695,625
Nuevo Energy Co. (b)........................................ 25,000 1,300,000
Pogo Producing Co. ......................................... 25,000 1,181,250
Reading & Bates Corp. (b)................................... 40,000 1,060,000
Rowan Cos., Inc. (b)........................................ 35,000 791,875
Seagull Energy Corp. (b).................................... 10,560 232,320
Swift Energy Co. (b)........................................ 30,000 896,250
United Meridian Corp. (b)................................... 20,000 1,035,000
------------
28,043,320
------------
FINANCE 6.4%
Amresco, Inc. (b)........................................... 60,000 1,605,000
Conseco, Inc. .............................................. 35,000 2,231,250
Imperial Credit Industries, Inc. (b)........................ 60,000 1,260,000
Leasing Solutions, Inc. (b)................................. 45,000 1,158,750
RAC Financial Group, Inc. (b)............................... 60,000 1,267,500
Southern Pacific Funding Corp. (b).......................... 55,000 1,711,875
SunAmerica, Inc. ........................................... 40,000 1,775,000
------------
11,009,375
------------
</TABLE>

See Notes to Financial Statements

9
<PAGE> 139

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>

HEALTHCARE 2.0%
Curative Health Services, Inc. (b).......................... 30,000 $ 830,625
Jones Medical Industries, Inc. ............................. 30,000 1,098,750
Medicis Pharmaceutical Corp., Class A (b)................... 32,375 1,424,500
------------
3,353,875
------------
PRODUCER MANUFACTURING 4.7%
Apogee Enterprises, Inc. ................................... 35,000 1,391,250
Mastec, Inc. (b)............................................ 30,000 1,590,000
Oregon Metallurgical Corp. (b).............................. 20,000 645,000
Tetra Technologies, Inc. (b)................................ 40,000 1,010,000
U.S. Filter Corp. (b)....................................... 50,000 1,587,500
United Waste Systems, Inc. (b).............................. 25,000 859,375
USA Waste Services, Inc. (b)................................ 31,000 988,125
------------
8,071,250
------------
RAW MATERIALS/PROCESSING INDUSTRIES 0.5%
Titanium Metals Corp. (b)................................... 25,000 821,875
------------
TECHNOLOGY 38.8%
Acxiom Corp. (b)............................................ 85,000 2,040,000
ADC Telecommunications, Inc. (b)............................ 60,000 1,867,500
Advanced Fibre Communications (b)........................... 2,700 150,188
Applied Magnetics Corp. (b)................................. 45,000 1,344,375
Ascend Communications, Inc. (b)............................. 25,000 1,553,125
Aspen Technology, Inc. (b).................................. 25,000 2,006,250
Boston Technology, Inc. (b)................................. 45,000 1,293,750
Cascade Communications Corp. (b)............................ 14,000 771,750
Centennial Technologies, Inc. (b)........................... 65,000 3,380,000
Ciber, Inc. (b)............................................. 35,000 1,050,000
Citrix Systems, Inc. (b).................................... 25,000 976,562
Clarify, Inc. (b)........................................... 45,000 2,160,000
Cognos, Inc. (b)............................................ 40,000 1,125,000
Compaq Computer Corp. (b)................................... 14,000 1,039,500
Compuware Corp. (b)......................................... 35,000 1,754,375
Comverse Technology, Inc. (b)............................... 40,000 1,512,500
Cybermedia, Inc. (b)........................................ 12,000 189,000
Cymer, Inc. (b)............................................. 25,000 1,203,125
Davox Corp. (b)............................................. 12,000 495,000
Dell Computer Corp. (b)..................................... 40,000 2,125,000
</TABLE>

See Notes to Financial Statements

10
<PAGE> 140

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>

TECHNOLOGY (CONTINUED)
Dynatech Corp. (b).......................................... 30,000 $ 1,327,500
Encad, Inc. (b)............................................. 25,000 1,031,250
ESS Technology, Inc. (b).................................... 30,000 843,750
Infinity Financial Technology, Inc. (b)..................... 32,700 564,075
Information Management Resources, Inc. (b).................. 60,000 1,267,500
Innovex, Inc. (b)........................................... 50,000 1,350,000
Intel Corp. ................................................ 20,000 2,618,750
Lecroy Corp. (b)............................................ 35,000 1,312,500
Manugistics Group, Inc. (b)................................. 20,000 795,000
McAfee Associates, Inc. (b)................................. 40,000 1,760,000
PairGain Technologies, Inc. (b)............................. 24,000 730,500
Peoplesoft, Inc. (b)........................................ 40,000 1,917,500
Periphonics Corp. (b)....................................... 50,000 1,462,500
Rational Software Corp. (b)................................. 35,000 1,384,687
Remedy Corp. (b)............................................ 35,000 1,881,250
Saville Systems PLC - ADR (Ireland) (b)..................... 20,000 812,500
SBS Technologies, Inc. (b).................................. 35,000 1,295,000
Scopus Technology, Inc. (b)................................. 30,000 1,395,000
Siebel Systems, Inc. (b).................................... 39,600 1,069,200
Technology Solutions Co. (b)................................ 50,000 2,075,000
Tellabs, Inc. (b)........................................... 30,000 1,128,750
Uniphase Corp. (b).......................................... 30,000 1,575,000
Vantive Corp. (b)........................................... 44,000 1,375,000
Verilink Corp. (b).......................................... 40,000 1,330,000
VideoServer, Inc. (b)....................................... 20,000 850,000
Vitesse Semiconductor Corp. (b)............................. 30,000 1,365,000
Western Digital Corp. (b)................................... 35,000 1,990,625
Wind River Systems, Inc. (b)................................ 40,000 1,895,000
------------
66,439,837
------------
TRANSPORTATION 2.0%
Seacor Holdings, Inc. (b)................................... 25,000 1,575,000
Trico Marine Services, Inc. (b)............................. 40,000 1,920,000
------------
3,495,000
------------
</TABLE>
See Notes to Financial Statements

11
<PAGE> 141

PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Security Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL LONG-TERM INVESTMENTS 91.9%
(Cost $136,806,506) (a)........................................... $157,330,476
REPURCHASE AGREEMENT 6.1%
SBC Capital Markets, Inc., ($10,495,000 par collateralized by U.S.
Government securities in a pooled cash account, dated 12/31/96, to
be sold on 01/02/97 at $10,498,936)............................... 10,495,000
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0%......................... 3,486,607
------------
NET ASSETS 100.0%.................................................. $171,312,083
============
</TABLE>

(a) At December 31, 1996, for federal income tax purposes cost is $136,806,506;
the aggregate gross unrealized appreciation is $24,105,666 and the aggregate
gross unrealized depreciation is $3,581,696, resulting in net unrealized
appreciation of $20,523,970.

(b) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

12
<PAGE> 142

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $136,806,506)
(Note 1).................................................. $157,330,476
Repurchase Agreement (Note 1)............................... 10,495,000
Cash........................................................ 1,069
Receivables:
Fund Shares Sold.......................................... 4,880,514
Investments Sold.......................................... 324,000
Dividends................................................. 11,233
Unamortized Organizational Expenses (Note 1)................ 92,701
------------
Total Assets.......................................... 173,134,993
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 1,004,773
Investments Purchased..................................... 441,200
Distributor and Affiliates (Notes 2 and 5)................ 187,195
Investment Advisory Fee (Note 2).......................... 113,893
Organizational Expenses................................... 26,878
Accrued Expenses............................................ 33,731
Deferred Compensation and Retirement Plans (Note 2)......... 15,240
------------
Total Liabilities..................................... 1,822,910
------------
NET ASSETS.................................................. $171,312,083
============
NET ASSETS CONSIST OF:
Capital (Note 3)............................................ $161,025,974
Net Unrealized Appreciation on Investments.................. 20,523,970
Accumulated Net Investment Loss............................. (624,809)
Accumulated Net Realized Loss on Investments................ (9,613,052)
------------
NET ASSETS.................................................. $171,312,083
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $85,290,890 and 8,508,294 shares of
beneficial interest issued and outstanding)............. $ 10.02
Maximum sales charge (5.75%* of offering price)......... .61
------------
Maximum offering price to public............................ $ 10.63
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $77,813,468 and 7,796,216 shares of
beneficial interest issued and outstanding)............. $ 9.98
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $8,207,725 and 822,310 shares of
beneficial interest issued and outstanding)............. $ 9.98
============
*On sales of $50,000 or more, the sales charge will be
reduced.
</TABLE>

See Notes to Financial Statements

13
<PAGE> 143

STATEMENT OF OPERATIONS

For the Six Months Ended December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 240,121
Dividends................................................... 51,066
-----------
Total Income............................................ 291,187
-----------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 425,868
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $71,807, $255,662 and $28,216, respectively)
(Note 5).................................................. 355,685
Shareholder Services (Note 2)............................... 74,654
Trustees Fees and Expenses (Note 2)......................... 17,615
Legal (Note 2).............................................. 11,573
Amortization of Organizational Expenses (Note 1)............ 10,984
Custody..................................................... 1,976
Other....................................................... 12,516
-----------
Total Expenses.......................................... 910,871
-----------
NET INVESTMENT LOSS......................................... $ (619,684)
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Loss on Investments............................ $(8,741,622)
-----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 48,334
End of the Period......................................... 20,523,970
-----------
Net Unrealized Appreciation on Investments During the
Period.................................................... 20,475,636
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. $11,734,014
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $11,114,330
===========
</TABLE>

See Notes to Financial Statements

14
<PAGE> 144

STATEMENT OF CHANGES IN NET ASSETS

For the Six Months Ended December 31, 1996
and the Period Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
May 29, 1996
(Commencement of
Six Months Ended Investment Operations)
December 31, 1996 to June 30, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss................................ $ (619,684) $ (26,170)
Net Realized Loss on Investments................... (8,741,622) (871,430)
Net Unrealized Appreciation on Investments During
the Period....................................... 20,475,636 48,334
------------ -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... 11,114,330 (849,266)
------------ -----------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold.......................... 125,896,213 61,468,641
Cost of Shares Repurchased......................... (25,508,103) (812,561)
------------ -----------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 100,388,110 60,656,080
------------ -----------
TOTAL INCREASE IN NET ASSETS....................... 111,502,440 59,806,814
NET ASSETS:
Beginning of the Period............................ 59,809,643 2,829
------------ -----------
End of the Period (Including accumulated net
investment loss of $624,809 and $5,125,
respectively).................................... $171,312,083 $59,809,643
============ ===========
</TABLE>

See Notes to Financial Statements

15
<PAGE> 145

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Six Months Ended Operations) to
Class A Shares December 31, 1996(a) June 30, 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period............. $ 9.118 $9.430
------- ------
Net Investment Loss................................ (.034) (.002)
Net Realized and Unrealized Gain/Loss on
Investments...................................... .940 (.310)
------- ------
Total from Investment Operations..................... .906 (.312)
------- ------
Net Asset Value, End of the Period................... $10.024 $9.118
======= ======
Total Return(b)...................................... 9.87%* (3.29%)*
Net Assets at End of the Period (In millions)........ $ 85.3 $ 30.3
Ratio of Expenses to Average Net Assets (c).......... 1.30% 1.29%
Ratio of Net Investment Loss to Average Net Assets
(c)................................................ (.79%) (.50%)
Portfolio Turnover................................... 55%* 4%*
Average Commission Paid Per Equity Share Traded
(d)................................................ $ .0430 $.0310
</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) If certain expenses had not been assumed by VKAC, the Ratio of Expenses to
Average Net Assets and the Ratio of Net Investment Loss to Average Net
Assets would have been 2.05% and (1.25%) for the period ended June 30, 1996.

(d) Represents the average brokerage commissions paid per equity share traded
during the period for trades where commissions were applicable.

See Notes to Financial Statements

16
<PAGE> 146

FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Six Months Ended Operations) to
Class B Shares December 31, 1996(a) June 30, 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period............. $9.112 $9.430
------ ------
Net Investment Loss................................ (.072) (.006)
Net Realized and Unrealized Gain/Loss on
Investments...................................... .941 (.312)
------ ------
Total from Investment Operations..................... .869 (.318)
------ ------
Net Asset Value, End of the Period................... $9.981 $9.112
====== ======
Total Return (b)..................................... 9.55%* (3.39%)*
Net Assets at End of the Period (In millions)........ $ 77.8 $ 25.5
Ratio of Expenses to Average Net Assets (c).......... 2.05% 2.06%
Ratio of Net Investment Loss to Average Net Assets
(c)................................................ (1.54%) (1.28%)
Portfolio Turnover................................... 55%* 4%*
Average Commission Paid Per Equity Share Traded
(d)................................................ $.0430 $.0310
</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) If certain expenses had not been assumed by VKAC, the Ratio of Expenses to
Average Net Assets and the Ratio of Net Investment Loss to Average Net
Assets would have been 2.81% and (2.04%) for the period ended June 30, 1996.

(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable.

See Notes to Financial Statements

17
<PAGE> 147

FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
May 29, 1996
(Commencement
of Investment
Six Months Ended Operations) to
Class C Shares December 31, 1996(a) June 30, 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of the Period............. $9.113 $9.430
------ ------
Net Investment Loss................................ (.072) (.006)
Net Realized and Unrealized Gain/Loss on
Investments...................................... .940 (.311)
------ ------
Total from Investment Operations..................... .868 (.317)
------ ------
Net Asset Value, End of the Period................... $9.981 $9.113
====== ======
Total Return (b)..................................... 9.55%* (3.39%)*
Net Assets at End of the Period (In millions)........ $ 8.2 $ 3.9
Ratio of Expenses to Average Net Assets (c).......... 2.05% 2.05%
Ratio of Net Investment Loss to Average Net Assets
(c)................................................ (1.54%) (1.28%)
Portfolio Turnover................................... 55%* 4%*
Average Commission Paid Per Equity Share Traded
(d)................................................ $.0430 $.0310
*Non-Annualized
</TABLE>

(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.

(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable.

See Notes to Financial Statements

18
<PAGE> 148

NOTES TO FINANCIAL STATEMENTS

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Aggressive Growth Fund (the "Fund") is organized as
a separate diversified series of Van Kampen American Capital Equity Trust (the
"Trust"), a Delaware business trust, which is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek capital growth by investing
primarily in a diversified portfolio of common stocks and other equity
securities. The Fund commenced investment operations on May 29, 1996 with three
classes of common shares, Class A, Class B and Class C.
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.
Investments in securities not listed on a securities exchange are valued based
on their last sales price 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 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 American Capital Investment Advisory Corp. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are 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.

19
<PAGE> 149

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

C. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.

D. ORGANIZATIONAL EXPENSES--The Fund will reimburse Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Fund's organization in the amount of $105,000. These costs
are being amortized on a straight line basis over the 60 month period ending May
28, 2001. The Adviser has agreed that in the event any of the initial shares of
the Fund originally purchased by VKAC are redeemed by the Fund during the
amortization period, the Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.

F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares and pays dividends
annually from net investment income and net realized gains, if any. For federal
income tax purposes, a net investment loss recognized in the current year cannot
be used to offset future years net investment income. Therefore, tax basis net
investment losses are reclassified to capital at the end of the Fund's fiscal
year. Due to inherent differences in the recognition of certain expenses under
generally accepted accounting principles and for federal income tax purposes,
the amount of net investment income/loss may differ between book and federal
income tax purposes for a particular period. These differences are temporary in
nature, but may result in book basis net investment losses.

<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- ---------------------------------------------------------------------
<S> <C>
First $500 million...................................... .75 of 1%
Next $500 million....................................... .70 of 1%
Over $1 billion......................................... .65 of 1%
</TABLE>

Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

20
<PAGE> 150

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

For the six months ended December 31, 1996, the Fund recognized expenses of
approximately $4,200, representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting
services to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
shareholder servicing agent for the Fund. For the six months ended December 31,
1996, the Fund recognized expenses of approximately $50,000, representing
ACCESS' cost of providing transfer agency and shareholder services plus a
profit.
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers of
VKAC.
The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
At December 31, 1996, VKAC owned 100 shares each of Classes A, B and C.

3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of common shares, 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 December 31, 1996, capital aggregated $80,049,894, $73,208,376 and
$7,767,704 for Classes A, B, and C, respectively. For the six months ended
December 31, 1996, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................... 7,267,610 $ 69,602,055
Class B................................... 5,420,443 51,460,605
Class C................................... 507,711 4,833,553
---------- ------------
Total Sales................................. 13,195,764 $125,896,213
========== ============
Repurchases:
Class A................................... (2,087,827) $(20,378,919)
Class B................................... (425,028) (4,078,816)
Class C................................... (117,786) (1,050,368)
---------- ------------
Total Repurchases........................... (2,630,641) $(25,508,103)
========== ============
</TABLE>

21
<PAGE> 151

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

At June 30, 1996, capital aggregated $30,826,758, $25,826,587 and $3,984,519
for Classes A, B, and C, respectively. For the period ended June 30, 1996,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A..................................... 3,364,245 $31,165,017
Class B..................................... 2,845,703 26,235,112
Class C..................................... 441,454 4,068,512
--------- -----------
Total Sales................................... 6,651,402 $61,468,641
========= ===========
Repurchases:
Class A..................................... (35,834) $ (327,971)
Class B..................................... (45,002) (400,997)
Class C..................................... (9,169) (83,593)
--------- -----------
Total Repurchases............................. (90,005) $ (812,561)
========= ===========
</TABLE>

Class B and C Shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC for Class B and C
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. The Class B and C shares bear the expense of their
respective deferred sales arrangements, including higher distribution and
service fees and incremental transfer agency costs.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALE 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 six months ended December 31, 1996, VKAC, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $206,900

22
<PAGE> 152

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------

and CDSC on redeemed shares of approximately $85,100. Sales charges do not
represent expenses of the Fund.

4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $148,630,945 and $56,758,159,
respectively.

5. 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 December 31, 1996, are payments to VKAC of
approximately $216,700.

23
<PAGE> 153

FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL

GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund

EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund

Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund

24
<PAGE> 154

VAN KAMPEN AMERICAN CAPITAL AGGRESSIVE GROWTH FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
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. MORRELL*
Vice President and Chief Accounting Officer

JOHN L. SULLIVAN*
Treasurer

TANYA M. LODEN*
Controller

PETER W. HEGEL*

ALAN T. SACHTLEBEN*

PAUL R. WOLKENBERG*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

DISTRIBUTOR

VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

SHAREHOLDER SERVICING AGENT

ACCESS 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

KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

* "Interested" persons of the Fund, as defined in the Investment Company Act of
1940.
(C) Van Kampen American Capital Distributors, Inc., 1997 All rights reserved.
SM denotes a service mark of Van Kampen American Capital Distributors, 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.
RESULTS OF SHAREHOLDER VOTES

A Special Meeting of Shareholders of the Fund was held on October 25, 1996,
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of KPMG Peat Marwick LLP as independent
public accountants. With regard to the approval of a new investment advisory
agreement between Van Kampen American Capital Investment Advisory Corp. and the
Fund, 7,102,283 shares voted for the proposal, 90,468 shares voted against and
356,529 shares abstained. With regard to the approval of certain changes to the
Fund's fundamental investment policies with respect to investment in other
investment companies, 4,463,540 shares voted for the proposal, 112,682 shares
voted against and 330,480 shares abstained. With regard to the ratification of
KPMG Peat Marwick LLP as independent public accountants for the Fund, 7,154,754
shares voted for the proposal, 43,344 shares voted against and 3,51,183 shares
abstained.